Contract Type

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contract type

Contract Types

Construction contracts are standard form of documents that are related to different services. A clear and simple agreement is signed between the client and the service provider. Commercial building projects are very much benefited by it.

There are so many types of contracts that exist in the construction business but A2G construction recommends some of them which is totally based on our working experience which further proves to be very beneficial for emerging businesses who have the capacity to adapt new things constantly but have limited resources.

Below mentioned types of contracts that ensure the best quality performance by controlling the process in a systematic way hence reducing the associated risk.

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Cost Plus

In a Cost plus contract the construction organization is paid by the client for the manufacturing related expenses which includes material,labour etc that are mentioned along with the calculated profit amount. The paid or the spent amount lies within a specific criteria to protect against cost overruns.It is prefered when the work is uncertain.It completely nullifies the risk of loss that arises from price change.

Lump Sum

It is considered to be the traditional and most common type of construction contract.Its main work is to reduce the price of construction when activities related with the project are well defined.A total amount is paid by the contractor instead of bidding on individual items which is a time consuming process.It is very much preferred for those projects that are well defined and systematic with low risk associated.

Guaranteed Maximum Price

In a GMP an agreement is signed with the contractor in which it is clearly mentioned and agree upon that the overall price of the contract would not exceed more than the laid out figures. It tends the contractor to carry out the construction work in a smart way to ensure some control on the cost without compromising the safety of the project. In case of higher amount of money spent than the GMP than it is beard by the contractor and vice versa. In short we can say that the shift of responsibilities is more towards the contractor in every aspect.