![]() If there are liquidated damages on a project, make sure that the damages will be passed down only to the contractors responsible for the delay. Liquidated damages are usually assessed by the owner to the general contractor and are often passed down to subcontractors. They are assessed to help compensate the project owner for lost revenues due to a delay in the project. Liquidated damages are penalties for completing a project after its scheduled completion time. This clause should be changed to include reimbursement for damages if a delay is caused by an upstream party and is not the fault of the contractor. This means that lower-tier contractors can lose significant amounts of money waiting for upper-tier contractors to move the work along, whether they caused the delay or not. No damage for delayĪ no damage for delay clause states that a contractor cannot be reimbursed for costs incurred by a delay caused by an upper-tier party.įor example, a subcontractor cannot claim costs for a delay caused by the owner or the GC. This clause should be changed to include reimbursement for materials and equipment that have been purchased and haven’t been installed yet. This means that materials or equipment that have been purchased and haven’t been installed yet aren’t paid for, and the contractor incurs the cost without reimbursement. Often the clause states that contractors will only be paid for work that has been performed or installed after the date of termination. These clauses stipulate what happens if the owner terminates the project for their own purposes. If the GC won’t remove it, proceed with caution. You should ask for a pay-if-paid clause to be removed from the contract if possible. They shift the responsibility for non-payment from the GC to the subcontractor. Pay-if-paid clauses, however, create a dependency between the owner paying the general contractor and the subcontractor being paid. ![]() These deadlines are subject to federal and state prompt payment laws, so make sure you know which laws apply for your project. ![]() There’s usually a deadline for when payment will be made, such as seven days after payment from the owner. Pay-when-paid states that payments will be made to a subcontractor after the owner has paid the general. These clauses attempt to delay payment to lower-tier contractors. You’ll want to be sure to check the payment clauses in the contract to determine if they include a pay-when-paid or pay-if-paid clause. Clauses in your contract to watch out for ‘Pay-when-paid’ or ‘pay-if-paid’ You’ll also want to note who is responsible for attorney’s fees if a claim is settled or decided by a judge or arbitrator. Other options include mediation or a lawsuit. Many contracts stipulate that the parties will go to arbitration if there is a dispute. Take note of the method of dispute resolution that is required by the contract. Having the wrong documents listed on the contract can create conflict when it comes time to determine the scope of work. Pay special attention to the dates of drawings, as they usually go through several revisions on a project. Review the list of drawings and specifications and other contract documents to make sure that you have the correct versions of the documents. Usually, they are considered part of the contract by being listed or incorporated into the document. The contract documents, like drawings and specifications, are often referenced in construction contracts as the basis for the scope of work. Since project completion depends on everyone completing their work on time, it’s especially important to review and discover any schedule changes as early as possible. Make sure you have been given enough time to get submittal approval, order materials or equipment, and have them delivered before you start work. If a schedule is included, review the dates for your work carefully. Project scheduleĬontracts may include a construction schedule or dates for the project as part of the contract language. If changes have been made to the scope of work, make sure that the changes are reflected in the scope description, as well as the contract amount. Make sure that the contract amount matches the amount of your proposal and any agreed-upon alternates or change orders. A well-defined scope description helps all parties to the contract know exactly what work is included - as well as excluded. Some contracts will provide a detailed description of the work needed, while others may be quite broad. Make sure that it matches the work that you have offered to perform. The first section that you should review is the scope of work described in the contract. Construction contract review: Where to proceed with cautionĭownload the contract review checklist Construction contract sections to review for accuracy Scope of work.Clauses in your contract to watch out for.Construction contract sections to review for accuracy.
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