"Fixed Rate" vs. "Time and Materials" Contracts
When you are making an agreement with a contractor for construction or renovation jobs for your business, you need to decide what kind of contract you will be using: "fixed rate” or “time and materials.” Each has particular advantages. The type of work you want done your other circumstances play a large part in determining which is the superior option for you.
If you're thinking of signing a construction contract and would like to know more about your options, contact Texas Legal Entities today by calling 512-472-2431.
Types of Contracts
The two types of contracts you can choose between are:
- Fixed rate. This is the more common contract. In a fixed-rate, or fixed-price, contract, you and the contractor agree on a set price when you sign the document. The contractor researches the cost of every aspect of the job beforehand, and factors that into the quote. The price in a fixed-rate contract covers all materials and labor costs associated with the project.
- Time and materials. In a time-and-materials contract, the contractor charges you as the job progresses. This allows for more flexibility, and if you're seriously involved in the project, it may actually save you money. However, the cost can just as easily get out of hand. If you decide to go with a time-and-materials contract, it can be a good idea to include a price cap on the contract to make sure that the costs don't balloon out of control.
Contact Us
If you're a business owner and you're interested in learning more about contracts and how they affect your company, contact Texas Legal Entities today by calling 512-472-2431.
At any time, please feel free to ask us a question. It's FREE!