Which type of contract is commonly used for large construction projects?

A fixed-price contract is commonly used for large construction projects because it establishes a clear total price for the project before work begins. This type of contract provides both the contractor and the client with financial certainty, which is especially important in large-scale construction where budgeting is critical.

In a fixed-price arrangement, the contractor assumes the risk of cost overruns and manages the scope of work to avoid exceeding the agreed-upon amount. This encourages efficiency and careful planning on the contractor's part to stay within budget, making it a preferred choice for projects where the specifications are well-defined and the costs can be accurately estimated.

Additionally, clients appreciate fixed-price contracts because they know upfront what the total project cost will be, allowing them to allocate resources accordingly. Other contract types, like cost-plus or time and materials, can introduce unpredictability regarding total costs, which may deter clients from using them for large projects. Oral contracts lack the formal structure and enforceability of written contracts, making them unsuitable for significant undertakings where details need to be clearly documented and legally upheld.