Commercial Contracts, Money & Risk
Welcome
Hello, and welcome. This is Super Structures General Contractors — a national general contractor headquartered in Powhatan, Virginia — here to help you and your clients build something that lasts. We're glad you're with us, and we look forward to connecting with you.
Commercial construction runs on serious money and serious paper. The contracts are formal, the billing is structured, and the risk is managed with bonds and insurance. If you want to play in commercial, you have to understand the money machine — so let's open the books.
The contracts & money
- Contracts: standardized AIA (or ConsensusDocs) agreements — lump-sum, GMP, or cost-plus.
- Billing: monthly AIA pay applications against a schedule of values, with retainage held back.
- Risk transfer: performance & payment bonds, builder's-risk and liability insurance, and liquidated damages for late completion.
- Cash: draws follow progress, so the GC fronts costs and bills in arrears.
Going Deeper (Intermediate)
Match the contract type to the risk (lump-sum vs. GMP vs. cost-plus). Run AIA billing / SOV / retainage cleanly (see the accounting courses), and recognize that bonding capacity is the gate to bigger commercial work, while liquidated damages put the schedule on the contract.
Advanced / Pro-Level
Manage GMP shared savings, change orders at scale, and the lender's draw inspections. Understand the cash-flow cycle on big commercial jobs (retainage can tie up your whole margin), and that bonding, insurance, and working capital literally determine the size of commercial work you can take on.
Practice Challenge
Why does a contractor need significant bonding capacity to win larger commercial work? (Answer: commercial owners — especially public and institutional — require performance and payment bonds, and a surety will only bond you up to your capacity (tied to your working capital and financials). Without that bonding capacity you literally can't bid the larger jobs — so building working capital and a clean financial record is the gate to bigger commercial work.)
Takeaway: Commercial runs on formal AIA-style contracts (lump-sum/GMP/cost-plus), structured AIA billing against a schedule of values with retainage, and risk transfer via bonds, insurance, and liquidated damages — and your bonding capacity (tied to working capital) sets the size of commercial work you can win.
Educational overview — every commercial project, owner, and jurisdiction differs; follow your specific contract documents, the adopted codes, and the building official.