Types of Construction Contracts
Q. Is the contract outlined below a cost plus percentage of cost contract, even if the modifications show a target cost, base fee and maximum available award fee? Cost plus award fee contract. 8 percent base. 7 percent award fee. Contract ceiling $508 million. Contract grows due to scope changes over a six-month period to almost $1 billion.
The contractor will quote against each BOQ item and enter a unit rate or unit price to build up the total contract price on basis of those BOQ quantities. During the construction period, the actual quantity of works executed under each BOQ item will be jointly measured and valued at the quoted rate for interim payment purpose.
A lump-sum contract is a great contract agreement to be used if the requested work is well-defined and construction drawings are completed. The lump-sum agreement will reduce owner risk, and the contractor has greater control over profit expectations.
A lump-sum contract is the most recognized agreement form on simple and small projects and projects with a well-defined scope or construction projects where the risk of different site conditions is minimal.
Contract Document List – A list of all contract documents that form part of the contract agreement. Drawings, exhibits, specs and supplemental conditions can be part of this list. Construction Scope - Description of all construction activities including some descriptions of things that will form part of the project.