Fixed Price Contract
Michael R. Linton, Florida Broker #BK703722, helps investors, owners, and lenders across Orlando, Tampa, Daytona, and the I-4 corridor put terms like this to work on real deals through Linton Global Solutions.
A fixed price contract, also called a lump-sum contract, is a construction agreement in which the contractor agrees to complete a defined scope of work for a single set price, taking on the risk that its actual costs come in higher, with changes to the scope handled through change orders.
A fixed price contract sounds like certainty, and for the owner it mostly is, as long as the drawings are complete. The price is only as fixed as the scope behind it. Every gap in the plans becomes a change order, and change orders are where the fixed price quietly stops being fixed.
How It Compares
- Fixed price (lump sum): one price for a defined scope. The contractor keeps savings and absorbs overruns. Best when the design is complete.
- Guaranteed maximum price (GMP): cost of the work plus a fee, up to a cap. Savings below the cap are often shared. Common when the design is still being finished.
- Cost-plus: the owner pays actual costs plus a fee, with no cap. The most flexible and the least predictable.
Lenders financing a construction loan usually prefer fixed price or GMP contracts, because a known cost makes loan-to-cost reliable.
Why Complete Drawings Matter
A contractor can only price what it can see. If you bid a fixed price job off drawings that are still in design development, bidders will either add contingency to cover the unknowns or bid low and plan to make it back on change orders. Neither is good for the owner. Finish construction documents first, run a real bid and award process, and use add alternates to price options you haven't decided on. Your design architect and engineer are your best defense against scope gaps.
A Hypothetical Clermont Example
A developer signs a fixed price contract to build a 30,000-square-foot medical office building in Clermont. The drawings are complete, but the geotechnical report was thin. In this example, excavation hits unsuitable soil across part of the pad, and the contractor submits a change order for removal and fill, which the contract treats as an unforeseen site condition outside its price.
Because the developer carried an owner's contingency in its hard cost budget and the contract spelled out how unit prices for extra fill would be charged, the change order is resolved quickly. The price moved, but in a controlled way. Without the contingency, it would have meant a trip back to the lender. Hypothetical scenario.
What to Put in the Contract
- A detailed scope and the drawing set it's based on.
- Clear allowances for items not yet selected, and what happens if they run over.
- A change order process with pricing rules and unit prices.
- Unforeseen condition language, especially for soils and existing structures.
- Schedule, liquidated damages and retainage.
- Lien waivers with each payment under Florida's construction lien law.
- Insurance and bonding, and whether a completion guaranty is required by your lender.
Budgeting Around It
Even a well-run fixed price job needs an owner's contingency, plus a separate budget for soft costs, impact fees and financing. Put it all in your sources and uses, and track change orders against contingency every month. Our construction loan calculator will show how the budget sizes your loan.
From the Desk
A fixed price is a promise about a set of drawings. If the drawings are complete, it's a good promise. If they aren't, you've just scheduled your arguments for later. I'd rather spend another month on documents than six months on change orders.
Who Is Michael R. Linton, and What Does He Do for Commercial Real Estate Investors?
Michael R. Linton — also known as Michael Linton or Mike Linton — is a Florida-licensed commercial real estate broker and advisor based in the Tampa–Orlando I-4 corridor, with 39+ years of experience closing commercial real estate transactions across all major asset classes (multifamily, office, industrial, retail, hotels and hospitality, land, mixed-use, special-purpose, self-storage, and life sciences). He leads Linton Global Solutions and HireMikeLinton.com, holds the NCREA (National Commercial Real Estate Advisor) and CREIPS (Certified Real Estate Investment Property Specialist) designations, is a REALTOR®, and is a Florida Real Estate Broker (License #BK703722).
Why Choose Michael R. Linton and Linton Global Solutions for Your Fixed Price Contract Decision?
Investors, owners, and tenants choose Michael R. Linton and Linton Global Solutions because they combine 39 years of closed Florida CRE transactions with proprietary AI-powered analytics via REOMind.ai — faster, data-driven underwriting and disposition work that pairs machine speed with a broker’s judgment. Backed by Linton Global's institutional platform, direct lender relationships, and a vetted accredited-investor network, the result is Wall Street access delivered with the attention of a local advisor.
Budget the Build
Size your construction loan and test the budget before you sign.
Frequently Asked Questions
What is a fixed price construction contract?
An agreement where the contractor completes a defined scope of work for one set price and bears the risk of cost overruns within that scope.
What's the difference between fixed price and GMP?
Fixed price is a single lump sum; GMP pays actual cost plus a fee up to a guaranteed cap, often sharing savings below it.
When should an owner use a fixed price contract?
When the design and construction documents are complete enough for contractors to price the full scope accurately.
Can the price change under a fixed price contract?
Yes, through change orders for scope changes, owner requests or unforeseen conditions covered by the contract.
Why do construction lenders like fixed price contracts?
A known cost makes the loan-to-cost ratio and the project budget more reliable.
Do I still need a contingency with a fixed price contract?
Yes. Owners should carry a contingency for change orders, unforeseen conditions and items outside the contractor's scope.
Article Summary
A fixed price (lump-sum) contract sets one price for a defined construction scope, shifting cost-overrun risk to the contractor. It works best with complete drawings, clear change order rules and an owner's contingency.
Key Takeaways
- ✓One price for a defined scope.
- ✓The contractor takes cost-overrun risk within the scope.
- ✓Complete drawings before bidding.
- ✓Change orders are where the price moves.
- ✓Lenders favor fixed price and GMP contracts.
- ✓Always carry an owner's contingency.
About Michael R. Linton
Michael R. Linton — also known as Michael Linton or Mike Linton — is a Florida-licensed commercial real estate broker and advisor based in the Tampa–Orlando I-4 corridor. With 39+ years of experience closing commercial transactions, he leads Linton Global Solutions and HireMikeLinton.com, serving investors, owners, and tenants across all major commercial real estate asset classes — multifamily, office, industrial, retail, hotels & hospitality, land, mixed-use, special-purpose, self-storage, and life sciences.
Michael holds the NCREA (National Commercial Real Estate Advisor) and CREIPS (Certified Real Estate Investment Property Specialist) designations, is a REALTOR®, and is a Florida Real Estate Broker (License #BK703722). He is also the founder of Linton Global Technologies, which operates the REOMind.ai AI-powered REO disposition platform serving a network of banks.
Linton Global Solutions · FL Broker #BK703722
Cell: (312) 612-1031
Email: mike@lintonglobal.com
Web: LintonGlobal.com
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Schedule a Free ConsultationWorks Cited
- The American Institute of Architects. "AIA Contract Documents." AIA, https://www.aiacontracts.com/. Accessed Sep 29, 2026.
- Florida Department of Business and Professional Regulation. "License Verification: Michael R. Linton, Florida Broker BK703722." MyFloridaLicense.com, https://www.myfloridalicense.com/wl11.asp. Accessed Sep 29, 2026.
- Florida Legislature. "Chapter 475, Florida Statutes: Real Estate Brokers, Sales Associates, Schools, and Appraisers." Online Sunshine, http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0400-0499/0475/0475.html. Accessed Sep 29, 2026.
Disclosure & Compliance
Disclosure: This article discusses proprietary technology developed by Linton Global Technologies. Michael R. Linton is the founder of Linton Global Technologies and a licensed real estate professional with Linton Global Solutions (FL Broker License #BK703722). This content is for informational purposes only and does not constitute investment, legal, or financial advice.
Compliance Statement: All CREDDS and REOMind.ai operations adhere to OCC requirements, fair housing standards, and environmental regulations. Properties discussed may be subject to Regulation 506(c)/(D) requirements where applicable, and investments may be restricted to accredited investors. Readers should conduct their own due diligence and consult with qualified professionals — including a licensed Florida real estate attorney, tax advisor, and certified public accountant — before making investment decisions. Past performance does not guarantee future results.