Types of Contracts:
Lump Sum / Fixed Price :
This is the most common type of construction contract in the industry, Where by the general contractor completes building a project for a fixed cost. This fixed cost can either be negotiated or obtained through a bidding process.
Construction or Project Management :
Construction or Project Management involves the overall planning, coordination and control of a project from inception to completion aimed at meeting a client’s requirements in order to produce a functionally and financially viable project that will be completed on time and within budget. In this case the General Contractor is acting on behalf of the owner as his/her agent. The biggest advantage of this approach is having the GC offer valuable input into the budget, construct-ability, and schedule, during the design phase.
Design / Build :
This is a method of project delivery in which the design and construction services are contracted by a single entity known as the design-builder or design-build contractor. The design-build procurement route changes the traditional sequence of work by having a single-point of responsibility in an attempt to reduce risks and overall costs to the owner.
Cost Plus :
This method of contract is agreed upon by the owner and general contractor where the owner agrees to pay a fixed profit percentage to all project costs and the owner benefits from the contractors efforts to reduce costs.
Guaranteed Maximum Price :
This method is similar to the Cost
Plus approach but the contractor guarantees a maximum cost to the owner up front, so this minimizes the owners risk. Savings from the quoted price are typically shared.