Construction Contracts Examples: Understanding the Basics

Construction contracts are legal agreements between contractors and their clients, outlining the scope of work, payment schedules, timelines, and other important details. These types of contracts are crucial for any construction project, as they protect both parties and ensure that the project is completed smoothly and on time. In this article, we will explore some common types of construction contracts and their key features.

1. Fixed-Price Contract

Also known as a lump-sum contract, this type of agreement sets a fixed price for the entire project. The contractor is responsible for completing the project within the agreed-upon budget, regardless of any unforeseen circumstances or additional work required. Fixed-price contracts are commonly used for smaller projects where the scope of work is well-defined, and the risks are relatively low.

2. Cost-Plus Contract

This type of contract sets a fixed fee for the contractor`s work, but allows for additional costs to be added on top of the fee. The added costs can include materials, labor, and any other expenses necessary for completing the project. Cost-plus contracts are generally used for more complex projects, where there are likely to be more unknowns and uncertainties.

3. Time and Materials Contract

This type of agreement is similar to the cost-plus contract, but it focuses on the time and materials used to complete the project. The client pays the contractor for the materials used and the time spent on the project, plus a percentage fee for the contractor`s services. Time and materials contracts are often used for smaller, simpler projects.

4. Unit-Price Contract

This type of contract is used for projects where the scope of work is difficult to define or where there is a high level of uncertainty. The contract sets a fixed price per unit of work, such as per cubic yard of concrete or per linear foot of piping. This allows for greater flexibility in the project`s scope, as the client can adjust the amount of work required without renegotiating the entire contract.


Construction contracts are essential for any construction project, large or small. They provide both parties with a clear understanding of the work to be done, the timeline for completion, and the costs involved. Understanding the different types of contracts available can help clients and contractors choose the right one for their specific project needs. If you are planning a construction project, it is essential to consult with an experienced attorney to ensure that your contract protects your interests and meets your specific project requirements.