Introduction Types Of Contracts In Construction Management

Types of contracts in construction management do you have any plans to build a house on your lot? Alternatively, you might be expanding your home by adding a new room. The procedure for working with contractors might be difficult. You might have to put up with schedule delays and cost overruns. An agreement can be enter into to address these issues.

Construction projects can be challenging, necessitating the participation of contractors, subcontractors, and other parties to carry out particular tasks. Managing a project when several parties are involve can be difficult. To make construction management easier in this situation, a contract can aid in defining the parties’ obligations and tasks.

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Importance Of Contract Forms In Construction Management

To safeguard the parties involve in the construction process, various forms of contracts are require in construction management. Depending on the type of contract, it will contain the construction process’s requirements, such as the project’s specifications, deadlines, expenses, deliverables, and dispute resolution procedures. To lower the risks, specify liabilities, and streamline construction management, the parties should write a contract.

Construction Management Contract Types

Below is a list of the various types of contracts use in construction management.

Unit Pricing Agreement

The owner and contractor agree on per-unit pricing for labour, supplies, materials, overheads, and other things in the contract. The owner avoids future price increases by paying the contractor a fixed amount per unit.

Lump Sum Agreement

In accordance with this contract, an estimate cost for the entire project is establish, and the owner is responsible for making the entire payment, in full or in part.

Schedule &  Lump Sum Contract

The lump-sum contract mention in this agreement also includes a Schedule of Rates, which aids in figuring out how much more the contractor will have to pay for further work that is complete.

Cost-Plus Agreement

According to this contract, the owner awards the contractor with a fixed sum of money or a predetermined proportion of the total cost. The cost of construction is in addition to such a rate or fixed sum.

Contract With A Guaranteed Maximum Price

In this agreement, the maximum price that an owner must pay is capped. The contractor, not the owner, is responsible for any additional costs.

Negotiated Agreement

In accordance with this agreement, contractors are invited to submit bids while negotiating the method of payment, deliverables, costs, and work scope. The right to select the winning bidder after discussions belongs to the owner.

Turn-Key Agreement

According to this contract, the contractor is in charge of delivering finished goods at a predetermined time and cost. The contractor is in charge of both the design and the construction.

Important Components Of Various Contracts

Certain essential components, such as the following, must be include in a construction management contract:

• The construction project’s work scope
• The project’s cost
• The project’s timeline, timetable, and deadlines
• The change order process
• Techniques for resolving disputes

Resolution Of Disagreements In Construction Management

To prevent disputes between the participants in the construction process, a construction management contract is create. However, even though a contract is legally binding, parties may still break certain clauses.

The parties may use dispute resolution procedures such as arbitration, mediation, conciliation, and litigation if there is a breach. Therefore, a settlement plan should be agree upon by the parties and written into the contract.

Construction projects frequently require significant costs and have lengthy timeframes. Therefore, as was said before, several forms of contracts can be create to manage such projects more effectively. To learn which kind of contract is best for your building project, it is advise that you speak with a lawyer.

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