Common Construction Contract Types

Key Contract Types Used in Construction Projects

Common construction contract types define the legal and financial obligations between clients and contractors. Understanding these contracts helps quantity surveying learners manage risks, costs, and timelines more effectively on projects.

Here are the main types of construction contracts commonly used in South Africa:

• Traditional or Lump Sum Contract

  This contract fixes the total price for the entire project. The contractor agrees to complete the work for a set amount. It is simple and straightforward, offering cost certainty to the client. Any variations usually lead to extra charges.

• Bill of Quantities (BOQ) Contract

  This contract uses a detailed list of materials and work quantities. Pricing is based on these quantities, measured carefully before work starts. It helps with accurate valuation and is popular in tender processes.

• Cost Plus Contract

  The client pays the contractor’s actual costs plus an agreed fee or percentage as profit. This contract allows flexibility but can lead to higher costs if not well managed.

• Re-measurement Contract

  The contractor is paid based on the actual measured quantities at completion. This is useful when it is hard to estimate quantities exactly upfront, reducing risks on changes and unknowns.

• Design and Build Contract

  The contractor designs and builds the project. This method lets the client deal with one party, speeding up delivery. The contractor takes responsibility for both design and construction costs.

• Management Contracting

  The client employs a management contractor to hire and oversee specialist subcontractors. The client holds direct contracts with subcontractors, allowing flexibility and fast mobilisation.

Choosing the right contract depends on the project scope, risk allocation, timing, and budget control. Quantity surveyors play a vital role in advising which contract type suits each project best. Clear contracts reduce disputes and keep projects running smoothly.