A construction contract contains general and special conditions of contract agreement, details of construction project work, their specifications, time limits, payments and penalties for delays and regulates every party’s rights and obligations. A construction contract document can be legally enforced under law.
Some of the general conditions of contract consist:
- Definition of the project;
- Contract components;
- Professional indemnity insurance;
- Rights and responsibilities of the owner and the contractor;
- Project timeline;
- Payment method; and
- Warranty and penalties due to project delay.
Different types of constructions are:
- Lump sum or Fixed Price contract – a single fixed price for overall activities in the project scope;
- Cost Plus contract – it includes direct and indirect costs plus specific fee, this fee could be a fixed fee or percentage of costs;
- Unit price contract – it is based on the price of each item’s unit, the contractor is paid as per the rates of items specified in the bill of quantity; and
- Target cost contract – it has common features of the lump sum and cost plus contracts.
Please contact us if you require assistance with a construction contract.