How many basic forms of construction phase contracts exist?

There are two basic forms of construction phase contracts. These typically refer to Fixed-Price Contracts and Cost-Plus Contracts.

Fixed-Price Contracts provide a set price for the project, which means that the contractor must complete the work for that price, regardless of the actual costs incurred. This type of contract is advantageous for owners as it offers a high level of budget certainty.

Cost-Plus Contracts, on the other hand, allow for reimbursement of actual costs incurred by the contractor, plus a fee or percentage for overhead and profit. This can benefit contractors, especially in projects where costs are uncertain or where the project scope is likely to change.

Understanding these two forms of contracts is crucial for construction managers in training, as they dictate the level of risk sharing between the owner and the contractor, influence project financing, and affect overall project management strategies.