A construction contract is a binding contract between the builder and the owner of the building. These types of contracts are important because they determine the compensation that will be distributed. There are many types of construction contracts that exist. Some of them are prefered more by construction professionals. The quality of construction, services, Scaffolding Hire company etc are also important factors. Here are the 4 types of construction contracts that exist. All of the contracts depend upon the the quality of materials and techniques used. In financial terms these can be classified as :
Lump Sum Of Fixed Price Contract
A lump sum contract is prefered when there is a clear goal and a defined schedule. These are the more traditional types of contracts. An experienced company can easily take a lot of fixed sum projects as they know how to complete everything in time An owner must also ensure that all services are provided. For example apart from construction workers you need a Scaffold Hire In Sydney for support.
Cost Plus Contracts
These are some easier types of contracts in which the actual cost of the construction and the expenses are beared by the owner. A certain pre negotiated amount is also used in these types of contracts. The cost should be clarified and also divided to direct costs and indirect costs. Here are some of the types of cost plus :
Cost Plus Fixed PErcentage
Cost Plus Fixed Fee
Cost plus With Guaranteed Maximum Price Contract
Bonus Contract with Guaranteed Maximum Price
Time And Material Contracts ( Not Clear Goals )
When the time spent and the material is not clear, in that case these type of contracts are used. In this type of agreement the owner pays the builder on an hourly rate or daily rate. This is also very common in the Industry. An owner must use these types of contracts when the standards are maintained. In other cases instead of time unit pricing is also used which is employed by federal agencies.