Types Of Construction Contracts


Construction contracts are basically agreements drawn between two parties defining the line of work that is to be done. The way the job has to be performed, executed, and also the compensation that comes after the work is done is clearly outlined within this agreement. There is no one discussion that goes into drawing up this type of agreement, but it is after several negotiations that the agreement is made, with relation to only a particular construction of an asset. Given below are different types of construction categories.

Unit price

When a project is started there is certain amount of anticipation with regards to the quantities of items that may require. The unit price contract is then based on these said items, and is also taken into account each of the items unit prices. Thus, the quantity of items used to carry out the project directly determines the final monetary quotient which has to be paid. Comparatively, these type of unit price contracts mostly suit projects which have the possibility of identifying different types for items.

Lump sum

This type of contract is only drawn up when a contractor agrees to finish off a project for a fixed pre-agreed price. Therefore, items from building materials trading companies and payments to labourers must be done within this stipulated budget. These type of projects are only suited towards people who have a clear idea of what they want, how they want it done, and within what type of time period, thus allowing the contractor to have clear idea making way to having a good accurate estimation.

Cost plus

This agreement is drawn up when there is a large amount of uncertainty about the project, where the buyer gives approval to pay for all the costs which incur with regard to laborers costs, material costs and also overheads. Given the scenario, all needs are fulfilled as and when they arise, for instance items from Building materials suppliers Dubai are brought in when required, with the inclusion of skilled labor as well.


These type of agreements are drawn up when compensation is going to be given only when the project has been completed by a given date, within a certain budget, or even with a fair amount of quality in place. Since everything is based on performance, not achieving targets may result in a cut from the pay.

Before you draw up any type of agreement look into what your requirement is, given what you need draw up a feasible contract that will benefit both parties as a whole.