7 Most Common Construction Contract Types in the United States

The Most Common Contract Types in the U.S.

Construction contracts in the U.S. typically fall into a few key categories, each suited for different project needs. The right contract type impacts cost control, risk allocation, and project efficiency.

Many of these contract types rely on standard contract forms developed by organizations like AIA, EJCDC, ConsensusDocs, and DBIA. These pre-approved templates provide a structured legal framework and ensure fairness in agreements.

1. ‍Lump-Sum Contract: The contractor agrees to complete the project for a set price. Best for projects with a well-defined scope and minimal expected changes.‍
2. Cost-Plus Contract: The owner reimburses the contractor for actual costs plus a fee. Ideal for complex projects where costs are difficult to predict upfront.‍
3. Guaranteed Maximum Price Contract: A variation of cost-plus contracts that sets a spending cap. Provides flexibility while protecting owners from excessive costs.‍
4. Unit Price Contract: Payments are based on a fixed rate per unit of work completed. Common in infrastructure and utility projects.‍
5. Design-Build Contract: A single entity handles both design and construction, streamlining communication and project delivery.‍
6. Design-Bid-Build Contract: A traditional method where design and construction are separate phases, often used in government projects.‍
7. Integrated Project Delivery (IPD) Contracts: All stakeholders share risks and rewards under one contract, encouraging collaboration and efficiency.

Each contract type serves a specific purpose and carries unique risks. In the next sections, we’ll dive into the standard contract forms that shape how these agreements are structured across the industry.

The Role of Standardized U.S. Construction Contracts

Without clear contractual terms, construction projects can quickly become chaotic. Standardized contracts offer a structured way to outline expectations, prevent disputes, and keep projects on track.

Industry groups have developed widely used contract frameworks that simplify negotiations while ensuring compliance with legal and financial obligations.

AIA (American Institute of Architects)

AIA contracts are among the most widely used in the U.S., especially for commercial and residential projects. They provide a clear framework for roles, responsibilities, and risk allocation between owners, contractors, and architects. These agreements cover various project types, from lump-sum contracts to cost-plus arrangements.

EJCDC (Engineers Joint Contract Documents Committee)

EJCDC contracts are commonly used in public infrastructure and engineering projects. Developed by engineers and legal experts, these agreements address the complexities of projects like roads, utilities, and water treatment facilities. They provide structured terms that help manage technical risks and cost variations.

ConsensusDocs

ConsensusDocs contracts are created with input from multiple industry groups, ensuring a balanced approach that considers both owners and contractors. These agreements cover a range of delivery methods, including design-build and integrated project delivery (IPD). They are known for promoting fair risk-sharing and reducing disputes.

DBIA (Design-Build Institute of America)

DBIA contracts focus on design-build projects, where a single entity handles both design and construction. These agreements are designed to improve efficiency, reduce delays, and streamline communication between project teams. They are widely used in public-private partnerships and large-scale developments.

Common Construction Contract Standard Forms in the U.S.

A strong contract framework is essential for successful project execution. To reduce uncertainty and ensure fairness, the construction industry relies on pre-approved contract forms designed to address common challenges.

These standardized agreements provide a consistent legal foundation. It helps contractors and owners navigate their roles, obligations, and financial arrangements effectively.

AIA A101 – Standard Agreement Between Owner and Contractor (Stipulated Sum)

AIA A101 is one of the most widely used contracts for lump-sum (fixed-price) projects, where the contractor agrees to complete the work for a set price. This contract provides cost certainty for project owners, making it ideal for projects with a clearly defined scope, minimal expected changes, and straightforward construction requirements.

• Best for: Commercial, residential, and institutional projects with well-defined specifications.
• Advantages: Predictable costs, minimal owner risk, and straightforward payment terms.
• Challenges: Contractors assume financial risk if costs exceed estimates, leading to potential quality compromises.

AIA A102 – Standard Agreement Between Owner and Contractor (Cost-Plus with GMP)

AIA A102 is designed for cost-plus contracts with a guaranteed maximum price (GMP), where the owner reimburses the contractor for actual costs but sets a cap on total spending. This contract is beneficial for projects requiring flexibility but with budget constraints to prevent cost overruns.

• Best for: Large-scale or complex projects where scope and costs may evolve.
• Advantages: Cost transparency, flexibility, and a price ceiling to protect the owner.
• Challenges: Requires detailed cost tracking, and changes can still lead to disputes over scope adjustments.

AIA A201 – General Conditions of the Contract for Construction

AIA A201 serves as the foundation for design-bid-build (DBB) contracts, defining project responsibilities, risk allocation, and dispute resolution. It’s often paired with other AIA contracts to establish standard terms between the owner, architect, and contractor.

• Best for: Traditional project delivery methods where design and construction are separate phases.
• Advantages: Clearly defines responsibilities, legal obligations, and administrative procedures.
• Challenges: Can be rigid in handling design changes, leading to potential conflicts if the project scope evolves.

AIA C191 – Standard Multi-Party Integrated Project Delivery Agreement

AIA C191 is designed for Integrated Project Delivery (IPD), where the owner, designer, and contractor work under a single contract and share risks and rewards. This contract encourages collaboration and efficiency, making it ideal for projects requiring high levels of coordination and innovation.

• Best for: Healthcare, high-tech, and large-scale commercial projects with complex stakeholder involvement.
• Advantages: Reduces inefficiencies, aligns interests, and encourages shared accountability.
• Challenges: Requires a cultural shift towards collaboration and may not suit traditional project structures.

EJCDC C-700 – Standard General Conditions of the Construction Contract

EJCDC C-700 is widely used for unit price and cost-plus contracts, particularly in public infrastructure and utility projects. It establishes general conditions for contracts where pricing is based on quantifiable work units rather than a lump sum.

• Best for: Roadwork, water treatment plants, and public utility infrastructure.
• Advantages: Provides a structured approach to measuring and paying for work based on units completed.
• Challenges: Requires precise quantity tracking and may lead to disputes over measurement discrepancies.

EJCDC C-525 – Agreement Between Owner and Contractor

EJCDC C-525 is used for cost-plus contracts, allowing owners to reimburse contractors for actual costs plus a negotiated fee. This contract works well for engineering-heavy projects where costs are difficult to estimate upfront.

• Best for: Infrastructure, civil engineering, and technically complex projects.
• Advantages: Gives contractors flexibility while allowing owners control over spending.
• Challenges: Costs can escalate if not closely managed, requiring strong oversight and documentation.

ConsensusDocs 200 – Standard Agreement Between Owner and Constructor

ConsensusDocs 200 provides an industry-wide alternative to AIA A101 for lump-sum contracts, offering a balanced agreement that protects both owners and contractors. It includes fair risk-sharing provisions that can reduce disputes and ensure smoother project execution.

• Best for: Private commercial developments and institutional projects.
• Advantages: Developed with input from multiple industry stakeholders to create a fair and transparent agreement.
• Challenges: May require negotiation to align with specific project needs.

ConsensusDocs 500 – Standard Agreement for Design-Build

ConsensusDocs 500 is specifically created for design-build (DB) contracts, where the same entity handles both design and construction. This contract is useful for projects that benefit from fast-tracking and streamlined decision-making.

• Best for: Fast-track projects, government buildings, and private sector developments.
• Advantages: Encourages efficiency, reduces coordination issues, and shortens project timelines.
• Challenges: Requires owners to relinquish some design control, which may not be suitable for all projects.

DBIA 530 – Standard Form of Agreement Between Owner and Design-Builder

DBIA 530 is another commonly used contract for design-build projects, particularly in large-scale private and public developments. It promotes a collaborative approach to design and construction, reducing delays and improving cost predictability.

• Best for: Public-private partnerships (P3s), large commercial buildings, and infrastructure projects.
• Advantages: Encourages a single point of responsibility, improving communication and accountability.
• Challenges: May require owners to carefully evaluate the design-builder’s capabilities before awarding contracts.

Final Thoughts on Common Contract Types in the U.S.

Standardized contract forms are the backbone of construction agreements, providing consistency, legal clarity, and balanced risk allocation. Industry organizations like AIA, EJCDC, ConsensusDocs, and DBIA have developed widely adopted templates that simplify negotiations and set clear expectations for all parties.

Understanding these contracts—and how they allocate risks, costs, and responsibilities—empowers project managers and owner to make informed decisions, minimize disputes, and keep projects on track.