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How to Address Workers Compensation Fraud

Contractors sign up for Workers’ Compensation insurance to protect employees who are hurt on the job. Although most claims are legitimate, workers compensation fraud is common. Bogus claims can add up to big losses for not only insurance carriers but employers, too. Read more

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How to Prevent Violence in the Workplace

We live in a very stressful society. People seem to live on the edge of stress and high emotions at all times, and there is a very real worry that a formerly mild-mannered employee could snap at any time. Incidents of workplace violence seem a constant in the media, and no contractor wants to risk such a thing happening on their job site. Here are some tips and best practices to keep in mind so that you can prevent violence in the workplace and handle incidents that do arise. Read more

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How to Prepare for a Workers Comp Audit

Every employer dreads an audit, whether it’s from OSHA or from your workers compensation insurance company. The process, however, doesn’t have to be a pure nightmare. In fact, if you prepare properly, you can make the audit relatively painless and can even use the results to improve your own practices. Here’s some advice on how to prepare for a workers comp audit and protect your construction and contracting business. Read more

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Why Do You Need to Hire a Licensed Contractor?

Why it is Vital to Hire a Licensed Contractor

When you need to hire a contractor to perform any sort of construction job, naturally you want to get the best deal possible. There are very important things to keep in mind, however, when shopping for the best company for the job. The single most vital of these is to be certain your contractor is licensed, bonded and certified. Unlicensed contractors are going to vie for your business by quoting you far lower prices than licensed ones, but you’ll pay the price in quality of work and risk. Here’s a look at why you want to hire a licensed contractor over an unlicensed contractor. Read more

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Understanding Different Types of Construction Contracts

Contracts are the core, the heart and soul, of the construction industry. As a contractor, you know that these written agreements not only define the scope of services you will provide, but they allow you vital protections against lawsuits and liability issues should anything go wrong during the course of work. Construction law is difficult and complex and, it seems, ever changing. Here’s an overview of what you need to know about the different types of construction contracts.

Fixed Price and Lump Sum

There are three types of construction contracts that are most commonly used, and of these the most common is the lump sum or fixed price form of contract. With this type of contract, the property owner seeks bids from several contractors to get the best deal they can. Since with this system the entire scope of a project is presented up front, this contract is able to clearly outline the scheduling, deadlines, costs, budget and other crucial aspects of the project.

types of construction contracts

Cost Plus

Cost plus contracts are more open and freeform. They are best applied when the costs and timeframe for the project are somewhat unclear. They allow the payment to be negotiated rather than defining it as a fixed cost. It essentially agrees that the contractor will be paid for the costs of the job plus labor fees, which can be set or a percentage and may include a bonus for quick completion of the job.

Time and Material

When the overall scope and details of the project are largely or completely unknown, a time and material contract can be implemented. Whatever the variables are, if the project is nebulous, this kind of contract is an option, though it is generally the least favorable of the three types. It agrees on an hourly rate for the contractor and materials paid for by the property owner. Separate fees are negotiated for contractor profit and overhead issues.

Union Issues

If your company is a union shop, there are other considerations and guidelines you will need to follow to ensure that the job contract is in line with union requirements. There are expectations that the union will have to see fulfilled before work can commence, including conditions of employment, discrimination issues, grievance procedures and the like.


These types of construction contracts will also address the kinds of workers you will be using. Most common are subcontractors who use their own equipment and are licensed on their own. They have to be specifically accounted for within your job contract, or you could end up with liability and lawsuit issues if things go wrong.

Direct hire employees, on the other hand, work for you and your company. These employees carry fewer but different liability issues. You will have to account for payment practices, the type of work performed and working conditions when dealing with direct hires. Don’t forget to keep your company and your employees protected with workers compensation insurance.

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