This form is a Construction Contract. The form contains the following subjects: scope of work, work site, and insurance. The contractor's warranty is limited to defects in workmanship within the scope of the work performed by the contractor.
What is a Construction contract agreement?
If you’re planning to build, renovate or reconstruct your house, you will need to enter into a contract for home construction with the building contractor, defining your mutual rights and responsibilities. This agreement contains project specifics, the contractor’s license and insurance details, the requested scope of work, etc. It may also determine the potential lien on the property should the work not be paid in full.
Types of construction contracts
Depending on the payment arrangements determined by parties, there are four basic types of home builders’ contracts:
1. Fixed price (or lump-sum) agreements set the price for the completed job right from the start. Although fixed, the document may also include provisions defining penalties (for example, if the constructor fails to finish the work on schedule).
2. Cost plus construction agreements set the price for the finished work based on building materials and labor with additionally mentioned “plus” (a percentage of the total costs or a fixed fee).
3. Time and material agreements set the price for the work without a “plus,” but the client pays the contractor a daily or hourly rate while they are under contract.
4. Unit-price agreements are standard in bidding, particularly for federal building projects. Both owner and contractor define the price that the contractor charges for a standard unit without any specific extra fees for other units.
The first two types of contract for home construction mentioned are the most popular ones. Let’s take a closer look at them.
Fixed price vs. cost-plus contract benefits
The fixed price agreement benefits owners more than builders, as it determines at the moment the parties seal the deal the exact price the contractor will get after they complete all the work. Builders risk not getting the estimated profits they initially anticipated, as expenses may increase significantly but remain the constructor’s responsibility.
The cost-plus construction deal contains the evaluation of the final project cost; however, it doesn’t determine the final contract price until the contractor completes all the work. Unlike the fixed-price agreement, it separates expenses and sets the profit rate (as a percentage of the final project cost or as a flat amount), so contractors prefer this type of agreement; it is riskier for homeowners.
Information you should provide in the construction contract agreement
The presented Construction Contract for Home is a universal multi-state construction contract template. This sample describes typical terms for a home building contract. Download a printable document version from our website or amend and fill it out online. Make sure to provide the following information:
• Name and contact details of the contractor and their license number;
• Name and contact details of the homeowner;
• Property legal description from county clerk’s records;
• Project description with blueprints and building specifications;
• Scope, description of work, and its estimated final dates;
• Costs of work and responsibilities of parties for any breach of contract.
Phoenix Arizona Construction Contract for Home — Fixed Fee or Cost Plus is a legal agreement between a homeowner and a contractor that outlines the terms and conditions for a construction project in Phoenix, Arizona. This contract is used to ensure that both parties understand their responsibilities, the scope of work, project timelines, and payment terms. Fixed Fee Contract: In a fixed fee construction contract, the contractor agrees to complete the project for a fixed and agreed-upon price. This type of contract is commonly used for smaller construction projects with a well-defined scope of work. The homeowner has a clear understanding of the total cost of the project upfront, which helps with budgeting and financial planning. Cost Plus Contract: A cost plus construction contract, on the other hand, requires the homeowner to pay for the actual cost of materials, labor, equipment, and other project-related expenses, along with a predetermined percentage fee for the contractor's services. This type of contract is commonly used for larger and more complex construction projects where the scope of work is not well-defined at the beginning. The actual cost can be subject to various factors, such as changes in design, unforeseen site conditions, or material price fluctuations. Both types of contracts have their advantages and considerations. A fixed fee contract provides cost certainty upfront, while a cost plus contract allows for more flexibility and accommodates changes during the project's construction phase. In a Phoenix Arizona Construction Contract for Home — Fixed Fee or Cost Plus, some key elements that should be included are: 1. Project Overview: A detailed description of the project, including the scope of work, materials to be used, construction timelines, and any unique project requirements. 2. Payment Terms: The payment schedule, including the initial deposit, milestone payments, and final payment. For a fixed fee contract, the payment terms will be based on the agreed-upon total project price. In a cost plus contract, payment terms should outline how the actual costs will be calculated and when invoices will be submitted. 3. Change Orders: Procedures for handling changes to the scope of work. This includes a clear description of how changes will be documented, approved, and how they will affect the overall project cost and timeline. 4. Insurance and Liability: The contractor's insurance requirements, including liability insurance, worker's compensation, and general liability coverage. This ensures that the contractor is responsible for any damages or accidents that may occur during the construction project. 5. Termination Clause: Specifies both the homeowner's and the contractor's rights to terminate the contract, along with any applicable penalties or fees. By entering into a Phoenix Arizona Construction Contract for Home — Fixed Fee or Cost Plus, homeowners and contractors can establish a clear understanding of the construction project, protecting both parties' rights and ensuring a successful and transparent collaboration.Phoenix Arizona Construction Contract for Home — Fixed Fee or Cost Plus is a legal agreement between a homeowner and a contractor that outlines the terms and conditions for a construction project in Phoenix, Arizona. This contract is used to ensure that both parties understand their responsibilities, the scope of work, project timelines, and payment terms. Fixed Fee Contract: In a fixed fee construction contract, the contractor agrees to complete the project for a fixed and agreed-upon price. This type of contract is commonly used for smaller construction projects with a well-defined scope of work. The homeowner has a clear understanding of the total cost of the project upfront, which helps with budgeting and financial planning. Cost Plus Contract: A cost plus construction contract, on the other hand, requires the homeowner to pay for the actual cost of materials, labor, equipment, and other project-related expenses, along with a predetermined percentage fee for the contractor's services. This type of contract is commonly used for larger and more complex construction projects where the scope of work is not well-defined at the beginning. The actual cost can be subject to various factors, such as changes in design, unforeseen site conditions, or material price fluctuations. Both types of contracts have their advantages and considerations. A fixed fee contract provides cost certainty upfront, while a cost plus contract allows for more flexibility and accommodates changes during the project's construction phase. In a Phoenix Arizona Construction Contract for Home — Fixed Fee or Cost Plus, some key elements that should be included are: 1. Project Overview: A detailed description of the project, including the scope of work, materials to be used, construction timelines, and any unique project requirements. 2. Payment Terms: The payment schedule, including the initial deposit, milestone payments, and final payment. For a fixed fee contract, the payment terms will be based on the agreed-upon total project price. In a cost plus contract, payment terms should outline how the actual costs will be calculated and when invoices will be submitted. 3. Change Orders: Procedures for handling changes to the scope of work. This includes a clear description of how changes will be documented, approved, and how they will affect the overall project cost and timeline. 4. Insurance and Liability: The contractor's insurance requirements, including liability insurance, worker's compensation, and general liability coverage. This ensures that the contractor is responsible for any damages or accidents that may occur during the construction project. 5. Termination Clause: Specifies both the homeowner's and the contractor's rights to terminate the contract, along with any applicable penalties or fees. By entering into a Phoenix Arizona Construction Contract for Home — Fixed Fee or Cost Plus, homeowners and contractors can establish a clear understanding of the construction project, protecting both parties' rights and ensuring a successful and transparent collaboration.
