Construction contracts are lengthy and complex, and you may be tempted to skim over them and sign off.
But to protect yourself and the relationships with your clients and partners, it’s wise to review each construction contract thoroughly before signing.
In this article, we’ll help you sort it all out by answering the following questions:
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When approaching a monumental task with many components, it’s helpful to have a checklist to ensure no details are overlooked.
A construction contract review checklist does just that — it provides a list of every important detail that should be examined before signing a construction contract.
Even though the checklist is lengthy and is a comprehensive list, don’t neglect to review the actual contract as well.
In fact, the review of the construction contract should come first, and the construction contract checklist should be used to make sure all the key elements of the contract have been included.
In some cases, it may even be advisable to have the assistance of a contract review lawyer.
Construction contract review checklists are important for a variety of reasons, and help to:
Flexbase can help you get your construction contracts right the first time to avoid trouble and conflict in the future.
If you want to know what to look for in a contractor agreement, here is a general list of what construction contracts should include:
Though there are many types of construction contracts, these are the basic components that should be included in each one.
In this section, we’ll take a look at some important construction contract elements to review and discuss the importance of each one.
Though a construction contract will likely have more than ten parts, a look at these ten areas will get you off to a good start:
Though not every detail of a project will be decided when the contract is signed, a construction contract should include as much information about the project as possible.
Look for a description of the following categories regarding the project description:
It’s important to describe the scope of the work with as much accuracy as possible. A detailed description is preferred over a broad one. This ensures that all parties know what work is included and expected.
The scope of work should outline:
The scope of work should include the following aspects of the project:
Before signing a contract, part of the construction contract review should include a look at the project schedule.
When reviewing the project schedule, look at the dates carefully to ensure that you have plenty of time to:
Looking meticulously at the scheduled dates before signing the project will allow you to make changes early on if necessary.
It’s also important to remember that many factors can affect the schedule — many of them out of the contractor’s control — so all parties should approach the schedule as expectations as opposed to absolutes.
When reviewing this portion of the contract, ensure that the contract amount is the same amount as the proposal, as well as any change orders that were negotiated.
Make sure that the contract amount is changed to match any alterations to the scope of work.
Be certain that the owner’s responsibilities are clearly spelled out in the contract.
Look for client responsibilities like:
Risk and liability are always considerations in the construction industry, and understanding any indemnity provisions is key to ensuring your own protection.
In any event, each party should be willing to claim responsibility for any losses caused by their own negligence.
When reviewing the construction contract, make sure:
Another item important to include on a construction contract review checklist refers to insurance.
To establish coverage in the case of negligence or an accident, you’ll want to be careful to ensure the following:
Knowing when and how you are going to get paid is of utmost importance to avoid unnecessary conflict.
Check the contract to make sure the payment details are spelled out. Will invoices be sent monthly, or will payment be expected promptly at the time of service? Are any bonuses or incentives included? And what about any benefits?
Outlining these details from the outset will further help protect relationships among all parties.
Disputes are bound to occur from time to time, so reviewing the dispute resolution clause spelled out in the contract is a key item on the construction contract checklist.
When resolution strategies are not included in the contract, litigation often becomes the only option. Everyone would prefer to leave the courts and their costly fees out of the picture.
When reviewing the dispute resolution portion of the contract, look for these proactive solutions:
Also, check that your dispute resolution agreements regarding subcontractors match the agreement you have with the client.
Construction contracts can be terminated for a variety of reasons such as:
When termination of contract details are included in the construction contract, you’ll be better prepared to bring things to a close if necessary.
When reviewing the contract, look for:
Construction documents can be complex and overwhelming. But they are also necessary, and getting them right is critical to the success of the project and your business.
Flexbase streamlines the whole process by generating compliance documents and paperwork in just one click.
Flexbase is easy to use and is essentially free. You pay us only when you get paid. And you won’t spend unnecessary cash on licenses or subscriptions you don’t use.
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