Which contract type typically does NOT include a penalty for late completion?

The contract type that typically does not include a penalty for late completion is the cost-plus contract. In a cost-plus contract, the contractor is reimbursed for their allowable expenses plus an additional payment for profit, which is often a fixed fee or a percentage of the costs. This structure means that the contractor is not held to strict deadlines in the same way that lump-sum or fixed-price contracts are. Instead, the focus is generally on the actual costs incurred during the project, allowing for more flexibility in scheduling and completion dates. This can often mean that if the project takes longer than anticipated, the contractor will still be compensated for their time and expenses without a financial penalty for delays.

In contrast, lump-sum and fixed-price contracts usually involve clearly defined timelines and deliverables, and they often include penalties for late completion to incentivize timely delivery. Design-build contracts can also vary in their terms but generally have specific project timelines established, often leading to similar consequences for delays.