Contracting is often the term used when working in construction. At Kilgore Companies, we have many contractors that we have relationships with for construction projects. When working in jobs in construction, you’ll have to fulfill the duties of a construction project to ensure that it’s to the contractor’s liking.
What is contracting?
Contracting is essentially a legal agreement between the owner and the builder on how the construction project should be and the project’s budget. There are five main types of contracting in construction, and they are:
Lump-sum contracts
These contracts are often referred to as fixed-price contracts because it’s basic and usually readily agreed on. There are lump sum payments as more work gets done as well.
Time & Material Contracts
This contract has the customer reimbursing the contractor for materials plus hourly wages so that nothing is lost. While this is a popular option, especially with jobs in construction, it can be time-consuming, making it not worth it.
Cost Plus Contracts
This contract has the owner paying the contractor for the costs incurred during the projects. There is often extra money set aside to offset any expenses incurred. The downside to this contract is justifying the cost of certain things like administrative duties or vehicle mileage, as owners can be hesitant to reimburse that.
Unit Price Contract
This contract divides the work required for a project and determines the price per unit instead of the entire agreement. It may work for some contractors, but it’s an option if the work is repetitive and heavily dependent on material costs.
As you see from the five types of contracting, it’s important to know which ones are best suited to your construction project. You can learn more about these contracts when you apply for jobs in construction at Kilgore Companies.