Video dealswith all types of contracts in construction

Construction contracts in a strict sense are those contracts that are to do with building of structures, laying of roads, constructing dams, digging canals, making bunds, etc., which are predominantly civil engineering activity. In usage though it has become a norm to call any large contract that involves aspects of civil engineering as a construction contract. There are many articles on ‘Types of Construction Contracts’ listing and explaining them. It is not the intention of this article to add one more to the galore, rather it is to seek the reason for so much variety and show how and why these construction contracts have become a fertile ground for unusual and weird legal disputes, not to mention regular ones.


Note: The size of construction contracts focused on in this article are large ones, and in that sense sometimes the word Project(s) is used to refer to the contract(s) as well as the work they represent.


Cost (Plus) Contracts
Lump Sum Contracts (Also known as Fixed Price Contracts)
Piecework Contracts
Unit Pricing Contracts
GMP Contracts (Guaranteed Minimum Price Contract)
Rate Contracts
Target Contracts
Materials and Labor supply Contracts
Time and Materials Contracts
Again, in Cost Contracts there are:


Cost Plus Contracts
Cost Plus Percentage Contracts
Cost Plus Fixed Fee Contracts
Cost Plus fluctuating Fee Contracts
Similarly, under the Rate Contracts there are:


Item Rate Contracts
Percentage Rate Contracts
The list goes on. In the last couple of decades three other types of contracts have become popular,


Operate, Maintain and Transfer (OMT) Contracts (popular in roadworks);


Build Operate Transfer (BOT) Contracts; and


Build Own Operate Transfer (BOOT) Contracts.


Contract types explained
As stated under the scope the intention of this article is not to dwell into the details of construction contracts. One can easily access sufficient information from Google by searching by name each of the named contracts listed under heading-2 above. Those interested in a quick overall view of some of these contracts may refer to types of Construction Contracts.


Why so many types
Civil engineering deals with natural elements of earth like water, sun, rain, etc., to protect living beings by keeping them out if not containing, by regulating if not controlling and by shielding from if not conquering these elements. Added civil engineering together with other technologies is employed to satisfy the ever-changing needs and wants of humanity for its comfort and pleasure. The complex and imponderable nature of these elements makes it difficult to standardize engineering designs and firm-up cost estimates.


A glance at the names of these contracts shows the emphasis is on method of payment to or recovery by the contractor. A construction contract is normally a huge commercial activity with a profit motive. These contracts run into months and years, and one inadequately worded or missed clause, one unforeseen, misjudged, or miscalculated factor can mire contracting parties in seemingly interminable litigation and loss.




Faced with such huge risks and given a contract is a legally binding agreement enforceable under law, the parties to both sides of the contract choose to safeguard their interests by legally harnessing by all possible means and methods, adding to the variety of contracts. One remedial safeguard introduced leaves in its wake the potential for another kind of vulnerability. The net outcome seems to be web complexities and complications leading to litigation.

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Please watch: "(552) Some Terms In Construction Industry "
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