What are common types of construction contracts?

Common types of construction contracts typically include fixed-price contracts, time-and-materials contracts, and cost-plus contracts. These are well-established and widely understood contract types that provide a framework for construction projects.

Fixed-price contracts set a predetermined price for the entire project, offering clarity and stability for both parties regarding financial expectations. This type of contract is beneficial in situations where the scope of work can be clearly defined upfront.

Time-and-materials contracts are based on the actual costs of labor and materials plus a markup for overhead and profit. This type of contract is useful when the scope of work is uncertain, allowing for flexibility and adjustments as the project progresses.

Cost-plus contracts reimburse the contractor for project expenses plus a fixed fee or a percentage of costs, making them suitable for projects where direct costs can fluctuate. This arrangement encourages contractors to efficiently manage expenses while still providing compensation for incurred costs.

The other options describe less formal types of agreements or variations that may lack the structure and clarity necessary for typical construction projects. These variations often lead to misunderstandings and disputes, which is why the more standardized forms of contracts are preferred in the construction industry.