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What Provisions Should I Include in a Construction Contract?

On Behalf of | Oct 21, 2022 | Construction Law

Make no mistake, construction projects are complex undertakings. As such, the importance of drafting a contract for your construction project cannot be understated. Done right, a construction project contract can offer valuable protections for both parties and set clear expectations for the workflow.

Each construction project is unique, and so is the accompanying contract. That said, here are key clauses that you need to include in your construction contract.

The Scope of the Work

How both parties understand the scope of the construction project is probably the most important component of the contract. Basically, the scope of work refers to what the contractor is expected to do in exchange for the money the client is obliged to pay.  While defining the scope of work, it is important to mention the labor, materials, equipment and other services that will be used to execute the project.

This clause can also include clarifications and exclusions that will be provided by the client’s other contractors.

The Cost of the Project

The agreed price of the construction project must match up with the agreed scope of work. Of course, this cost can be reviewed if there are changes to any component of the scope of work.

It is important that you specify how payments will be made. Industry standards for payment modules include:

Lump-sum payments (a fixed price)

Unit pricing

Installment payment

Dispute Resolution

Disputes are bound to happen during the course of the construction project. And if they do, the repercussions can be far-reaching. Including a dispute resolution mechanism such as mediation can help minimize potential damages that may arise from construction disputes.

Construction work is resource-intensive, and you want a contract that is nuanced. Find out how you can create a construction contract that safeguards your rights and interests.

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