Stipulated price contract

Established

Also: Lump sum contract, Fixed price contract, CCDC 2

A construction contract in which the contractor agrees to perform a defined scope of work for a fixed total price, adjusted only through the contract's change provisions.

Explanation

The contractor carries the risk of its own cost overruns and keeps any savings; the owner carries the risk of design errors and owner-initiated changes, which are priced through change orders or change directives. A stipulated price requires complete design documents at tender. In Canada the standard form is CCDC 2 (2020 edition), whose 2020 update introduced Ready-for-Takeover and provisions aligned with prompt payment legislation.

Practical example

A GC bids $8.6 million to build a school addition on complete drawings. During construction, an owner-requested added classroom is priced at $310,000 and incorporated by change order, raising the contract price to $8.91 million.

Why it matters

Price certainty at award is the main attraction for owners, but only if the design is complete; incomplete documents turn a fixed price into a stream of changes.

Common confusion

Standards and references

  1. CCDC contract documents (catalogue). Canadian Construction Documents Committee (CCDC).Widely accepted professional interpretation
    Supports: CCDC 2 Stipulated Price Contract, 2020 edition · Status: Catalogue lists CCDC 2 (2020), 3 (2016), 4 (2023), 5A/5B (2025), 11 (2019), 14/15 (2026), 17 (2025), 18 (2023), 30 (2025), 31 (2020), 32/33 (2026).
  2. CCDC 2 (2020): 8 Key Changes to the Stipulated Price Contract. McInnes Cooper, 2021.Widely accepted professional interpretation
    Supports: Key 2020 changes: Ready-for-Takeover, payment legislation and proper invoice provisions, adjudication

VDC Stack.io writes its own explanations and does not reproduce copyrighted standards text. Consult the cited standard for normative wording.

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VDC Stack.io. (2026). Stipulated price contract. In VDC Stack.io Knowledge Dictionary. Retrieved from https://vdcstack.io/dictionary/stipulated-price-contract/