The world of construction is terrible, for the most part.
Why? It’s filled with slimy contractors, slimy owners, slimy suppliers and umm, lots of other slimy stuff. Ever read the wall of a jobsite port-o-potty? ‘Nuff said…
That’s why construction contracts are imperative for both the project Owner and the Contractor.
Undertaking a remodel without a proper contract is like trying to slide across a dry slip-n-slide. It’s like break-dancing with no cardboard under you and coming up from a wicked helicopter spin with grass stains on your head. It’s like being attacked by a herd of feral cats genetically engineered to lick their prey to death.
Need I say more? You get the point…
The Main Types of Construction Contracts
Construction contracts fall into three main categories:
- Lump Sum / Stipulated Sum – Both Owner and Contractor live or die by one single price for the whole project. Over budget? Contractor looses. Under budget? Owner looses. Classic lose-lose contract, although used most often.
- Time & Materials (aka T&M) – Owner and Contractor agree to a labor rate and a materials/subcontractor mark-up, then the fun begins. Contractor has a blank check, so to speak.
- Cost Plus a Fee (aka Cost Plus) – Owner agrees to pay Contractor an established fee on all costs. Owner and Contractor work together to control said costs.
What’s In Store for This Series
In the next few weeks, we will investigate the following topics related to construction contracts:
- Construction Contract Myths
- The Lump Sum Contract: Be Ready for Battle
- Construction Contracts: Time & Materials or You Better be Family
- Cost Plus a Fee: The best of Both Worlds
- How Do I Create A Construction Contract?
By the end of the series, you’ll be able to determine which contract is right for your remodel.
And don’t worry, the series is not too long or academic. I just have a short attention span and can’t write too much at once…
PS: Before getting too far into this series, download my free e-book Remodel with Confidence. It’ll act as a good foundation for this material. And I also make fun of a lot of things in it.
Image credit: http://www.flickr.com/photos/lumaxart/
