Even though everyone hopes the best for construction projects, it’s best to plan for worst case scenarios. Proper planning will help protect individuals and businesses from liability, overrun costs, or being taken advantage of by unscrupulous people. A lot of external factors like weather, shipping delays, accidents and other issues can also slow up and complicate construction work. Parties involved in construction projects can protect themselves by making sure that all contingencies are accounted for.

Delays

Delays are unfortunately a common frustration of many construction projects. Not to mention, they can affect all parties in a project. Owners can’t have access to their facility when expected, and workers can’t work until the delay is fixed. Delays can cause a domino effect where contractors’ other jobs are pushed back until the delayed one is completed. Oftentimes what happens in a delay is that both sides resist assuming liability for the delay—by doing so, they attempt to dodge incurring extra costs. Contractors demand to be paid during delays and owners want reduced pricing because the original contract was not honored.

Delays aren’t always caused by human error. Weather, deliveries, and other factors can cause a delay that’s not attributable to owners or workers. With both sides resisting responsibility and out of control factors threatening to cause delays, it’s best to have all of this worked out prior to construction beginning. A proper agreement will spell out what to do in each specific incident so that both parties understand the best course of action.

how to avoid common construction contract issuesMaterial Costs Change

Prior to construction, clients provide a budget and contractors provide estimates and both parties meet somewhere in the middle. Contractors budget for how much materials cost at the time of the estimate, but sometimes that changes during a project. Who bears those costs can have significant impact on either owner costs or contractor profit. What should be done in the event of fluctuation in material costs should be explicitly laid out in an agreement prior to work beginning.

Risk-Management Provision Back-Ups

Indemnity provisions a frequently used in construction contracts but are often seen as ineffective because of a lack of insurance of asset coverage. Both parties should conduct due diligence on partners to make sure assets tied to an agreement aren’t being used or deteriorated while your contract is in effect. It’s also possible to require parties to report regularly on insurance status to make sure coverage doesn’t end prior to project completion.

Bonds to Ensure All Parties are Paid

Requiring that parties post a bond equal to a contractual payment is important. It will help avoid subcontractors from working without pay and getting into disputes with hiring firms. It keeps payment agreements secure.

Have Every Contract Reviewed by an Attorney 

An important precaution any party involved in a construction party should take is to have a business attorney look over documents and agreements to make sure every contingency is covered. Woodall Batchelor PLLC has attorneys will extensive experience in reviewing contracts and agreements and can help advise clients on how to best protect their assets.