Construction and remodeling contracts are legally binding agreements for both the owner and the builder/remodeler about the specific amount of compensation for a certain job. No two projects are the same, which is why a few types of contracts are available to satisfy the requirements of all involved parties.
Understanding which one is the best fit for a specific project allows homeowners, contractors/builders and suppliers to mitigate risks and ensure the smooth flow of the work and payment. Today, local custom home builder Sadler Building Corporation discusses some of the most common contracts used in the building industry.
Also known as a fixed-price contract, it outlines a fixed price for all related construction-related activities. It is preferred in most construction projects whenever a well-defined scope of work and schedule have been reviewed and agreed upon. On the part of the builder or contractor, this contract involves a fair amount of risks because it doesn’t account for unexpected costs or delays once the project is underway.
Time and Materials Contracts
This type of contract is the exact opposite of the lump sum contract in that it is preferred when the construction or remodeling project doesn’t have a well-defined scope. Here, the builder/remodeler and the owner must agree on an hourly or daily rate, which may include added expenses arising from the construction process. This contract also reimburses the contractor for the cost of the materials.
Also known as a cost-reimbursement contract, it involves the payment of the actual costs, purchases, or other expenses created directly from the construction or remodeling project. It contains specific information on direct costs such as labor and materials, indirect costs like travel and communication expenses, and profit, which is the agreed-upon fee or markup.
As the leading semi-custom home builder in the area, Sadler Building Corporation upholds the value of transparency. We are more than happy to answer all your questions you might have about your construction or remodeling contract. We also make sure to put everything in writing for your peace of mind. Give us a call at (757) 977-1041 or fill out our contact form to get started. We serve Virginia homeowners including those living in Suffolk, VA, and surrounding communities.