Construction contracts help to keep the client and the construction company protected through the duration of the project. Having as many details as possible in these contracts is critical because that typically means that there are fewer opportunities for disputes.
Certain clauses should be included in every construction contract. These provide important information that goes beyond the basic scope of the project. Let’s look at a few key ones.
Detailed payment schedule
A construction contract should always include a clear payment schedule that lays out when and how the payments for the project should be made. This might be tied to project milestones, specific dates or completion percentages. It’s a good idea to include what documentation, if any, is required prior to the release of each payment.
Clear change order procedure
Construction projects rarely go exactly as they’re planned. Things like unexpected site conditions, weather delays and design changes can lead to changes in the project. The change order should spell out how changes to the scope of the work must be requested, approved and documented.
Defined dispute resolution methods
Disputes in construction projects are bound to happen, so it’s crucial to have terms for addressing these. Some contracts require alternative dispute resolution methods, such as arbitration or mediation. Choice of venue and similar information might also be included in the contract.
There are times when construction disputes can’t be resolved in an amicable manner. In those cases, it might be necessary to turn to litigation. If that’s the situation, it’s best to have someone who can assist with determining the direction of the case and to represent the construction company’s best interests.