BMATWT 353 - Business of Building

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5 Key Elements of a Construction Contract

Henry Goudreau. Monday, November 19, 2001. http://www.redvector.com/dg.lts/id.299/news_articles.view_content.htm

 Contract from the latin "contractus"

A definition: An agreement, between two or more parties, to complete a specific amount of work, for a specific value, in a certain amount of time.

1. Payments:

The Zero-Dollar Invoice: Prior to the start of work, provide owner with a copy of your invoice so they can become familiar with it's format. Get approval for it (or modify your invoice procedures to meet owner requirements). Benefit: On-time payments

When and how often billed?

How calculated?

Payment due after invoicing (Terms)

 

2. Accurate Listing of Contract Documents

If all contract documents and their relationships/priority are not listed in the Contract then sources of disagreement and confusion can arise:

• Contract (s)
• Drawings
• Specifications

 

3. Authority

Who has decisionmaking authority?

For the owner/designer? Contractor?

4. Change Orders

How are they filed?

Who has authority?

How is payment calculated, billed?

5. Schedule

Who is responsible for what kinds of delays? Owner caused?, Weather?, Acts of God?, War?

 

Produced and maintained by David T. Damery
Building Materials and Wood Technology
Department of Natural Resources Conservation
College of Natural Resources and the Environment
University of Massachusetts, Amherst.