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What to include in every construction contract

On Behalf of | Feb 1, 2024 | Commercial Real Estate |

A construction contract is a legal agreement that sets the stage for a successful construction project. Effective ones outline the responsibilities, roles and expectations of every party involved in the deal.

The only way to write an airtight document is by knowing from the outset what every construction contract needs to address.

Project description and scope of work

Construction contracts should begin by defining the job from top to bottom. This includes the type of work, site details and specific tasks the contractor will undertake. Leading off with a clear and detailed overview helps prevent scope creep, where a project expands beyond the original plan, increasing costs and delaying completion.

Schedule and timeline

Proper construction contracts specify start and finish dates, plus milestones and deadlines for stages of completion. This ensures that everyone understands how much must get done within particular timeframes.

Payment terms and schedule

Every building agreement should also detail the complete cost of the undertaking, payment dates and money delivery method. Clarification in this department helps immensely with fiscal planning.

Change order process

A construction project can shift as work progresses. Therefore, every starting contract should include instructions on changing the original plan. An agreed-upon protocol facilitates making adjustments without argument.

Dispute resolution

Even under the best of circumstances, disagreements sometimes arise. Because of this, construction agreements need to outline what will occur if a conflict develops. Mandating mediation as a solution could sidestep a painful court case.

Construction contracts should be mandatory for every building project. Creating one with forethought reduces the odds of trouble that may turn into litigation.