Examining the Effectiveness of Fixed Price Contracts on Project Performance: A Case Study of Infrastructure in Nalolo District

The use of fixed price contracts has become a common approach in construction project delivery, offering cost certainty and minimizing the risk of budget overruns. In public sector projects, particularly in the education sector, fixed price contracts are often preferred because they align with limited budget allocations and the need for accountability in resource use. Project performance under fixed price contracts can be influenced by several factors, including the clarity of the scope of work, the relationship between the contract type and performance outcomes, contractors’ perceptions, and the level of flexibility during execution. A poorly defined scope of work can lead to disputes, delays, or compromised quality, while the financial discipline inherent in fixed price contracts may limit a contractor’s ability to adapt to unforeseen challenges. Additionally, understanding the decision-making processes and flexibility within fixed price contracts is important for identifying areas for improvement that can enhance project outcomes. This study sought to examine the effectiveness of fixed price contracts on project performance, focusing specifically on educational infrastructure projects in Nalolo District. The study’s specific objectives included; examining the effects of scope of work in fixed price contracts on project performance, determining the relationship between a fixed price contract and project performance, exploring local contractors’ perceptions of fixed price contracts, and understanding the decision-making process and flexibility during contract execution. The study adopted an exploratory case study design, employing both qualitative and quantitative research methods. Data was collected from stakeholders involved in educational infrastructure projects in Nalolo District using structured questionnaires. Quantitative data was analyzed using STATA, with the Chi-square test applied to examine associations between variables such as contract scope, fixed-price contract features, and project performance indicators. The study found that fixed-price contracts significantly influence project performance in educational infrastructure projects in Nalolo District. The study found that fixed-price contracts in Nalolo District’s educational projects strongly influence performance. Scope clarity was high (83%), positively affecting timelines (79%), cost control (88%), quality, stakeholder satisfaction (81%), and resource allocation (85%), while scope changes caused rework (70%) and delays (scope creep 75%, task ambiguity 68%). Fixed contracts improved project success (73%), cost predictability (87%), deadlines (71%), client satisfaction (83%), and output predictability (76%), though disputes occurred sometimes or often (69%). Contractors generally favoured the model (71%) for cost certainty (82%) and clear scope (75%) but faced challenges managing changes (88%), cost overruns (85%), and tight timelines (78%). The contracts were mostly inflexible (71%), with top-down decision-making common (72%) and adjustment mechanisms often inadequate (61%), highlighting a trade-off between predictability and flexibility. The study recommends ensuring detailed and well-defined scopes to minimize delays, rework, and cost overruns. Fixed-price contracts should incorporate clearer mechanisms for managing changes to improve flexibility. Training and guidance for contractors on risk and change management can enhance performance outcomes. Finally, stakeholder collaboration and adaptive decision-making should be strengthened to balance predictability with responsiveness.