Why ‘Fixed Price’ Is Often a False Comfort

Bart Kolosowski
20 hours ago
3 min read

WHAT HAS TO BE FIXED FOR A FIXED PRICE TO WORK

In the world of residential architecture and construction, the term fixed price is often treated as a psychological safety net. For a client, it represents a ceiling on expenditure, for an architect, it represents a boundary for the budget.

However, a common point of friction arises when that fixed price begins to move. To understand why this happens, we must dismantle a pervasive myth: A fixed-price contract does not mean the price cannot change.

It means the price is fixed only for a defined scope, based on defined information, that does not change. This distinction underpins the entire commercial relationship.

WHAT A FIXED PRICE ACTUALLY IS

From a Quantity Surveying perspective, a fixed price is a specific commercial agreement. It is a commitment to deliver a specific scope of work for a specific sum, based on a specific set of information available at the point of contract.

It is important to clarify what it is not:

It is not a guarantee against future change.
It is not protection against incomplete design.
It is not insurance against the inherent uncertainties of a site.

If the scope, the information, or the underlying assumptions change, the price changes—legitimately. Fixed price is a pricing mechanism, not a promise of immutability.

THE REALITY OF FULLY DEFINED SCOPE

Scope is frequently misunderstood as being synonymous with the drawings. In reality, a genuinely fixed price relies on a much broader ecosystem of information:

Coordinated Design: Not just layouts, but how structure, services, and finishes interact.
Comprehensive Specifications: Defining the exact performance, fitting, and finish of every element.
Contractual Clarity: Clear allocation of responsibility and defined interfaces between different trades.
Realistic Programming: Assumptions about how long the work will take and the sequence in which it must happen.

Scope is not just what is drawn, it is what is agreed. If an item is to be confirmed, the price for that item is, by definition, not fixed.

WHY INFORMATION IS RARELY FIXED

Many residential projects are pushed to tender or onto the site prematurely. There is an understandable desire to get started, leading to a culture where complex decisions are deferred. Commonly, clients and designers assume that finishes, specialist fit-out items, or ironmongery can be decided once we’re on site. The logic is that there is still time.

However, deferred design decisions do not save time, they displace it into the most expensive phase of the project.

For example, a late decision on a floor finish might conflict with the screed depth already poured, or a kitchen layout change might require moving services that are already chased into walls. These changes cause:

Redesign costs
Sequencing disruptions
Loss of commercial leverage as you are now negotiating with a contractor who is already on-site.

REFURBISHMENTS: MANAGING THE UNKNOWN

Refurbishments and extensions carry a unique layer of complexity. Even with high-quality surveys, the existing structure remains partially unknown until opening up occurs.

These unknowns cannot be eliminated, but they must be managed. This does not mean a fixed-price contract is inappropriate, it means the risk must be handled intelligently. Rather than ignoring the risk, we must account for it through informed allowances rather than arbitrary guesses.

WHEN FIXED PRICE BECOMES FALSE COMFORT

The frustration many clients feel during a build usually stems from a misalignment of expectations. They interpret fixed price as: the price will not change.

When variations arise due to design gaps or changed assumptions, the client feels the contract has failed. In reality, the contract is doing exactly what it was designed to do. It is adjusting the price to reflect the reality of the work being requested.

The failure isn't in the contract, it’s in the initial understanding of the parameters.

HOW TO MAKE FIXED PRICE WORK FOR YOU

In most residential projects, a fixed-price contract is still the most advisable route, but only once specific conditions are met:

The design is fully developed and discrepancies are closed off.
Assumptions are minimised and, where possible, tested.
Provisional Sums are used for items that truly cannot be fixed, based on informed cost ranges rather than arbitrary numbers.

A Practical Tip: The Pre-Tender Strip-Out

One of the most effective ways to ensure a fixed price stays fixed on a refurbishment is to undertake a strip-out or opening-up phase before the main tender.

By revealing the structure and hidden conditions early, you reduce the contractor’s need for risk pricing and assumptions. This leads to more accurate tenders, fewer variations, and a contract sum that holds firm.