Issuing contracts before starting any aspect of a build, no matter how small, is crucial for both clients and tradesmen. Contracts provide protection and clarity, ensuring that both parties understand their responsibilities and the project's scope.
Here’s a breakdown of common building contracts and their suitability for various projects:
Types of Building Contracts
1. Lump Sum Contract (also known as All Risk Contract):
Description: Contractor agrees to complete the project for a fixed price.
Ideal for: Projects with clearly defined scopes.
2. Cost Plus Contract (also known as Open Book Contract):
Description: Client pays the actual cost of the project plus a fee covering the contractor's overhead and profit.
Ideal for: Projects with undefined or evolving scopes.
3. Time and Materials Contract:
Description: Client pays for actual labor and materials costs plus a markup.
Ideal for: Projects where the scope of work is uncertain.
4. Unit Price Contract:
Description: Contractor is paid a fixed amount for each unit of work completed.
Ideal for: Civil construction projects with indeterminate quantities.
5. Design and Build Contract:
Description: Contractor handles both design and construction.
Ideal for: Projects preferring a single point of responsibility.
Essential Contract Inclusions
A contract doesn’t need to be lengthy but should cover basic details such as
Activities/Tasks: Specific tasks to be carried out by the contractor.
Payment Value: Total agreed payment.
Payment Terms: Schedule and terms of payment.
Client’s Responsibility: Client-provided materials, welfare, etc.
Drawings/Information: Specific plans or information guiding the work.
Dispute Resolution: Appointing an independent arbitrator.
Work Standards: Quality standards to be adhered to.
Change Management: Procedures for handling design changes or additional work.
Ensuring Mutual Understanding
The most important aspect of a contract is mutual understanding of the terms. Key steps include:
Pre-Start Meeting: Discuss terms thoroughly and ensure clarity.
Detailed Review: Go through every point carefully to prevent misunderstandings.
Professional Advice: Seek legal advice if any aspect of the contract is unclear.
Final Note
Contracts are not designed to catch people out but to ensure both parties know exactly what is expected. Always prioritise clarity and mutual agreement to create a comfortable and professional working relationship.
ALWAYS SEEK PROFESSIONAL HELP!
The Emerge Team
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