Contracts & Buyout

Prime Contract

Also known as: Owner Contract

The agreement between the project owner and the general contractor that defines the total scope, price, and terms.

The prime contract is the top-level agreement between the owner and the general contractor — it sets the contract sum, the scope, the schedule, and the terms the whole job hangs off of. Everything the GC buys out downstream (the commitments) has to add up to deliver the prime contract's scope within its price.

Prime contract change orders (PCCOs) adjust the owner-GC agreement when scope changes, while commitment change orders (CCOs) adjust the subcontracts below it. Keeping the two sides reconciled — what the owner has approved versus what you've committed to subs — is central to protecting margin.

Related terms

Commitment

A subcontract or purchase order — a signed agreement committing money to a subcontractor or supplier for a defined scope.

Change Order

A formal, signed modification to a contract that adjusts its scope, price, or schedule after it's been executed.

GMP (Guaranteed Maximum Price)

A contract price ceiling — the contractor guarantees the project won't exceed a set maximum, and shared savings go back to the owner.

Schedule of Values

A line-item breakdown of a contract's total price, used as the basis for progress billing.

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