A construction project is a huge undertaking. Besides the significant financial implications, a construction project also comes with its share of risks. Add to these the number of parties involved – the client, the contractor, the architect, the suppliers, among others – and you understand why every project requires a well-thought-out contract.
A construction contract stipulates each party’s rights and responsibilities during the construction project. It also spells out how conflicts will be mitigated. Here are some of the important clauses you should always include in a construction contract.
The scope of the project
It is easy to assume each party knows what is expected of them. After all, both the client and the contractor sat and discussed this before getting down to work. However, one of the common mistakes contractors make is attaching a copy of their proposal to the contract with the assumption that it will control the scope of the work as well.
It is not uncommon for the contractor’s understanding of the scope of work to be different from the client’s understanding of the same. Misunderstanding the scope of the project can result in potential disputes down the road. And this can result in a breach of contract lawsuit, resulting in unnecessary losses for both parties. This is why both parties must understand the scope of the work from the onset.
The cost of the project
Once both parties are clear on the scope of the work, it is important that they discuss and include the cost of the project in the contract. Is the contractor going to charge for the labor and construction materials only, or will they also be responsible for processing taxes, permits, insurance and other construction-related fees? It is important that these provisions are clearly articulated in the contract to avoid disputes.
A good construction contract can mean the difference between a successful project and a contentious one. These are just some of the provisions you need to pay close attention to when drafting a construction contract.