What is Lump Sum?

LS (Lump Sum) is one fixed total price for a defined scope of work, instead of pricing each item separately.

Definition

LS (Lump Sum) is a pricing method in which the contractor provides a single total price for the entire scope of work rather than listing each item separately.

In construction, LS (Lump Sum) pricing is usually used when the work is clear enough to estimate as a whole. This can include site preparation, landscaping, or HVAC system installation, depending on the project.

It is also useful for financial planning because the owner gets a set price before the work starts.

Purpose

The main purpose of LS (Lump Sum) pricing is to give both the owner and contractor a clear project cost upfront.

It helps reduce confusion around pricing, especially when the scope is well-defined. For example, a contractor may price all site preparation work under a single LS (Lump Sum) amount instead of breaking out each small task.

Examples of Use

A contractor gives an LS (Lump Sum) price for site preparation, including clearing, grading, and cleanup.
A landscaper submits one LS (Lump Sum) amount for basic landscaping work around a commercial building.
A mechanical contractor provides an LS (Lump Sum) quote for installing an HVAC system.
An owner uses LS (Lump Sum) pricing for better financial planning before approving a project.

Related Terms

Accuracy

Accuracy is the degree to which a measurement, calculation, or result matches the actual or intended value.

SY (Square Yard)

SY(Square Yard) is a unit of measure used for surfaces like flooring, paving, roofing, landscaping, and site work.

Notes

LS (Lump Sum) works best when the scope is clear.
A vague scope can make LS (Lump Sum) pricing risky.
Financial planning is easier when the total cost is known upfront.
Site preparation, landscaping, and HVAC system work can be priced as LS (Lump Sum) if the deliverables are clear.
Any exclusions, allowances, or change orders should be listed clearly with an LS (Lump Sum) price.

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