5 vital contract documents needed for a construction project
A construction project is essentially a time-bound project. A single day’s delay in the project’s completion incurs extra costs and puts the owner of the project under pressure from investors and customers. And the heat flows down on the contractor.
A comprehensively written construction contract helps avert all disputes between the project owner and the contractor.
If you are a construction contractor, you’ll definitely not put your reputation at stake, but finish your part of the work and receive the payment. On the other hand, if you are the project owner, you’ll want to see your project progress according to the approved plan and design and finish within the expected date.
But, it’s not just about the timely finish of the project. There are many areas where both parties should agree and conform to the agreement, such as the specific nature of the works, materials to be used, quality construction, compliances, etc. Each type of requirement is addressed by a specific type of contract document. This underlines the importance of contract documents in construction.
What are contract documents?
Construction documents are different sections of a construction contract. A construction contract is a legal agreement between contractors and clients that outlines the specifications and terms of a project in great detail in different documents.
Contract documents are statements, clauses, conditions, and other job-specific details for different parts of the contract that must be fulfilled. They may be text or graphic in nature, and serve as a legal definition of the contract. Unlike other industries, a contract in construction is not a single document. There can be different types of contract documents in construction.
Fulfilling the requirements of contract documents and their various versions (if any) can be daunting. Contractors must be careful about avoiding contract breaches by following the laid down principles, specifications, and standards.
While the list of contract documents for construction may contain many different types, we’ll highlight here 5 essential ones that are contained in any construction contract:
- Scope of Work
- Agreement and Conditions of Contract
- Contract Drawings
- Bills of Quantities
1. Scope of Work
A construction contract must include a clearly defined scope of work, also known as a statement of work. This document will detail the specific tasks and objectives of a contractor.
The scope of work specifies how much work the contractor must complete in order to meet their contractual obligations. When preparing change orders and punch lists, the scope is a critical reference point.
Contractors and subcontractors must understand what work falls outside their scope of work in order to avoid performing additional work without additional compensation.
2. The Construction Agreement
The agreement is another very important document in the construction contract package. This makes the foundation upon which the rest of the project details are built. This document will outline the overall purpose of the contract as well as the contract price.
The agreement can be a standard document, such as those provided in an AIA contract, or it can be tailored to the needs of a specific project. Depending on how the contract payment is set up, the form will differ.
The following are the variety of types of construction contracts:
- Time and Material contract
- Unit-Price contract
- Cost-Plus Contract
- Design-Build Contract
- Guaranteed Maximum Price Contract
- Incentive Construction Contracts
- Integrated Project Delivery Contract
- Lump-Sum Contract
The agreement is only the beginning. Construction contracts must be as detailed as possible in order to avoid mistakes, conflicts, and delays, ultimately saving everyone involved in the project.
All technical data and performance requirements are contained in the section for construction specifications. The specifications should specify the materials and techniques that the contractors must use for any given job. It will detail all of the quality standards, acceptable materials, and any quality testing that is required to ensure compliance.
These will be prepared by the architect or engineer, and they will be verified by the client. In turn, the client provides the specs to contractors who must follow those specifications. However, any defective specifications may result in the client being liable to the contractor for any additional costs incurred as a result of the specs.
For a variety of reasons, the contractor may want to substitute one material for another in some cases. Contractors must always follow the specifications created by the architect or engineer. However, if a change is required, it is critical to follow the steps required to make a substitution request.
A set of drawings or blueprints should be included with every construction project. Drawings provide a quick overview of the entire project. Before any construction activities begin, the architect or construction manager should present these to contractors.
This document instructs the contractors on what and how to construct the structure. The architect, the client, and the contractor work together to create construction drawings. These should be the most recent versions of the drawings.
5. Bill of Quantities
A bill of quantities is not required on all contracts, but it can be useful. A bill of quantities is a detailed list of the materials, parts, and labor needed. Typically, this list is provided during the bidding process.
The goal is for prospective bidders to be able to more accurately estimate their costs and simplify the evaluation process. The bill of quantities is typically prepared by a quantity surveyor or building estimator.
A bill of quantities frequently resembles a schedule of values, to the point where the terms are used interchangeably.
A construction project involves huge investments and contributes to the economy either directly or indirectly. However a construction project cannot start unless a contract is agreed upon and signed by the contractor and the client. Understanding the objective of each contract document in civil engineering is necessary for the satisfactory completion of the project.