There are three very common types of construction contracts you may run into whilst renovating or building their pro and cons, and which one would suit your purpose and that's what we shall discuss.
The first contract is the lump sum contract which is also known as the stipulated sum. It's one number that the contractor gives you and says for an 'x' price he will build you an 'x' project. The other type is called the cost-plus contract, this comes in two versions. The first cost plus is a cost-plus with a guaranteed maximum price. This means that you'll get the contractor's actual cost plus a slight interest that usually ranges up from five to twenty percent depending on the contractor and they will then guarantee that no matter what the cost of the job will not be over the guaranteed maximum price.
The last type of contract is a cost-plus with no guarantee maximum price. That means whatever the cost is plus the fees are not fixed at all so the job could keep going and if there are other adjustments or changes the cost of it will keep accumulating until you pay for them.
The pros and cons of each of them would be:
The lump-sum – this type of contract gives certainty. You know for a given that in an 'x' amount 'x' job will get done. The con to this is that any savings that may occur during the job will not go to you but to the contractor.
The flip side to this is on a cost-plus contract, it allows you to see the contractors cost plus the interest he charges. You can learn more about this from your Construction Lawyers in Sydney.