How OnStation Supports CEI Firms Navigating Lump Sum Contracts

A lump sum contract in the context of a Department of Transportation (DOT) project is a type of construction contract where the contractor agrees to complete a defined scope of work for a fixed total price.

Key Features:

• Single price for the whole project: The DOT and the contractor agree on one price that covers all labor, materials, equipment, and services.

• Scope must be clearly defined: Since the price doesn’t change easily, the plans and specs must be detailed and accurate up front.

• Minimal quantity tracking: Unlike unit price contracts, the DOT typically doesn’t track individual quantities (e.g., tons of asphalt or feet of guardrail) as the basis for payment.

• Risk is on the contractor: If costs go over, the contractor generally absorbs the overrun (unless there's a change order or dispute).

When DOTs Use Lump Sum Contracts:

• For well-defined projects with low variability in scope.

• On design-build or smaller-scale projects where speed or efficiency is prioritized.

• When it’s easier to manage payment in one sum rather than track every line item.

Consulting firms face new opportunities and challenges as infrastructure owners and DOTs shift toward lump sum contracts for construction engineering and inspection (CEI) work. These fixed-price agreements offer firms greater control over how they deliver services, but with that control comes increased responsibility, especially when managing scope and cost. Tools like OnStation are becoming essential to thriving in this new project delivery model.

The Shift to Lump Sum CEI Contracts

Several states, including Florida, have already begun requiring lump sum CEI contracts, with implementation starting as early as January 2025. Nationally, the American Council of Engineering Companies (ACEC) advocates for broader adoption of incentive-based contracts to encourage innovation and efficiency in project delivery.

“The industry must encourage the adoption of more incentive-based contracts, like lump sum, so that firms can invest in their ability to leverage digital technology to deliver better project outcomes for their clients.”

— Nicolas Mangon, VP of AEC Strategy at Autodesk

Why Do Lump Sum Contracts Matter to CEI Firms?

Under lump sum agreements, risk shifts from the owner to the consultant. CEI firms must now take greater responsibility for managing scope, staffing, and performance. Success depends on:

• A clearly defined scope of work

• Seamless communication among all stakeholders

• Rigorous change management

• Cost control and margin protection

• Post-project process improvement

To remain competitive and profitable, CEI firms must adopt digital tools that help them execute contracts efficiently and proactively manage change.

OnStation: Built for the Lump Sum Environment

OnStation is uniquely positioned to help CEI consultants deliver successful projects under lump sum terms. Here’s how:

📍Precise Location Awareness
Lump sum contracts require meticulous planning up front, knowing how costs are calculated and being able to justify them. OnStation provides live digital stationing that ensures every team member knows exactly where work will be performed, which is critical for avoiding rework and scope misinterpretation. Because the plans are overlaid directly on the map, field personnel can instantly verify whether the work aligns with the contract at a specific location. If there’s a discrepancy, they can quickly drop a flag to capture the issue. These flags serve as the first step in maintaining a change register, supporting accurate cost tracking and proactive change management.

📘Scope Transparency
OnStation allows the complete contract scope to be accessed digitally in the field. With everyone aligned on what work needs to be done, CEI teams can reduce errors and boost efficiency. Discrepancies in scope can be flagged instantly and shared across the team for evaluation. Even if the full impact of a change isn’t known right away, OnStation’s chat, photo, and group tagging features allow team members to collaboratively gather details and determine whether the issue rises to the level of a change order. This transparency supports clearer communication, better documentation, and faster decisions.

🚩Flag-Based Change Management
The cornerstone of managing lump sum contracts is knowing when a change has occurred and documenting it. OnStation’s flag feature supports this by allowing CEI consultants to:

• Record location- and time-stamped flags for indisputable documentation

• Include forms and checklists to standardize responses and create repeatable processes

• Use chat, photos, and tags to classify severity and share context

• Create notification groups so responsible parties can quickly act

• Filter, export, and share flags for internal tracking or formal change order generation

Because users are already familiar with flagging, adoption is seamless. This leads to real-time visibility into project changes, reducing the human tendency to “wait and see” and instead enabling immediate response.

📤Documentation for Accountability and Growth
All data captured during the project can be exported for internal analysis, future estimating, or audit preparation. Through the OnStation Data Portal, project managers gain a centralized view of all project activity, including change history across contracts. This promotes a “no surprises” environment where all stakeholders (internally and externally) are looped in as soon as changes occur. Sharing flags with owners and contractors fosters collaboration and helps maintain trust throughout the project lifecycle.

More Than Compliance: A Competitive Advantage

Beyond fulfilling contractual obligations, using OnStation empowers CEI firms to streamline operations and demonstrate control in a high-stakes environment. By embracing digital tools, firms are not just adapting but positioning themselves as forward-thinking partners ready to tackle complex infrastructure challenges.

As the industry moves toward fixed-price CEI contracts, the firms that invest in innovation and process discipline will emerge. OnStation gives CEI firms the tools they need to manage scope, monitor change, and maximize profitability, all while enhancing communication and collaboration.