What are the Different Types of Building Contracts? (www.AutoBuilders.net)

http://www.autobuilders.net If you're considering hiring a general contractor or you've already made your choice, you might be wondering what type of Construction Contract should you use? There are a few different contract forms that we use that you might want to consider using.
- The Consensus Documents by the Associated General Contractors of America. This is a fair set of documents that they produce for approval between the owner, the contractor, and the architect.
- Then there's the Contract Documents by the American Institute of Architects (AIA) which is another standard document that contractors, architects, and owners use.
Either of these documents are fair and recognized by the legal community.
-The most common document type we see is the Standard Stipulated Sum Contract. This is used in a bid format when several general contractors are bidding on a design, and the design documents call for a Stipulated Sum or a Guaranteed Price or agreed upon sum that the contractor agrees to. If the project is under the stipulated sum, the contractor keeps the savings, but if the project goes over the stipulated sum, the contractor looses out on that amount.
- Cost + a Fee is where you sit down with the owner, you show them all of your subcontractor's bids, and the owner pays the actual cost of construction plus a negotiated fee for your services. This way, you get the actual cost of the project, you see all of the invoices, and you know exactly what the cost is and you pay that plus the contractor's fee.
- Guaranteed Maximum Price Contract, which sometimes has a savings split. This means that the contractor guarantees that the price won't exceed a certain price point. BUT, if the total cost comes in under that maximum price, the owner and the contractor then get to negotiate the savings. Most of the times there is a 50-50 savings split, which is incentive for the contractor to buy the project out for less than the maximum price and save both parties money.
- Popular in Public work is Construction Management at Risk, which means that you negotiate your fee (or overhead + profit) up front with the owner, and they've already selected you for the project typically based on your qualifications. They get you involved early in the project when the construction documents are first being prepared by the engineers and the architects and the owners to do budgeting on a phased basis so that the owner knows what the project is going to cost early on. And then when you bid the project out you review the bids with the owner and then you lock the price in and guarantee to the owner that the price is not going to exceed a certain amount of money, and then you can also negotiate with the contractor a savings split if it comes in underneath the guaranteed maximum price.
These are options you might want to consider when you're talking to a contractor; look them over, see which one best suites you, and talk with your attorney.
Remember, at AutoBuilders, it's OUR business to build YOUR business.

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