Florida Building Contractor Business/Finance Practice Exam

Which type of construction contract typically has the most competition?

1. Design-build

2. Fixed price

3. Open

4. Negotiated

The correct answer is: Open

The type of construction contract that typically has the most competition is the open contract. This type of contract is characterized by its non-restrictive nature, allowing for various contractors to submit bids without much prequalification or exclusivity. Open contracts encourage many contractors to participate in the bidding process, which increases competition and can lead to lower prices for clients as contractors strive to win the project. In contrast, design-build contracts combine design and construction responsibilities, often leading to fewer firms that have the capabilities and resources to handle both aspects effectively. Fixed-price contracts can create competition, but typically involve a more structured bidding process that may limit the number of bidders based on price and project specifics. Negotiated contracts often involve direct discussions and arrangements between the client and a select contractor, further reducing competition as not all contractors get a chance to propose their services.