A well-written contract often makes the difference between a construction project’s success and failure. When disputes arise, a mistake in binding agreement terms could inflate costs and derail progress.
Whether you are new to the construction industry or need a legal refresher before taking on a big development, these are the common contract mistakes to avoid.
Lack of a change order
If anything about the contract changes, such as scope, budget or terms, the party requesting the change should issue an official change order detailing the desired alteration. Both parties must agree in writing on the changed terms and any resulting financial changes. Often, the lack of documented change results in a legal dispute when mistakes occur.
Pricing or signing without clear specs
Never assume that you know what a client is thinking based on vague or poorly written specifications. Ask questions and seek more information until you have a clear idea of everything the project entails. Only then can you agree on a price.
Quoting without a walkthrough
Avoid providing a price for construction services without completely evaluating the scope of the project in person. While written specs are critical, they do not show the full picture of a potential project site.
Failure to include checkpoints
Your contract should include clear budget and project milestones. Establish regular check-in dates in writing so both parties can assess progress toward those goals and make adjustments when necessary. This prevents the length, budget and scope of a project from inflating without client updates. The financial milestones should also establish a payment schedule with clear fees for missing payments.
The project schedule should account for rain delays, poor weather and unfavorable conditions that may trigger construction project setbacks. Both parties should ensure that the time provided to reach each milestone is realistic, fair and accurate. Allowing extra time in a contract gives you the opportunity to exceed client expectations.
Be sure to perform your due diligence regarding the legal aspects of construction projects before you draw up a legal agreement. Often, oral agreements between friends or colleagues end up in court.