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.
Rhode Island Construction Contract for Home refers to a legal agreement between a homeowner and a construction contractor, defining the terms and conditions of a construction project for a residential property in the state of Rhode Island. This contract can be either a Fixed Fee or Cost Plus contract, with each having its own characteristics. A Fixed Fee construction contract, also known as a Lump Sum contract, entails a predetermined, fixed cost for the entire construction project. The contractor provides a comprehensive quote for the project, which includes all labor, materials, permits, and other expenses required to complete the construction. This type of contract is often preferred when the scope of the project is well-defined and the homeowner wants to have a clear understanding of the final cost upfront. It provides the benefit of cost certainty, as the price does not change unless there are agreed-upon change orders or modifications to the initial scope. On the other hand, a Cost Plus construction contract involves the homeowner paying the actual costs incurred during the construction process, along with an additional fee for the contractor's overhead and profit. The contractor is reimbursed for all labor, materials, subcontractors, permits, and other direct project-related expenses. The homeowner is often involved in the decision-making process and may have more flexibility to make changes or modifications along the way. This type of contract is ideal when the project scope is uncertain, and it offers transparency in terms of costs, as the homeowner has visibility into all expenses incurred. In Rhode Island, there may be variations or specific terms that contractors may use to describe these types of contracts. For example, the Fixed Fee contract may also be referred to as a Lump Sum contract, whereas the Cost Plus contract may have variations such as Cost Plus Percentage Fee or Cost Plus Fixed Fee. These options allow for different methods of calculating the contractor's fee. It is crucial for both the homeowner and contractor to carefully review and understand the terms and conditions specified in the Rhode Island Construction Contract for Home, regardless of whether it is a Fixed Fee or Cost Plus contract. Key elements typically included in the contract are project scope, timeline, payment schedule, warranties, insurance, dispute resolution, and any specific state regulations or requirements that must be adhered to. In summary, the Rhode Island Construction Contract for Home — Fixed Fee or Cost Plus is a legally binding agreement outlining the terms and conditions for residential construction projects in Rhode Island, with the main distinction being how the costs are determined. The choice of contract type depends on the homeowner's preference, the project scope, and the level of flexibility desired in making modifications during construction.
