Whether you’re just getting your contractor’s licence in British Columbia or you’ve been running crews for years, knowing your contract types isn’t optional — it’s the difference between a profitable project and a financial nightmare.
In Canada, construction contracts are heavily influenced by the Canadian Construction Documents Committee (CCDC) standards, but the contract type you choose (or sign) determines who carries the risk, how you get paid, and what happens when things go sideways. This guide breaks down every major contract type you’ll encounter as a General Contractor (GC) in BC and Canada-wide.
Table of Contents
- What Is the CCDC? (Canada’s Contract Standard)
- Lump Sum (Stipulated Price) Contract — CCDC 2
- Cost Plus Contract — CCDC 3
- Unit Price Contract — CCDC 4
- Construction Management Contract — CCDC 5A / 5B
- Design-Build Contract — CCDC 14
- Guaranteed Maximum Price (GMP) Contract
- Time and Materials (T&M) Contract
- Quick Comparison Table: All Contract Types
- Which Contract Is Right for Your Project?
- BC-Specific Considerations
1. What Is the CCDC? (Canada’s Contract Standard)
The Canadian Construction Documents Committee (CCDC) is a national joint committee that publishes standardized construction contracts, forms, and guides used across Canada. Think of CCDC documents as the industry’s “templates” — they’re widely accepted by owners, contractors, lawyers, and courts.
Using a CCDC contract doesn’t mean you can’t negotiate — but it gives you a solid legal foundation built around Canadian law. In BC, CCDC contracts are commonly used alongside the Builders Lien Act and Workers Compensation Act requirements.
Key CCDC Documents for General Contractors:
- CCDC 2 — Stipulated Price Contract (most common)
- CCDC 3 — Cost Plus Contract
- CCDC 4 — Unit Price Contract
- CCDC 5A / 5B — Construction Management Contracts
- CCDC 14 — Design-Build Stipulated Price Contract
- CCDC 17 — Trade Contractor on CM Projects
- CCDC 18 — Civil Works Contract
CCDC documents can be purchased directly from the CCDC website. They are copyrighted — you cannot simply copy them; you must purchase each use.
💡 Pro tip: Need CCDC documents without the steep single-use cost? Some industry associations offer member access. [Affiliate link placeholder — e.g., BCCA membership, industry association]
2. Lump Sum (Stipulated Price) Contract — CCDC 2
The lump sum contract, known in CCDC terms as the Stipulated Price Contract, is the most common contract type in Canadian construction. The GC agrees to complete the entire scope of work for one fixed price.
How It Works
The owner provides complete drawings and specifications. The GC prices everything, adds markup and contingency, and submits a single total price. If costs run over, that’s on the GC. If you come in under budget, you keep the savings.
Pros & Cons for GCs
| ✅ Pros | ❌ Cons |
|---|---|
| Potential for high profit if well-estimated | All cost overruns fall on the GC |
| Simple payment structure for the owner | Requires complete drawings before bidding |
| Strong incentive to work efficiently | Scope creep disputes are common |
| Widely understood — easy to get bonded/insured | Change orders can create conflict |
Best Used For
Well-defined projects with complete drawings: custom homes, commercial tenant improvements, school renovations.
Key CCDC 2 Features to Know
- CCDC 2 uses a 10-day notice period for disputes and claims — missing this can forfeit your rights
- Substantial Performance triggers holdback release under the BC Builders Lien Act
- General Conditions (GC 3.8) address change directives — know them cold
3. Cost Plus Contract — CCDC 3
Under a cost plus contract, the owner pays all actual project costs (labour, materials, subs, equipment) plus an agreed fee — either a fixed fee or a percentage of costs. The GC carries very little financial risk.
Fee Structures
| Fee Type | How It Works | Best When |
|---|---|---|
| Cost + Fixed Fee | GC earns a set dollar amount regardless of final cost | Owner wants cost certainty on the GC’s profit |
| Cost + Percentage | GC earns X% of total costs (e.g., 15%) | Fast-track or emergency projects |
| Cost + Fee with GMP | Cost plus, but total project cost capped | Owner wants protection; GC shares savings |
Pros & Cons for GCs
| ✅ Pros | ❌ Cons |
|---|---|
| Low financial risk for the GC | Owner has right to audit all costs |
| Great for projects with unknown scope | Owners may question every invoice |
| Flexible as design evolves | Less incentive to find savings (% fee) |
| Stronger owner-GC relationship | Requires excellent bookkeeping |
Best Used For
Heritage renovations, fast-track projects, design-assist work, renovation projects where the full scope is unknown.
4. Unit Price Contract — CCDC 4
In a unit price contract, the GC sets a price per unit of work (e.g., per cubic metre of concrete, per linear metre of pipe, per tonne of asphalt). Payment is based on actual quantities measured in the field.
Example Unit Prices
| Work Item | Unit | Example Price (CAD) |
|---|---|---|
| Earthwork / Excavation | m³ | $18 – $45 / m³ |
| Concrete (slab on grade) | m³ | $250 – $400 / m³ |
| Asphalt paving | tonne | $150 – $250 / tonne |
| Chain-link fencing | lineal m | $55 – $120 / m |
* Prices vary significantly by region, market conditions, and project specifics.
Best Used For
Civil and infrastructure work: roads, utilities, grading, site servicing. Also common in municipal contracts in BC.
Key Risk: Quantity Variations
CCDC 4 contains provisions for when actual quantities vary significantly from estimated quantities — typically ±15%. Large variances allow either party to renegotiate unit prices. Know this clause before you bid.
5. Construction Management Contract — CCDC 5A & 5B
Under a Construction Management (CM) delivery model, the GC acts as a professional manager rather than a traditional contractor. There are two CCDC versions:
| Contract | What the CM Does | Who Holds Trade Contracts |
|---|---|---|
| CCDC 5A (CM for Services) | Manages the project (scheduling, coordination, procurement advice) | Owner holds all trade contracts directly |
| CCDC 5B (CM for Services & Construction) | Manages AND holds trade contracts | CM (GC) holds trade contracts |
The CM Fee
The CM earns a management fee (typically 5–10% of construction cost) rather than a traditional markup. In CCDC 5B, the GC has more control but also more liability.
Best Used For
Large, complex, fast-tracked projects: hospitals, universities, major commercial builds. Increasingly common with BC public sector clients (BC Infrastructure Benefits, schools, health authorities).
6. Design-Build Contract — CCDC 14
In a design-build contract, the GC is responsible for both the design and the construction under one contract. The owner deals with a single entity for everything.
How It’s Structured in BC
The GC typically assembles a team: a design firm (architect/engineer) + trade subcontractors. The GC carries full design liability, which is a significant shift from traditional delivery.
Pros & Cons for GCs
| ✅ Pros | ❌ Cons |
|---|---|
| Higher overall contract value | GC carries design liability (errors & omissions) |
| More control over schedule and design | Requires strong design management capability |
| Less owner interference | Pursuit costs are high (expensive proposals) |
| Growing market in BC (P3, municipal) | Requires design-build insurance coverage |
Important: Design-Build Insurance in BC
Standard GC liability insurance does NOT cover design errors. You need a wrap-up liability policy and the design firm needs Errors & Omissions (E&O) coverage. Talk to your broker before pursuing design-build work.
7. Guaranteed Maximum Price (GMP) Contract
A Guaranteed Maximum Price (GMP) contract is a hybrid — usually built on top of a cost-plus structure — where the GC commits that the project will not exceed a set maximum price. If costs go over the GMP, the GC absorbs them. If costs come in under, savings are typically shared between owner and GC (the “shared savings” clause).
GMP Structure at a Glance
| Component | What It Means |
|---|---|
| Estimated Cost of Work | Best estimate of all project costs at time of GMP |
| GC Fee | Fixed or % fee for the GC’s services |
| Contingency | Buffer within the GMP — who controls this matters enormously |
| GMP Amount | The hard cap — GC pays anything above this |
| Shared Savings | If final cost < GMP, savings split per agreed formula (e.g., 50/50) |
The GC’s Critical Negotiation Points
- Scope of the GMP: Clearly define what’s IN and OUT of scope before the GMP is set
- Who controls the contingency: Negotiate for GC-controlled contingency, not owner-controlled
- GMP adjustment triggers: Define what events allow the GMP to be revised (owner changes, unforeseen site conditions)
- Open book accounting: The owner will have full visibility into your costs — prepare your systems accordingly
8. Time and Materials (T&M) Contract
The simplest contract type: the GC is paid for actual time (labour hours × agreed rates) plus actual materials, plus markup. There is no fixed price and often no defined scope.
When GCs Use T&M
- Small residential repairs and service calls
- Emergency work (flood, fire, storm damage)
- Investigative or exploratory work (opening walls, test pits)
- Change order work on larger projects
T&M Rate Sheet Example
| Labour Category | Typical BC Rate (CAD/hr, billed) |
|---|---|
| General Labourer | $75 – $95 / hr |
| Carpenter (Journeyman) | $110 – $140 / hr |
| Foreman / Site Supervisor | $130 – $165 / hr |
| Project Manager | $150 – $200 / hr |
* Rates include wages, burden (CPP, EI, WCB, vacation), overhead, and profit margin.
Protect Yourself on T&M Work
Always set a Not-to-Exceed (NTE) amount or get a signed T&M authorization for each work order. Without it, collecting payment becomes extremely difficult in BC Small Claims Court.
9. Quick Comparison Table: All Contract Types
| Contract Type | CCDC Document | Who Bears Risk | Scope Needed? | Typical Use in BC |
|---|---|---|---|---|
| Lump Sum / Stipulated Price | CCDC 2 | Mostly GC | Complete drawings required | Residential, ICI buildings |
| Cost Plus | CCDC 3 | Mostly Owner | Partial scope OK | Renovations, fast-track |
| Unit Price | CCDC 4 | Shared | Quantities estimated | Civil, municipal, utilities |
| Construction Management (Services) | CCDC 5A | Owner | Evolving scope | Public sector, large projects |
| Construction Management (Services + Construction) | CCDC 5B | CM / GC | Evolving scope | Hospitals, universities |
| Design-Build | CCDC 14 | GC (incl. design) | Performance spec only | P3, industrial, municipal |
| GMP | (Built on CCDC 3) | Shared, GC has cap | Design ~50–70% complete | Collaborative projects |
| Time & Materials | N/A (custom) | Owner | None required | Small jobs, emergency, change orders |
10. Which Contract Is Right for Your Project?
Use this decision framework before you sign anything:
| Project Situation | Recommended Contract Type |
|---|---|
| Full drawings, competitive bid, fixed budget | Lump Sum (CCDC 2) |
| Renovation, incomplete scope, trusted owner | Cost Plus (CCDC 3) or GMP |
| Roads, utilities, grading — quantity-driven | Unit Price (CCDC 4) |
| Large complex project, phased design | Construction Management (CCDC 5B) |
| Owner wants single responsibility (design + build) | Design-Build (CCDC 14) |
| Emergency repair, exploratory work | Time & Materials (with NTE) |
| Collaborative approach, cost transparency needed | GMP (Cost Plus with cap) |
11. BC-Specific Considerations for General Contractors
Builders Lien Act (BC)
Regardless of contract type, BC’s Builders Lien Act requires owners to hold a 10% holdback on all payments. This holdback is released 55 days after a Certificate of Substantial Performance is posted in a BC government registry. As a GC, you must track this on every project — it directly affects your cash flow.
WorkSafeBC (WCB) Obligations
Under any contract type, you’re responsible as GC for WorkSafeBC compliance on your site — including subcontractors. Always get clearance letters from every sub before they start work. One missed clearance can leave you liable for their WCB premiums.
Licensing Requirements
In BC, GCs must hold a valid licence under the Business Practices and Consumer Protection Act for residential work, and meet municipal business licence requirements. Some contract types (e.g., design-build) may require additional professional designations or partnerships with licensed engineers/architects.
GST / PST on Construction Contracts
Construction services in BC are subject to 5% GST. Some materials are also subject to 7% PST. Under cost-plus contracts, be explicit about whether fees are quoted inclusive or exclusive of taxes — disputes over this are common.
Final Thoughts
Understanding construction contract types isn’t just legal protection — it’s a core business skill for every General Contractor in BC. The right contract aligns risk, reward, and expectations between you and your client from day one. The wrong contract (or no contract) is where projects — and relationships — fall apart.
As you move through your career as a GC, you’ll likely work with most of these contract types. The key is knowing what you’re signing, what risk you’re taking on, and how to protect your business at every stage of the project.
Next in this series: Subcontractor Agreements — What Every BC General Contractor Needs in Their Sub Contracts