10 Essential Contract Documents for Construction Projects
Protection for Contractor and Client
Constructing a solid contract represents one of the first steps toward the success of your project, no matter what you're building or what client you are working for. A full-fledged construction contract can include as many as 10 documents specifying different aspects of the work. Successful contractors learn how to use all of them.
This is the principal agreement between the construction contractor and the private property owner or the contracting officer for a business. It's the essential component of the bundle of various contract documents—the main document to which most of the other documents attach or refer.
Having a clearly defined scope of the work involved for a project is helpful during the bidding process and later on during the construction sequence.
The Scope of Work document, sometimes known as the Statement of Work, should enumerate all of the work to be done, who is responsible for the work, how the work should be performed (techniques used), and what materials will be used. This is the document that will detail how change orders are handled.
The construction schedule is an important component of the larger document and second only to the construction contract agreement. This component allows the contracting client to know how and when the project will be completed and offers them leverage when schedule problems arise. It is also the document that helps the contractor schedule the work. Construction contracts sometimes require updated schedules throughout the construction progress, and they might form the basis for the application for payments by the contractor.
The General Conditions portion of an overall construction contract is the portion that sets forth the right, responsibilities, and relationships between the client and contractors. Most important is the delineation of rights and responsibilities of each party.
The General Conditions portion of the contract offers the legal framework for the overall construction contract. It includes stipulations for how any disputes will be resolved.
This is usually an extension of the contract and an addendum to the General Conditions. The Special Conditions document should specify certain conditions and clauses that pertain to specific portions of the job. For example, if there are specific instructions that apply to only one portion of the job, the Special Conditions section is where this will be described.
The Specifications section of a contract is where all the technical data and requirements are listed. Information should detail all the materials and techniques that are expected to be used.
These specifications should be discussed and negotiated at the time the contract is developed, and later changes to the specifications are often handled under whatever conditions are laid for change orders in the Scope of Work section.
This document comprises lists of diverse trades and materials that will form part of the construction. It includes an itemized list on the costs of materials, parts, and labor that will be part of the construction project. This document is essential for allowing a contractor to properly bid a project.
Sometimes this document is omitted since it is not always required by the contracting officer.
This portion of the construction contract agreement provides a breakdown of all items being incorporated into the construction project and their costs. The cost estimate can be detailed per item in a document that combines specifications and costs, or in a lump sum form that doesn't specify individual items.
Sometimes an itemized Cost Estimate is combined with the Specifications in a single section.
All contracts should include a set of whatever drawings that are applicable to the work being performed. This might include the actual blueprints for the project, or it may be one or more simpler drawings that provide a graphic representation of the scope, extent, and character of the work that will be performed by the contractor.
This is an essential part of the agreement because it provides a guarantee to the owner that the contractor has the means and the economic backup to perform under the terms of the construction contract. It will include details on specific types of coverages, including general liability insurance, performance bonding, and builder's risk insurance.
Although not always included, this document provides the official mandate for the contractor to complete execute every task and supply every material being incorporated into the construction project. It is an organizing document that provides a systematic way to arrange all the information found in the various contract sections.
The MasterFormat Outline supplements the construction drawings by specifying common standards, explaining deviations that have been accepted, detailing materials that have been accepted, and citing the required testing for all materials. Specifications are usually made by referencing formal construction standards and codes.
MasterFormat is a universal method for organizing such documents, a publication produced by CSI, the Construction Specification Institute. It is normally used for institutional and commercial building projects and is usually not used in residential construction projects.
Do You Need More?
A construction contract can also include details on when to issue stop-work orders, information about liens, staffing requirements, safety instructions, and excusable events and how they can be identified. Every contractor or builder should explore the possibility of additional documents that may be necessary depending on their industry and trade specification. The goal of these documents is to establish a way to solve claims and issues and to provide the legal body that can be used to present claims and solve potential conflicts in the case of any legal action.