Every new construction demands a proper construction contracts between client and contractor. The contract must describe what and when should be deliver to the costumer at what price.
There are different types of contracts depending on the type of project, cost, duration and parties involved. We are discussing the types of contract especially used for construction of building and their features.
1. Labor Construction Contracts
It is the traditional type of contracts and widely used one till date. In this contract, design is done before approaching the contractor. Contracts are only for the construction labor. Contract may be based on lump-sum, unit rate for each item or unit area of building.
All materials used should be provided by the client in this type of contracts. In this type of contract there is flexibility for client to select or change the quality of material during construction. Contractor should be selected carefully according to the type of work, material used and construction methodology.
In this type of contract client is solely responsible for the quality of material and contractor is responsible only for workmanship.
2. Lump-Sum Construction Contracts
In this contract client and contractor are agreed on a fixed amount for the end product. The amount is assessed based on the design, material used, construction methodology and construction period.
This is being popular because of the simple agreement and easier payment procedure and also it does not required detailed estimate.
In this type of contract contractor is responsible for both the quality of material and workmanship.
3. Unit Rate Contracts
In unit rate contract the contract is made for per unit price of each individual items used in the construction.
Per unit price of each item includes material, labor, equipment, overhead and profit. Client should pay the contractor based on the units at agreed rates.
It requires detailed estimates before contract agreement and detailed measurement of each item completed for payment to the contractor.
In this method cost of the actual work accomplished can be assessed very accurately. This is tedious and laborious hence it is not much in use in small scale private sector construction.
4. Design-Build Contract
In this type of contract designer and builder are same. It reduces the two separate contracts into one so it shorten the process and saves time for client. And also eliminates the conflicts between designer and contractor.
Whereas, it makes contractor more responsible toward the design but in some cases the cost might increase because the engineer and contractor works as a unit.