Which of the following best describes a "fixed price" contract?

A "fixed price" contract is characterized by a total price that is agreed upon by both parties at the outset, which remains constant throughout the duration of the contract, regardless of changes in costs or other project factors. This means that once the price is set, it cannot be altered unless all parties agree to additional terms, which is often seen as a significant benefit for clients who want to maintain a budget.

In contrast, other types of contracts, such as cost-plus or time and materials contracts, allow for changes in the total price based on various factors like material costs or labor. Thus, the stability of a fixed price contract provides both predictability for budgeting and financial security for the contractor against unforeseen expenses or material price fluctuations.

Understanding the nature of fixed price contracts is crucial for project management and financial planning in construction, enabling parties to allocate resources and estimate profit margins effectively.