- Introduction to construction contracts
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Introduction
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Contract elements
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Contracts between entities
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Contract types
- Contract types
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Lump (stipulated) sum
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Cost plus
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Guaranteed maximum price (GMP)
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Multi party agreement
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Unit price
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Time and materials (T&M)
- Activity
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Activity
- Projects and contract types
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Projects for each contract type
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Which contract type would you use?
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Final takeaways of construction contracts
- Conclusion
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Knowledge check
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Summary, resources, & what’s next?
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We want to hear from you!
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Conclusion
Construction Contracts -- Construction Bootcamp (Part 5)
Grasp the foundational elements of construction agreements.
Instructor: Ben Ashburn
1 hour
Last reviewed 12/2025
Video Content
Course Description
In this course, you will grasp the three core elements of every construction contract: (1) scope: detailing the work, (2) schedule: setting the project timeline, and (3) cost: defining the budget. The course also explains how agreements between owners and general contractors, known as prime contracts, and agreements with subcontractors, called commitments, function. Understanding these fundamentals is crucial for effective project delivery.
The course explores various contract types, each suited for different project needs and risk assignments. You will learn about lump sum agreements (fixed price), cost plus contracts (actual expenses plus a fee), and guaranteed maximum price (cost plus with a ceiling). Other key types include multi-party agreements for shared risk, unit price contracts for uncertain quantities like road work, and time and materials (T&M), billing by labor and material costs. This knowledge helps you pick the right contract for any project type, from traditional building to civil projects.
By completing this course, you will understand how to manage construction contracts and how contract structures assign risk and responsibility and influence payment, which empowers you to make informed decisions about project costs, manage contractor relationships, and confidently engage in contract negotiation and administration.
Learning Objectives
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Define contracts in construction.
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Identify the key parts of a construction contract.
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Differentiate between contract types and their uses.
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Explain how contract types affect risk, profit, design detail, and paperwork.
Prerequisites
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Learning Level: Beginner
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Prerequisite Knowledge: Completion of Drawings & Specifications.
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Recommended Knowledge: None.
Continuing Education Course Credits
Course Title: Construction Bootcamp
Course Number: PC-01-061825
Session Number: 1
Curriculum Group Name: AIA Providers
Credit: 12.5 AIA LU
Course Expiration Date: 06/24/2028
Procore's Continuing Education courses may qualify for continuing education credits with other professional organizations or fulfill state licensing requirements. If you are a member of a different organization, you can download your course completion certificate from your learning profile and report your completion yourself to the organization for potential credit. Please refer to the organization's continuing education requirements for course eligibility information.
AIA CES Provider statement
Procore Technologies is a registered provider of AIA-approved continuing education under Provider Number 40108059. All registered AIA CES Providers must comply with the AIA Standards for Continuing Education Programs. Any questions or concerns about this provider or this learning program may be sent to AIA CES (cessupport@aia.org or (800) AIA 3837, Option 3).
This learning program is registered with AIA CES for continuing professional education. As such, it does not include content that may be deemed or construed to be an approval or endorsement by the AIA of any material of construction or any method or manner of handling, using, distributing, or dealing in any material or product. AIA continuing education credit has been reviewed and approved by AIA CES. Learners must complete the entire learning program to receive continuing education credit. AIA continuing education Learning Units earned upon completion of this course will be reported to AIA CES for AIA members. Certificates of Completion for both AIA members and non-AIA members are available upon request.
AIA continuing education credit has been reviewed and approved by AIA CES. Learners must complete the entire learning program to receive continuing education credit. AIA continuing education Learning Units earned upon completion of this course will be reported to AIA CES for AIA members. Certificates of Completion for both AIA members and non-AIA members are available upon request.
Frequently Asked Questions
What are the key topics and main learnings I will gain from this course?
You will gain a solid understanding of the three distinct elements found in every construction contract: scope (what work is included), schedule (how long the project will take), and cost (the project's budget). The course also explains prime contracts, which are agreements between the owner and the general contractor, covering the entire project. Additionally, you'll learn about commitments, an umbrella term for agreements with subcontractors, including subcontracts (labor and materials) and purchase orders (materials only).
How will understanding various contract types benefit my career in construction?
This course will show you how different contract types are used to assign risk and responsibility among parties and determine methods of payment. This knowledge is essential for making informed decisions about project costs and selecting the most suitable contract for different project scenarios.
What's Next
Continue your learning journey
This course is part of the Construction Bootcamp Learning Path. Explore and complete the additional courses in the path below to complete your journey.
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Construction Bootcamp: Program Intro
View Course PageKickstart your learning journey with the Construction Bootcamp program.
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Construction Bootcamp: Construction Industry Overview
View Course PageUnderstand the construction landscape, structure, and key players.
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Construction Phases & Project Delivery Methods
View Course PageUnderstand how projects are organized and executed.
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Drawings & Specifications
View Course PageLearn to interpret essential project documents.
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You are here!
Construction Contracts
Grasp the foundational elements of construction agreements.
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Estimating & Bidding
View Course PageDive into the critical process of costing and proposals.
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Scheduling
View Course PageMaster techniques for effective project timelines.
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Quality, Safety, & Risk
View Course PagePrioritize excellence, manage hazards, and mitigate project risks.
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Contract Administration (RFIs & Submittals)
View Course PageNavigate essential project communications.
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Contract Administration (Financials)
View Course PageControl costs and manage project scope.
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Construction Site Operations & Project Controls
View Course PageUnderstand day-to-day site management and oversight.
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BIM
View Course PageAn introduction to modern construction technology.
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Professional & Soft Skills For Construction Management
View Course PageDevelop crucial interpersonal and leadership abilities.
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Program Exam
View Course PageTest your knowledge with the final exam and explore pathways for continuous learning.
Related Resources
Instructors
Ben Ashburn
After a successful career as a construction estimator — working his way up from estimating manager to senior estimator — Ben has spent the most recent part of his career in construction sharing his skills with other as a construction educator. Ben has an extensive background in construction education: He has been an assistant professor in the Department of Construction Science at Texas A&M, and lectured about estimating, scheduling, management, and other related construction topics at Murray State University. He has been a construction training and learning development partner with Procore since 2019.
Reviewers
Janine Trinidad
Janine Trinidad is a Construction Educational professional for Procore Technologies. In previous roles, Janine managed all phases of construction on hotel, mixed-use, and institutional projects in the San Francisco Bay area. She was responsible for negotiating contract budgets and change orders, managing RFIs and submittals, and overseeing quality control, among other duties. She is also a certified transformational coach with a focus on women-centered and trauma-informed methods. She is passionate about transforming the construction industry to be a healthier, more successful and welcoming place to work and believes technology and education are allies in doing so.
Dr. Irish Horsey
Dr. Irish Horsey is a seasoned expert in the construction industry with over 25 years of experience. Currently, she serves as the Director of Industry Advancement at Procore, while also teaching part-time at the Georgia Institute of Technology. A former Assistant Professor at Kennesaw State University, Dr. Horsey specializes in project management, workforce development, and diversity and inclusion in construction. She holds a Ph.D. in Higher Education and a Master's in Construction Management. Her extensive industry experience and academic background make her a trusted leader in advancing best practices and innovative strategies in construction.