A commercial construction contract is essentially a legal agreement between client and contractor.
A commercial construction contract is a necessity for any construction or remodeling project. Essentially, it outlines legal terms between a buyer or business owner and a construction company. This includes all information about the initial budget and costs, payment schedules and deadlines, what the job will entail, and any insurance information in the off chance that someone cannot uphold the contract. A well-written and cohesive contract is a must-have in order to protect both the buyer and the builder in a commercial construction project. But there are many different types of contracts that can be used. Here are five different types of legal contracts that are commonly used in commercial construction projects.
Unit Price Commercial Consrtuction Contract
A unit price contract is a more simplistic contract that measures the quantity of work over time using a line chart. The line usually indicates the overall financial cost of the project and how it will increase over time based on how much of the product or labor work the business owner desires. This is a perfect kind of commercial construction contract for small remodels that focus on something like square feet to use as a base for financial payment.
Lump-Sum Contracts
Lump-sum contracts are the oldest type of business contract: a buyer agrees to pay a finite amount of money for the completion of a job. These tried and true projects are perfect for construction projects that are firm and not going to be altered somewhere down the line.
Fixed-Price Commercial Construction Contracts
A fixed-price contract is similar to a lump sum contract since it is paid in one large interval. But the difference lies in the manner in which it’s paid. A fixed-price is a firm price that cannot be changed once the contract is completed. It’s usually a cheaper option for both sides of the contract. However, if something goes wrong during the construction process, such as weather delays, then one side is likely to be out of money, making it a rather risky endeavor. Fixed-price is a great option for projects that are low risk.
Time and Materials Contract
This is one of the more flexible categories of contracts in all commercial construction. A contract is made based on the estimated amount of cumulative time and materials the project is likely to use. This type of contract is perfect for long-term projects that may take a long time to complete or for business owners that are not 100% sure what they are looking for. This gives construction companies some freedom to make adjustments as needed as approved by the buyer.
Cost Plus Contract
A cost-plus contract is essentially a reverse time and materials contract. Essentially, the buyer provides a lump sum worth well more than needed, and the construction company over time pays the buyer back. This is a great idea for business owners that put their complete trust in a construction company to do a great job. The construction company must be able to report their records of reimbursement, so an organized company is a must.
Work With Encore Construction for Commercial Construction
As a premier commercial general contractor, Encore Construction is proud to provide interior and exterior services throughout Maryland and beyond. We have an impeccable track record, an impressive portfolio, and an experienced team that is ready to tackle your next big project. Our results speak for themselves, and we’re proud of the work we continue to produce for our clients.
Our office is in Annapolis, MD, and we are happy to serve Baltimore, Bowie, Columbia, Rockville, Washington DC, Tysons Corner VA, Northern VA, and surrounding areas. Follow us on Facebook, Twitter, and LinkedIn for news and updates! Do you want to discuss your project with a member of our team? Visit our website, and call us at (410) 573-5050. We look forward to hearing from you!