In construction projects in Idaho, contractors and property owners often have to agree on several issues beforehand, such as construction schedules, deadlines and the price of the project. That’s where construction contracts come in. There are different types of construction contracts, and each one has a situation in which it is most appropriate.
Unit price contract
This type of construction contract is most appropriate when the construction project is of a relatively small scope or when the construction schedule is uncertain. With a unit price contract, the contractor and property owner agree on a set price for each unit of work completed. This type of construction contract gives the contractor more flexibility as they can complete the work at their own pace.
Cost-plus contract
A cost-plus contract is most appropriate when the construction project is of a large scope and the construction schedule is certain. With a cost-plus contract, the property owner agrees to pay the contractor for the cost of materials plus a fixed fee for their services. This type of construction contract protects the property owner from any cost overruns as they only have to pay the agreed-upon price.
Lump-sum contract
A lump-sum contract is also most appropriate when the construction project is of a large scope. With a lump sum contract, the contractor and property owner agree on a set price for the entire project. After that, it is up to the contractor to complete the construction project within the agreed-upon time frame. This type of construction contract gives the property owner more certainty as they know exactly how much they will be paying for the construction project.
Time and materials contract
This type of construction contract is most appropriate when the construction project is of a medium scope. With a time and material contract, the contractor agrees to do the construction project for a set price plus an hourly fee. This type of construction contract gives the property owner more flexibility as they can adjust the amount of work that they need to do without violating construction law provisions.
No matter which type of construction contract you choose, it is important to make sure that all the terms are clearly defined and that everyone understands their responsibilities. A construction contract is a legally binding document, so it is important to get everything in writing.
