How Does General Contractors Get Paid

General contractors are professionals responsible for managing and overseeing construction projects. They are responsible for hiring subcontractors, managing timelines, budgets, and ensuring that the project is completed on time and to the required standards. If you are considering working as a general contractor, one of your primary considerations is likely to be how you will get paid for your work. In this article, we will explore the different ways that general contractors get paid.

1. Fixed price contract

One of the most common ways that general contractors get paid is through a fixed-price contract. A fixed-price contract is an agreement in which the contractor agrees to complete a project for a set price. This is a popular choice for clients because it provides a predictable cost for the project. It is also a popular choice for contractors because they know exactly how much they will be paid and can avoid any surprises.

2. Time and materials contract

Another way that general contractors get paid is through a time and materials contract. In this type of agreement, the contractor is paid based on the time and materials they use to complete the project. This means that the contractor is paid for the actual time spent on the project and the actual cost of the materials used. This is a popular choice for clients who want more flexibility in terms of the scope of the project and for contractors who want to ensure they are compensated for the actual work they do.

3. Cost-plus contract

A cost-plus contract is another option for general contractors. In this type of agreement, the client agrees to pay the contractor for the actual cost of the project plus a percentage of the cost as a fee. This type of contract provides more flexibility for both the client and the contractor since the project`s cost can change throughout the process. This type of contract is also suitable for larger and more complex projects since it provides additional funding for unexpected expenses.

4. Progress payments

Many general contractors receive progress payments throughout the project`s duration regardless of the type of contract they use. These payments are usually made at specific milestones, such as the completion of certain stages, and provide the contractor with regular income throughout the project`s duration. Progress payments allow contractors to keep track of their expenses and ensure that they are not out of pocket for a long time.


In conclusion, general contractors get paid in several ways, including a fixed-price contract, time and materials contract, cost-plus contract, and progress payments. Each of these payment methods provides benefits to both the contractor and the client, depending on the project`s scope and complexity. As a general contractor, it`s essential to choose the payment method that works best for you and your client and ensure that it is clearly outlined in your contract.

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