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Common Forms of Construction Contracts

COMMON FORMS OF CONSTRUCTION CONTRACTS

 

·      Design and Build, also known as a Turn Key Contract:.

 

In a design and build contract, the owner contracts with a single party that both designs and builds the project.  Blumer Construction, Inc. works with a dedicated, professional group of architects, engineers, designers and subcontractors that provide the best quality of work at the lowest possible cost to provide the client the greatest project for the funds expended. This style of contract can also include assistance with site selection and purchase.

 

·      Lump- Sum, Fixed Price, Stipulated Sum Contracts:

 

This style of contract promised to build X project for Y dollars.

This type of contract requires a fully developed set of plans and specifications, prepared by the owner’s design team, setting forth directions in enough detail to enable Blumer Construction, Inc. to carry them out.  This is the most commonly used construction contract method.

The fees for overhead recovery, supervision, General Liability Insurance, and profit are built-in this type of construction contract, as percentage markups on the total project cost.

 

·      Fixed Fee Contracts:

 

These contracts are similar to Lump-Sum Contracts,  the fees for overhead recovery, supervision, General Liability Insurance and profit are determined as a lump-sum, prior to distribution of plans and specifications to subcontractors for bids.  Blumer Construction, Inc. seldom utilizes this form of contract, due to uncertainty of final construction costs and risk involved in this type of contract.

 

·      Cost – Plus Contracts:

 

Under this arrangement, Blumer Construction, Inc. is reimbursed for the actual cost of labor and materials, plus a fee (typically an agreed upon percentage of the total costs) for overhead recovery, supervision, General Liability Insurance and profit. In order to insure the initial budget is not broken, another form of this contract would be a Cost-Plus Contract with Guaranteed Maximum Price.

 

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