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Understanding the various types of construction contracts is vital as they define payment structures, liability, and other project aspects. These contracts protect both builders and owners by clarifying expectations and preventing issues like cost overruns. There are several contract types, typically customized for specific project needs. This tutorial outlines the differences among them and advises when to use each. The terms "builder" and "owner" refer to the construction service provider and the entity hiring them, respectively. The first type discussed is lump sum contracts, which involve a fixed price for all work completed on a project.