There are two basic categories of construction phase contracts.

There are two basic categories of construction phase contracts.

• A. There are two categories: cost reimbursement and fixed price
• B. There is only one category
• C. There are three categories: cost reimbursement, time and materials, fixed price
• D. There are five categories

Answer: (B)

The main idea being tested is how pricing is used to classify construction phase contracts. In most construction management materials, contracts are distinguished by how the price is set: fixed-price (lump-sum) contracts, where a set price is agreed for a defined scope, and cost-reimbursement (cost-plus) contracts, where the owner pays actual costs plus a fee. This two-category framework matters because it directly affects who bears cost risk, how changes are handled, and how budgeting and oversight are managed during the project. If a particular course or test presents only one category, it’s a simplified or course-specific framing that treats the contract framework as a single model with pricing variations, rather than a broad, industry-standard split. In standard practice, understanding the two-category distinction is the most widely used way to analyze construction contracts and their risk implications.

The main idea being tested is how pricing is used to classify construction phase contracts. In most construction management materials, contracts are distinguished by how the price is set: fixed-price (lump-sum) contracts, where a set price is agreed for a defined scope, and cost-reimbursement (cost-plus) contracts, where the owner pays actual costs plus a fee. This two-category framework matters because it directly affects who bears cost risk, how changes are handled, and how budgeting and oversight are managed during the project.

If a particular course or test presents only one category, it’s a simplified or course-specific framing that treats the contract framework as a single model with pricing variations, rather than a broad, industry-standard split. In standard practice, understanding the two-category distinction is the most widely used way to analyze construction contracts and their risk implications.