Completed Contract Method
Progress Billing for a General Contractor
Covenant Definition of a Bond Contract
Contract Price Definition
Contract price, defined as the price of a contract which is paid to a contractor upon completion, is used any time a contract exists. Due to the fact that a contract is an agreement to complete a certain type and amount of work, the contract price is fully paid to a contractor when they have completed the job which has been agreed upon. Generally, contract price includes a down payment, may include a few continuing payments, and ends with a final amount paid to close the contract.
Contract Price Explanation
Contract price, explained simply as the price which two parties agree on for a certain amount of work, is a very common concept. Common contracts are for construction, landscaping, leasing, and even the common mobile phone.
Contract Price Cost Analysis
Contract price cost analysis is essential to preventing a bad deal. Different contracts serve different purposes. The common landscaping contract, for example, does not have irregular expenses or a final completion date. The nature of this agreement lends itself to a payment schedule. Due to this, the contract price for landscaping is commonly paid on a per month basis. In contrast, a construction job has irregular expenses and a final completion date. In this case, the contract price will be paid differently. As stated above, they commonly have a down payment, regular payments, and a final construction retainer. This payment will be paid when the job is almost complete and the client only expects a few small changes.
Contract Price Escalation
Contract price escalation may occur partway through the process of completing the work. The reason for this could be increased expenses, increased time to complete the project, and more. In this case both parties will need to renegotiate the deal. Contract price adjustment can be very complicated when one party does not want to change. Still, it must occur despite the inherent difficulty of changing a standing agreement.
Contract Price Example
For example, Dwight is an agent for major hip-hop music stars. His work deals heavily with negotiations. Dwight helps to negotiate contracts for his artists. For Dwight, the final contract price clause is really the deciding factor of success or failure in his work. Dwight is working on a contract today. He has completed the agreement and is pleased. This price comes different than those above: a payment per album, a payment per concert or tour, travel and accommodations, and some for living expenses. Very different from the standard contract, Dwight knows the minor differences make major effects. If he had even left out living expenses, his artist may have come out of the deal with little to show for it. Dwight must keep a constant state of awareness to make sure he does not make a mistake. Dwight goes home and has a sigh of relief.
Today, he has been successful at his work. He knows every day can not be this good. So, he resolves to celebrate his successes and mitigate his failures. This way, he will keep his perspective where it needs to be.