Types of contracts prevailing in the market
every construction professional knows that the project awarded to a contractor after evaluating his bid. unfortunately every one not aware of how many conract are prevailing in the market. here below i try to enumerate the types of contract prevailing in the market for information.
Payment Contracts
Lump-sum: This is the most common type of contract. The construction manager and the owner agree on the overall cost of the construction project and the owner is responsible for paying that amount whether the construction project exceeds or falls below the agreed price of payment.
Cost-Plus-Fee: This contract provides payment for the contractor including the total cost of the project as well as a fixed fee or percentage of the total cost. This contract is beneficial to the contractor since any additional costs will be paid for even though they were unexpected for the owner.
Guaranteed Maximum Price: This contract is the same as the cost-plus-fee contract although there is a set price that the overall cost and fee do not go above.
Unit-Price: This contract is used when the cost cannot be determined ahead of time. The owner provides materials with a specific unit price to limit spending.
every construction professional knows that the project awarded to a contractor after evaluating his bid. unfortunately every one not aware of how many conract are prevailing in the market. here below i try to enumerate the types of contract prevailing in the market for information.
Payment Contracts
Lump-sum: This is the most common type of contract. The construction manager and the owner agree on the overall cost of the construction project and the owner is responsible for paying that amount whether the construction project exceeds or falls below the agreed price of payment.
Cost-Plus-Fee: This contract provides payment for the contractor including the total cost of the project as well as a fixed fee or percentage of the total cost. This contract is beneficial to the contractor since any additional costs will be paid for even though they were unexpected for the owner.
Guaranteed Maximum Price: This contract is the same as the cost-plus-fee contract although there is a set price that the overall cost and fee do not go above.
Unit-Price: This contract is used when the cost cannot be determined ahead of time. The owner provides materials with a specific unit price to limit spending.
