What type of payment is characterized as a predetermined fee agreed upon for small projects?

A lump-sum fee is accurately characterized as a predetermined fee agreed upon for small projects. This type of payment structure involves an agreement between the client and the engineer or contractor regarding a fixed total price for the entire scope of work. It simplifies budgeting for both parties and provides clarity on costs from the outset, making it especially suitable for small projects where the scope is well-defined and unlikely to change significantly.

In contrast, other payment types differ in their structures and application. An hourly rate entails billing based on the number of hours worked, which can lead to uncertainty in total costs. A cost-plus fee involves billing for the actual costs incurred plus an additional fee, which can result in variations and may not provide the cost certainty that fixed-price arrangements offer. Unit pricing generally focuses on setting a price per unit of work done, which can be effective for larger or variable projects but is not typically associated with small-scale fixed agreements.