Different Types of Construction Contracts Explained
Construction contracts protect both the builder and customer for a specified building or remodeling job. These different types of construction contracts, or legal documents, usually lay out the specific amount of compensation for the job and its distribution. They are binding agreements between the two parties designed to protect them both. They also typically define the fixed terms of the build including duration, specifications, materials, and quality. Customers want to know the types and structures of contracts in order to know what to expect for the project and what to expect from the builder’s approach. Though many commercial construction manager customers and buyers may be aware of these contract types, it is helpful to have a quick, high-level reference and to know what types of contracts are preferred. Being prepared for project bids and agreements is always wise for construction customers to go forward. Though there are many different types of construction contracts, these are the four most commonly used in commercial (as well as private) builds.
- Unit Pricing Contracts
- Lump Sum or Fixed Price Contracts
- Time and Material Contracts
- Cost Plus Contracts