There are plenty of frustrating things to deal with throughout a construction project. Having to get a degree in order to understand construction contracts should not be a part of the list. An honest contractor will suggest the type of contract best suited to the type of project, and the one most fair to all parties.
The type of contract offered by a General Contractor will generally be like one of the following. Rarely should other types of contracts be considered for the scope of work required for a small to medium-sized assembly project:
The Contractor agrees to build a project with a specific scope for a fixed price. The price is determined by estimating labor costs, material costs, and adding overhead and profit. The Contractor assumes all of the risk in a Lump Sum contract, so he may ask for a higher markup to cover unforeseen costs; however, he has greater control over profit.
This type of contract is favored where the scope of work is indeterminate or highly uncertain, and the kinds of labor, material, and equipment needed are uncertain. It is also appropriate if the budget is restricted or when it is likely that the actual cost might be reduced.
Guaranteed Maximum Price
There are a number of issues that should be addressed in every construction contract. Some of these are Scope of Work, Allowances, Retainage, Insurance, Hidden Conditions, Change Orders, Warranties, Substantial and Final Completion.
We can provide the necessary information to formulate appropriate questions for contractors, or speak with them on your behalf.
Remember, if you don’t understand it, don’t sign it! Call us before you begin planning your project.
Let us be a part of your team from start to finish!