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Construction Contract

What is Construction Contract? Types of Construction Contracts

What is Construction Contract?

A construction contract is a mutual agreement between two parties for a specific construction project, such as constructing a building, road, dam, laying canals, etc. Civil engineering is involved in this. Owners are referred to as clients or employers. The owner is free to select the sort of contract he requires. The contract is a safety measure for both parties since it specifies the price, the completion date, and the procedure to be followed in the event of a disagreement.

Types of Construction Contracts

Contracts for buildings come in a variety of forms. Each project has decided on its needs and other project-related factors. Projects set their own budget, quality, and deadline. Before signing any contract, you should be aware of the kinds you need, which are listed below.

Lump Sum Contracts 

The risk is bigger with this form of contract since only the contractor is responsible for it. For completing the whole construction activity, the contractor submits a fixed price offer. The contractor is rewarded for completing projects earlier while also being penalized for completing them late. The owner is required to pay the whole sum without deductions.

Commercial Contract 

This contract covers all the tasks that need to be completed when a non-residential or commercial structure is being built. When this contract is drafted with a global perspective, both parties are helped and protected, and the contractor’s prospects of making a profit are also increased.

Domestic Construction Contracts

It is a form of contract that covers every aspect of building a building, whether it be commercial or residential, inside a nation.

Cost-Plus Contract

The customer agrees to cover any costs incurred during project construction under the terms of the cost-plus contract. It is often expressed as a % of the entire cost of the project and includes all costs, including direct, indirect, and overhead fees as well as any additional money received as profit. To reduce the risks, this kind of contract is employed. However, in this case, only some risks are covered.

Time and Material Contract

Small projects with unpredictable project duration and cost are best suited for this form of contract. It prevents owners from paying contractors excessively. The contractor in this occupation charges by the hour and the number of materials required. The owner should be prepared to provide a reward for finishing the project on time or under budget.

Importance of Construction Contract

A contract is essential for the smooth implementation of projects since construction involves significant financial commitments for all parties. Due to the financial risks, construction delays, and safety hazards it entails, it allows both parties to err on the side of caution. A contract will be in place after building on the project has begun and the builders have begun their work. In the sphere of building, a non-written contract is insufficient, thus having one is quite vital. Particularly when problems emerge, people alter their minds about the conditions and commitments they signed, which results in legal action and can occasionally result in damages.

Documents Required for Construction Contract

·        The Construction Agreement

·        General Conditions

·        Special Conditions

·        Scope of Work

·        Drawings

·        Specifications

·        Bill of Quantities

·        Construction Schedule

·        Schedule of Values

Benefits of Construction Contract

Construction contract saves the time of the owner because he does not have to worry about the presence of the physical location.

Construction Contract gives security about the quality and quantity of the work. 

It helps the owner to relax and keep track of how much work has been done 

It also helps to make payments on work bases and monthly bases 

It helps in calculating the payment of contractors according to work done.

It allows the owner to see the project physically and measure its value.

If any changes are required, they can be done.

Every small thing is mentioned in the contract.


We can say construction contract are in favor of both the parties because it takes cares of everything like choosing the quality and quantity of works and building materials. If you wanna buy good quality construction  material we are here for serve you. Your online shopping store.

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