Construction Contract Template

What a construction contract is, and when to use this one

A construction contract is the agreement between a property owner and the contractor who will do the work. It answers the questions every job raises before the first invoice: what exactly is being built, for how much, paid when, what happens when something changes or is found behind the wall, who pulls the permit, what is warranted and for how long, and how the two of you part ways if it goes wrong. Use this template when you contract directly with the owner — a homeowner, a landlord, a facility manager, a small commercial tenant — for residential or light commercial work. If you are working for a general contractor under their contract with the owner, you want the subcontractor agreement instead: it carries retainage, monthly applications and prime-contract flow-down that a direct owner contract does not need.

The clauses are written to be fair to both sides and general enough to use in any state, with the deal-specific values collected on a one-page Contract Summary that the numbered sections refer to by name — "the Payment Period," "the Cure Period," "the Change Order Markup." Negotiate the summary, attach the exhibits, and the clause text never needs editing.

Fixed price or cost plus?

The Contract Summary has a selector. Fixed price means the owner pays the stated price for the described work, adjusted only by change order; you carry the risk of your own estimate and keep the reward for efficient work. Cost of the Work plus fee means the owner pays your documented costs — labor, materials, equipment, subcontracts, permits, insurance and taxes directly attributable to the job, not your general overhead — plus a fee percentage. Add a guaranteed maximum price if the owner wants a ceiling; costs above it are yours unless a change order caused them. Cost-plus fits remodels with unknown existing conditions and jobs that start before design is finished; fixed price fits everything you can price with confidence from the plans.

Either way, allowances handle the items nobody has chosen yet — fixtures, tile, the exact equipment model. The allowance amount is in the price; when the real cost is known the difference is adjusted by change order without markup, so neither side games the selection.

The payment schedule: tie money to events you can prove

The most useful part of this form is a small table on page 1. Each row is a milestone, an amount and a due trigger, and the total must equal the contract price. Good milestones are events both parties can see without arguing: contract signed (deposit), equipment delivered to the site, rough-in inspection passed, substantial completion certified, final completion and closeout delivered. Bad milestones are percentages of progress that need a judgment call every time. Section 3 then does the rest: invoices are due within the Payment Period, disputes must be in writing within seven days with the undisputed balance paid, unpaid invoices bear the stated interest, and after seven days of nonpayment you may suspend on notice. Retainage is off unless the schedule turns it on — owners of small jobs rarely need it, and a contractor should not be surprised by it.

A worked example

The completed example is a direct job for the owner of the Harbor Point campus: Harbor Point Development LLC hires Summit Mechanical Contractors to replace two rooftop units on Building A. Fixed price $58,750.00 including a $2,400.00 allowance for curb adapters; deposit $5,875.00 on signing; then $23,500.00 when the units are delivered to the site, $23,500.00 at substantial completion, and $5,875.00 at final completion — a 10/40/40/10 split that totals the price. Commencement September 14, 2026 and substantial completion October 9, 2026; invoices paid within 15 days; 15% markup on change orders; 12-month warranty; 10-day cure period; general liability $1,000,000 per occurrence and $2,000,000 aggregate; builder's risk carried by the owner; Colorado law with disputes in Denver County courts. The same contractor's larger job on Building B — the $486,200 subcontract, its change orders and pay applications — appears across the other templates, so you can compare a direct owner contract with a GC subcontract side by side.

Residential jobs: right to cancel and required notices

Home-improvement contracts are the most regulated contracts a contractor signs. Depending on the state and how the contract was signed, the owner may have a short right to cancel, the contractor may have to include license and registration information, a mechanics lien notice, and limits on deposits, and some terms may have to appear in a prescribed form or type size. Section 15 of the template acknowledges those rules, makes them control over any inconsistent term, and gives them a home: Exhibit C. Get the notices your state requires from your licensing board or your attorney and attach them there. The lien waiver guide covers the notice and waiver exchange the Liens section of this contract describes.

Construction contract vs. quote vs. proposal vs. change order

• Quote — a one-page fixed price with line items and a validity date. When the owner signs it, you have an agreement, but a thin one: no payment schedule, no warranty terms, no dispute clause.
• Bid proposal — the fuller offer: scope, price with alternates, inclusions and exclusions, terms. This contract's General Provisions supersede the proposal except to the extent Exhibit A incorporates it, so contradictions are resolved in the contract's favor.
• Construction contract — the agreement itself, signed by both parties, with the proposal's scope attached as Exhibit A.
• Change order — the signed amendment that adjusts the price and the completion date once work is under way. Section 4 requires one, in writing, before changed work begins.

In BuildWorkPro that chain is one workflow: the estimate becomes the proposal, the accepted proposal becomes the project, and change orders are priced against the contract value and e-signed from an emailed link.