3.2.2 Contract Structures

There are several common forms of contract and project delivery arrangements that may be selected by an owner for a construction project, depending upon the individual circumstances and personal preferences. The basic forms of these arrangements are often modified in numerous ways. The actual contractual arrangement that we wind up working under might ultimately look very different from the “basic” format that may have been the basis for the particular contract. Often, however, we may still find that contracts are drafted with their familiar formats generally intact. In either case, the key is that the strict wording of each contract must be studied thoroughly and be completely understood in its specific detail. As those who work intimately with contracts should know, the modification of a single word can alter—and even reverse—the meaning of the entire document (consider the judicious placement of the word “not,” for example, in almost any paragraph that you can imagine).
“Historical” relationships (the way in which things are “usually” done) may no longer apply (and may never apply again). Just because the roofer, for example, never cuts masonry reglets as part of its normal operations doesn’t mean that it’s not the roofer’s responsibility to do precisely this work on this project. Or just because the mason contractor never provides the portion of the masonry anchor that is welded to the structural steel columns doesn’t mean that it’s not the mason contractor’s responsibility to provide precisely this work on this project.
The plans, specifications, general conditions, special conditions, special provisions, working procedure, etc., must be read completely. The contract must be understood in its smallest detail. Assumptions and blind dependence upon past experiences have absolutely no place in contemporary construction contracting.
Finally, there is an important distinction to be made between contract relationships and contact relationships. This sounds almost too simple to require discussion. The truth, however, is that “contact” (communication, day-to-day dealings) too often leads to actions, inactions, and assumptions of responsibilities and liabilities due to misunderstandings—and inadvertent, incorrect assumptions—with respect to contract relationships and authorities.
The communication, or “contact,” circles between the functional administrative divisions of every construction project include an owner, the design function, and a construction force. The communication format tends to occur (largely due to various practicalities) in nearly the same fashion and in the same manner project after project. The communication relationships tend to be preserved to very large degrees in a similar manner regardless of differences between technical contract structures.
Because of this, it is the first thicket in which the snare is laid—the huge potential for misunderstandings that eventually lead to cost increases, delays, claims, and other disruptions. At the site where all the activity is, the job “feels” like most other jobs. The traditional owner–architect–general contractor relationship becomes a difficult perspective and mindset to dissolve if some other contractual associations and relationships are specified. Even though the same individuals seem to be performing the same or similar activities, the differences lie in authorities, responsibilities, liabilities, and even timing.
So it is here in this general atmosphere of common forms of communication where a new game may begin to be played inadvertently by old rules. It is this environment in which problems, disputes, claims, and changes are nearly certain to become a way of life.
The most common structures of construction contracting arrangements can be classified as follows:

1. Cost Plus a Fee Contract
2. Cost Plus a Fee Contract with a Guaranteed Maximum Price (GMP)
3. Lump Sum Contract
4. Construction Management (CM)—Two types: At Risk and Agency (for Fee)
5. Design-Build