Business owners and facility managers want to focus on what they do best: running their business and supporting their employees. That is why starting a building expansion or construction project can be a daunting task.
While we highly recommend bringing a contractor on board during the conceptual stage to review the feasibility, constructability, costing, and scheduling components, here are five types of contracts available:
- Design – Build Contract
This is one of the most efficient ways of hiring a contractor. In this option, the general contractor and designer are hired as a team or a single entity. This means that most things are streamlined as there is one contract, one point of communication, and one point of responsibility. Under this type of contract, the length of project and/or budget can significantly decrease. - Design – Bid – Build Contract
This is the more traditional contract type within the commercial industry. In this option, designers and contractors are hired separately. Designers are hired to give complete design documentation, then the project goes out to contractors to bid. In this scenario, the owner carries the risk of any gaps in the design documentation. - Construction Management Agency
Like, Design – Bid – Build, under this contract type the designer and contractor are hired separately. However, in this case, the contractor is much more involved in the design phase of the project. In addition to contracts with the designer and the contractor, owners also have the responsibility of contracts with the subcontractors. This is used primarily in the K-12 school market. - Construction Manager At-Risk Contract
Under this type of contract, the contractor is hired with a guaranteed maximum project price. If that price is exceeded, the responsibility to cover any additional costs lies with the contractor instead of the owner. Because of that, the pre-construction process is heavily relied on to ensure accurate scheduling and budgeting. - Integrated Product Delivery Contract
The final contract type is one where the owner, designer, and contractor are equally responsible under one joint contract. Everyone wins or loses together. Risk is shared among all parties. This delivery method is all about streamlining the design process to remove excess drawing and time therefore reducing the time to bring a project to construction and delivering in an accelerated manner.
While there are multiple ways to bring on a contractor, knowing your project and what you want out of the contractor you are hiring is essential. When starting a project be sure to keep in mind things like: the amount of trust you have in your contractor, length of time in which you need it completed, what priorities you have in a new space, and how much time you would like to put into each phase of the project. All of these things will help you decide which type of contract is best for you!