A fixed price building contract, also called a lump sum agreement, sets a firm total cost for a clearly defined scope of work. It suits homeowners who have detailed plans and a precise specification, because the builder carries the risk of overruns. It becomes risky when the scope is vague, since every grey area can turn into a disputed extra cost. The rest of this guide explains what to check before you sign one.
TL;DR:
- Attach dated, approved drawings and a detailed specification to the contract; fixed pricing covers only listed work, while hidden defects can trigger extra charges.
- Require both parties to sign a priced variation before extra work begins, and agree in writing how material surcharges and ground conditions will be handled.
- Keep contingency separate: FMB guidance suggests about 10% of project cost, rising to 15% or more for older homes and structural work.
- Get at least three written quotes based on identical drawings and specifications, then compare exclusions and confirm insurance, warranties, and building control responsibilities.
- Tie staged payments to completed milestones, keep the upfront deposit modest, and retain a defined amount until snagging and handover are complete.
Table of Contents
- What makes a contract fixed price rather than cost-plus or remeasured
- Common fixed price contract types you might be offered
- What to insist on in a written fixed price contract
- The pros and cons of choosing fixed price
- How variations and price rises are handled
- Costs, contingency and realistic payment schedules
- How to choose a builder before you sign a fixed price contract
- How we structure fixed price quotes to protect homeowners
- What most homeowners get wrong about fixed price contracts
- Ready to get a fixed price quote done properly?
- FAQ
- Sources
What makes a contract fixed price rather than cost-plus or remeasured
A fixed price contract agrees one total figure for an exactly defined piece of construction work before anyone picks up a tool. Unlike a cost-plus arrangement, where you pay the contractor’s actual costs plus a fee and carry the risk if materials or labour cost more than expected, a fixed price deal puts that risk on the builder, provided the scope does not change. FMB guidance confirms that this is the standard definition used across the trade: a firm, agreed cost for a defined scope, with the builder normally absorbing overruns when nothing changes.
A remeasurement contract works differently again. Instead of one fixed sum, the final bill is calculated by measuring the actual quantities of work completed against agreed rates, which suits projects where the extent of work cannot be known precisely in advance. All of this depends on one thing: how good your drawings and specification are. Vague plans produce vague prices, and vague prices produce arguments later.
Common fixed price contract types you might be offered
Several recognised contract forms are used on domestic jobs across the North West, and it helps to know the names.
- FMB contracts: Federation of Master Builders templates written in plain English, designed to be shorter and easier for homeowners to follow than older legal documents, as the FMB has confirmed with its updated builder contracts.
- RIBA domestic building contract: a form drafted around an architect-led project, setting out stages, payments and the architect’s role as contract administrator.
- JCT homeowner contracts: Joint Contracts Tribunal agreements, including lump sum versions and measured or remeasurement variants for work that cannot be fully specified upfront.
- Fixed price with allowances: a hybrid where most work is fixed but named items, such as kitchen fittings, carry a budget allowance to be confirmed later.
Each form balances certainty against flexibility slightly differently, so ask which one is being proposed and why.
What to insist on in a written fixed price contract
A verbal agreement or a one-page quote is not a contract. Before you sign anything, make sure the document includes the following.
- A detailed schedule of works referencing dated drawings and a written specification, not general descriptions.
- Start and finish dates, with realistic milestones for each stage of the build.
- A payment schedule tied to completed stages, with a modest deposit rather than a large sum upfront.
- A written variations process requiring signed, priced authorisation before any extra work begins.
- Clarity on who arranges building control sign-off, scaffolding, skips and site insurance.
- A defined retention amount, a defects period, and a handover checklist with certificates and guarantees.
Local authority building control guidance specifically warns homeowners against paying large amounts in advance and recommends written contracts over informal agreements.
Pro Tip: Ask your builder to initial a printed copy of the specification and drawings as an attachment to the contract, not just the price page.
The pros and cons of choosing fixed price
Fixed price suits most domestic projects, but it is not automatically the right answer for every job.
- Cost certainty: you know the total figure before work starts, which makes mortgage or savings budgeting far easier.
- Builder incentive: because overruns usually fall on the contractor, there is a built-in reason to work efficiently and avoid waste.
- Exclusion risk: anything left out of the specification, such as unforeseen rewiring or unexpected drainage, becomes a separate charge.
- Dispute potential: a loosely worded scope gives both sides room to disagree about what was actually included.
Fixed price works best when you already have detailed, approved plans. It is less suitable for projects where the scope genuinely cannot be defined in advance, such as some older-property renovations where hidden defects only appear once walls are opened up.
How variations and price rises are handled
A variation is any change to the agreed scope, whether that is moving a socket or adding a window. FMB guidance is consistent on this point: no variation should proceed without a written, priced order signed by both parties, because verbal instructions are the single biggest cause of billing disputes.
Material price volatility has pushed many contractors to add explicit surcharge clauses for items like timber or steel, so it is worth asking upfront how that risk is shared and how transparent the pricing will be. Ground conditions, such as unexpected drainage or poor subsoil, are another common source of extra cost on extension and conversion work, and a well-drafted contract should state clearly how such discoveries get priced and agreed rather than leaving it open-ended.
Costs, contingency and realistic payment schedules
A typical payment profile for a domestic extension involves a modest deposit of a small percentage, several staged payments linked to completed work such as foundations, structure and first fix, and a final retention held until snagging is complete; for practical guidance, see this home renovation checklist for homeowners.
Keep a contingency fund. FMB guidance recommends budgeting around 10% of the project cost as a contingency, rising to 15% or more for older properties or structural work, where hidden conditions behind walls or under floors are more likely to surface once the project starts.
- Compare quotes on a strict like-for-like basis, item by item, not just the bottom line.
- Read the exclusions list carefully: it often hides the costs that catch homeowners out later.
- Keep your contingency separate from your main budget so it is not accidentally spent early.
Our guide on why extension quotes vary so much looks at this comparison problem in more detail.
How to choose a builder before you sign a fixed price contract
Choosing the right contractor matters as much as the contract wording itself.
- Get at least three written, like-for-like quotes based on the same drawings and specification, as Ashford Borough Council’s guidance recommends.
- Ask which standard contract form is being used, FMB, RIBA or JCT, and insist on a written variations process.
- Check public liability insurance, workmanship warranties, trade body membership and how building control approval will be handled.
- Watch for red flags: pressure to pay cash for a VAT-free discount, reluctance to sign anything written, or timescales that sound too fast to be realistic.
Pro Tip: Keep a simple builders’ quote checklist handy when comparing proposals, so you are judging specification and protections, not just the headline price.
A Full Plans building control application also helps contractors quote more accurately, since work proceeds from approved drawings rather than estimates, and that approval stays valid for three years.
How we structure fixed price quotes to protect homeowners
We prepare every fixed price quotation from design through to completion, backed by a written schedule of works rather than a rough estimate. We set out staged payments linked to progress, a written variations process, and a defined defects period before final handover.
We manage building control liaison directly, so homeowners are not left chasing approvals or wondering who is responsible for notifications.
What most homeowners get wrong about fixed price contracts
The biggest misunderstanding we see is homeowners assuming a fixed price covers “everything”, when really it only covers what is written into the specification. Spend properly on drawings and a detailed specification before you ask for quotes. It costs more upfront but removes most of the ambiguity that causes arguments later, and it lets every builder price the same job rather than three different guesses.
— Gareth
Ready to get a fixed price quote done properly?
We design and build fixed price projects across extensions, garage conversions, conservatory roof replacements and structural alterations, each quoted against a written schedule of works rather than a rough figure.
- Request a site survey before you commit to any specification.
- Use our builders’ quote checklist to compare proposals fairly.
- Ask us about staged payments and contingency planning for your project type.
We serve homeowners in the North West of England. Get in touch through our house extensions page to start a fixed price conversation about your project.
FAQ
What are the four main types of construction contracts?
The common types used in UK domestic work are fixed price (lump sum), cost-plus, remeasurement, and management or design-and-build contracts that combine elements of the others. Each allocates cost risk differently between homeowner and contractor.
How much do builders charge per m2?
Published per-square-metre rates vary too widely by region, finish and project type to quote a single reliable figure here. A written, like-for-like quote based on your own drawings and specification is a far more accurate way to compare costs than a generic rate.
What is a remeasurement contract?
A remeasurement contract calculates the final price by measuring the actual quantities of completed work against pre-agreed rates, rather than fixing one total in advance. It suits projects where the full extent of work cannot be known until work is underway.
What is a fixed-term contract in the UK?
A fixed-term contract is an employment term describing a job that ends on a set date or when a specific task finishes, and it is a different concept from a fixed price building contract. A fixed price building contract fixes the cost of defined construction work, not an employment period.
Sources
- How to keep your renovation on budget | Federation of Master Builders
- FAQs about building control | Waverley Borough Council
- Choosing a builder | Ashford Borough Council
