Construction Loan Article Center

Friday, December 01, 2006

13. As far as "fixed price" contracts go; if I contract for the work to be done, doesn't it automatically mean everything will be covered?

The answer is no. There are other types of contracts as well such as "cost plus" contracts. With these kinds of contracts you are guaranteed the price only for the contractor's supervision of the job (may exclude a portion of the costs for materials and labor). No matter what, you need to make sure you are clear about what is and is not covered. For example, other contractors may cover both labor and materials unlike cost plus contracts, yet permit the contractor to charge a higher price if there are material shortages or cost increases.

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