Construction projects come with many risks, so having a solid contract is an important step in protecting everyone involved.
Contracts delineate the duties of each party, recognize and allocate risk responsibilities, and reduce uncertainties that come with the project. They also outline provisions for pricing, scope of work, changes, and delays. Because so much is involved, contracts may take time to negotiate to ensue that everyone is on the same page and working together to complete a project.
Before we sign any contract, we ensure that these four key clauses are given special attention. Making sure we are on the same page early on is a strong indicator of the eventual success of the project.
Scope of Work
Scope of work is one of the most important clauses in a contract and is the basis for many contract claims and disputes. This section defines all of the responsibilities of those involved and what is supposed to happen.
Always make sure that the scope of work is very specific and fits the needs of the project. When the scope is poorly defined, it can leave the door open to disputes. To protect yourself, thoroughly review this part of the contract.
And, keep in mind that scope of work issues between you and the general contractor differ from those between the general contractor and subcontractors. It is up to general contractors to make sure scope of work is contracted to subcontractors and there are no overlapping issues.
Deadlines and Delays
Construction contracts outline many deadlines, but “substantial completion” is the overarching deadline. This refers to when the project is ready to be rented out or moved into. But, more often than not, delays occur, and contracts should account for this.
Construction contracts usually account for excused delays and owner-caused delays. Excused delays refer to unforeseen circumstances that impact a project. As its name suggests, owner-caused delays occur if a change is made to the original project by the owner.
Your contract should include provisions for these types of delays, along with how they should be addressed and any associated damages.
Changes are common in construction projects, especially large-scale ones.
A common type of change is a change order, which refer to changes to the contract. Change orders depend on a consensus of all the parties involved to change the work, price, time extensions, or other contract terms.
Everyone always skips ahead to look at the number associated with the contract, and for good reason. The price will be specified as a lump sum, unit prices, or time and material price. Contracts should include a definite price, and those that do not are commonly interpreted as requiring a fair value payment.
Always be sure that contracts include a schedule of value, which breaks down the price and allows you to track and compare the project’s progress.
At Seacoast Construction, we strongly believe that the contract needs to benefit both parties. If you want to find out why, call us at 786-433-8740 to schedule a consultation.
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