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Understanding different types of construction contracts is essential as they dictate what you pay and your liabilities. Contracts protect both builder and owner by clarifying expectations and avoiding potential issues. Contracts are tailored to the project's needs. There are four types of contracts: lump sum, cost-plus, unit pricing, and time and materials. Lump sum contracts use a fixed price for all work, while cost-plus contracts cover costs plus a fee. Unit pricing contracts specify cost per unit of work, and time and materials contracts pay based on labor and material costs.
