How should construction contracts deal with payment?

Before any service is provided in return for payment, a contract should be put into place. Contracts are made for the benefit of all parties involved. The goal of a contract is to formalize all communication in a way that is clear and legally binding. This enables all parties to have a safety net to fall back on if the contract is breached.

One of the most important aspects of a contract is deciding how payments will be made. It can be risky for a client to commission a project and then pay the entire sum upfront before any work has been done. Similarly, it can be risky for contractors to complete work that they have not been paid for. Clearly agreeing on a payment plan can help to avoid disputes in the future. The following are common payment methods used in construction contracts.

Fixed price contract

In fixed-price contracts, the contractor will agree to complete a specific job for a fixed sum. This can be risky for the contractor because they may underestimate the work needed. Quality may also be compromised to get the job done quickly.

Time and materials contract

This method involves the client covering material costs while paying the contractor an hourly rate.

Cost-plus contract

Cost-plus contracts involve the client paying at cost for all of the work, plus a certain rate to account for profit. These contracts usually set a cap for maximum payment.

If you have become involved in a dispute regarding the payment of construction workers, you may need to engage in litigation to clear up the matter.


To Our Valuable Clients:

The federal government has recently enacted legislation to assist citizens and businesses facing uncertain financial challenges due to COVID-19. We are here to help answer questions and guide you through the details of the various processes to procure financial assistance from our government. The acts are very new and more will probably be coming. But they currently provide for dollar for dollar tax credits for payroll for COVID19 related payroll, cash advances and loans that have tremendously favorable terms and in some cases, total forgiveness of the debt.

Please stay as safe as possible during this terrible crisis and if we can help you with questions about the new federal assistance laws, please contact us.

We Can Tailor A Solution To Meet Your Needs.

  • Fields marked with an * are required
  • Disclaimer | Privacy Policy
  • This field is for validation purposes and should be left unchanged.

  • Fields marked with an * are required
  • Disclaimer | Privacy Policy
  • This field is for validation purposes and should be left unchanged.