Construction Contracts Overview
Every construction project has unique challenges, and different types of contracts lend themselves to various situations. Understanding the risks and benefits of each contract type can help you make the best choice for your project.
Ultimately, selecting the right contracts for your projects is an important part of construction financial management.
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Cost-Plus Contracts
A cost-plus contractreimburses contractors for construction costs — labor, materials, and equipment — along with a predetermined markup rate or fixed fee.
With cost-plus contracts, both direct and indirect costs are covered, and markup is typically calculated as a specific percentage of the total costs.
Direct costs are those specifically related t.
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Guaranteed Maximum Price (GMP) Contracts
A guaranteed maximum price (GMP) contractsets a maximum project cost for the property owner.
Any costs that exceed the maximum price are the responsibility of the general contractor, who will see their profit margin cut as a result.
With a GMP contract, a general contractor uses a schedule of values to estimate the total project cost.
In addition t.
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Lump Sum Contracts
Lump sum contracts, also called fixed price contracts, establish a fixed price for all of the materials and labor required to complete a job.
This is the most basic and common type of construction contract.
Lump sum contracts work especially well for projects with a well-defined scope of work, which enables contractors to make an accurate estimate .
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Time and Materials Contracts
Time and materials contracts— also called T&M contracts — reimburse contractors for material costs and pay a fixed daily or hourly wage for labor costs.
This type of contract offers additional protection for contractors, who have greater assurance that their costs will be covered throughout the project.
Notably, material and labor costs have severa.
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Unit Price Contracts
Unit price contractsset a fixed price for a distinct, repeatable aspect of a project, which is defined as a “unit.” For example, a contractor building 10 miles of highway may sign a unit price contract, with each mile of highway representing a unit.
The same labor and materials will be used for each mile of road, so the contractor bills for each of.
1994 Republican legislative agenda
The Contract with America was a legislative agenda advocated for by the Republican Party during the 1994 congressional election campaign.
Written by Newt Gingrich and Dick Armey, and in part using text from former President Ronald Reagan's 1985 State of the Union Address, the Contract detailed the actions the Republicans promised to take if they became the majority party in the United States House of Representatives for the first time in 40 years.
Many of the Contract's policy ideas originated at The Heritage Foundation, a conservative think tank.
