What is the typical basis of reimbursement for a Design-Bid-Build project?

In a Design-Bid-Build project, the typical basis of reimbursement is often a lump sum. This means that the contractor provides a single fixed price for the entire project based on the designs and specifications provided by the architect or designer. This approach allows project owners to have a clear understanding of the overall cost upfront and provides a level of certainty in budgeting and financing.

The lump sum contract incentivizes the contractor to complete the work efficiently and within the agreed-upon price because any cost overruns will be the contractor's responsibility. This structure also fosters accountability and motivates the contractor to manage costs effectively, as their profit margin is built into the lump sum price.

In contrast, other reimbursement methods, such as unit price or cost-plus, may introduce variability in the final cost, which can complicate financial planning and management during the project's execution. Therefore, the lump sum approach is particularly favored in Design-Bid-Build projects for its simplicity and clarity in cost structure.