What is Lump Sum Billing?

Lump sum billing in construction refers to a payment method where the total cost of a project is agreed upon upfront and paid in one lump sum upon completion. This type of billing is commonly used for fixed-price contracts, where the contractor provides a detailed estimate of the project's total cost before work begins. Lump sum billing provides both the contractor and the client with a clear understanding of the project scope and cost, eliminating the need for ongoing negotiations or change orders that could lead to cost overruns.One of the main benefits of lump sum billing is that it provides clients with cost certainty. By agreeing to a fixed price upfront, clients can budget and plan for the project without worrying about unexpected expenses. Additionally, lump sum billing incentivizes contractors to complete the project