Risk Mitigation Strategies in Lump Sum and Unit Price Contracts: A Document Analysis and Thematic Synthesis

Robert Daniel Zebua; Oei Fuk Jin

doi:10.59261/jequi.v8i3.383

Authors

Robert Daniel Zebua Universitas Tarumanagara
Oei Fuk Jin Universitas Tarumanagara

DOI:

https://doi.org/10.59261/jequi.v8i3.383

Keywords:

Lump-sum Contracts, Unit-price Contracts, Hybrid Contracts, Risk Allocation, Performance-based Clauses

Abstract

Background: Despite the growing adoption of hybrid contract models in construction, energy, and agricultural procurement, there remains a significant gap in understanding how lump-sum and unit-price contracts differentially allocate risk across sectors and country contexts. This study addresses this gap by examining risk mitigation strategies through document analysis and thematic synthesis.

Objective: The aim of this study was to identify key risk allocation strategies, contractual mechanisms, and the effectiveness of hybrid models in managing uncertainty across developed and developing country contexts.

Methods: A qualitative approach based on thematic analysis and cross-case comparison was applied, drawing on 48 peer-reviewed sources published between 2015 and 2025, alongside relevant sector documents and procurement reports.

Results: The analysis identified that hybrid contracts reduced cost overrun variability by incorporating performance-based incentives aligned with Expected Utility Theory and Principal-Agent Theory, while developing economies such as Indonesia and Bangladesh exhibited distinct risk profiles requiring adaptive contract mechanisms. However, significant gaps remain, particularly regarding the empirical validation of blockchain-enabled contract enforcement and AI-driven risk prediction, as well as the underrepresentation of developing economy contexts in existing research.

Conclusion: The findings carry both scientific and practical implications. Theoretically, this study advances an integrative multi-theory framework combining Expected Utility Theory, Game Theory, and Principal-Agent Theory to analyse contract risk across diverse contexts. Practically, the results provide evidence-based guidance for procurement professionals and policymakers in selecting and designing contract structures that balance cost certainty with adaptive flexibility.

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