IDEAS home Printed from
   My bibliography  Save this article

Review Of Variance Analysis In Unit Price Or Lump-Sum Basis Contracts For A Construction Project


  • Hasan Bozkurt Nazilli

    () (Technical University Of Civil Engineering Bucharest, Romania)

  • Nicolae Postavaru

    () (Technical University Of Civil Engineering Bucharest, Romania)


Project cost control became a critical issue for the construction projects under global recession. There are various methods for cost controlling according to types of contracts. Crucial difference in principal is between Lump-sum and Unit-Price basis contracts. According to my past construction projects experience, usually a project can be completed on time, with acceptable safety, security, health and environmental conditions and in acceptable quality. But cost variance has been always encountered in projects because of a lot heterogeneous construction conditions. Effects of two difference type of contract as unit price and lump-sum basis have been reviewed in this study. Planned profit had been defined according to the cost report in the beginning of the project that was carried out in Bucharest. But the contractor paid more money at the end of the project in spite of quantities of some items were increased under unit price basis contract. Because unit prices of the work items were defined mistakenly without making a comprehensive study. Furthermore, at the end of the project actual overhead costs increased because of additional fixed and time related costs those could not estimate by the contractor. In condition of lump-sum basis contract, as a result of some increased or new appeared job items have not been paid by the client because of the contract spirit, gross income has been changed to lose money. As is understood, the contractor could not evaluate comprehensively all the contract documents, especially structural drawings have not been reviewed and made calculation precisely.

Suggested Citation

  • Hasan Bozkurt Nazilli & Nicolae Postavaru, 2012. "Review Of Variance Analysis In Unit Price Or Lump-Sum Basis Contracts For A Construction Project," Internal Auditing and Risk Management, Athenaeum University of Bucharest, vol. 2(26), pages 103-115, June.
  • Handle: RePEc:ath:journl:tome:26:v:2:y:2012:i:26:p:103-115

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Isabelle Huault & V. Perret & S. Charreire-Petit, 2007. "Management," Post-Print halshs-00337676, HAL.
    Full references (including those not matched with items on IDEAS)


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ath:journl:tome:26:v:2:y:2012:i:26:p:103-115. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Cosmin Catalin Olteanu and Emilia Vasile). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.