Construction Contract Terms Every Builder Needs to Know

Building any type of structure requires experience and knowledge. The construction industry is rife with complex procedure and terminology.

A strong grasp of construction terminology is an important part of running projects efficiently from planning through completion. Every builder needs to be knowledgeable about their jobs and that means adding some new words to their vocabulary (and contracts).

Scope of Work

The scope of work outlines exactly what the contractor is responsible for completing under the construction contract. It typically identifies the required labor, materials, equipment, services, and deliverables needed to complete the project.

A clearly defined scope of work establishes both the contractor’s obligations and the owner’s expectations. It should also identify what is not included in the agreement. When the scope is vague or incomplete, disagreements can arise over additional work, project costs, delays, and whether certain tasks were included in the original contract.

Standard construction agreements may incorporate drawings, specifications, and general conditions that further define the contractor’s responsibilities and the relationship between the contractor, owner, architect, and other project participants.

Contract Time

The contract time provision establishes the project’s schedule and identifies important deadlines and milestones. Depending on the project, these may include the start of construction, major phases of work, substantial completion, final completion, and the owner’s planned move-in or occupancy date.

Construction timelines often begin when the contractor receives a Notice to Proceed, which formally authorizes work to start. This date may trigger the timeline for completing specific milestones and reaching substantial completion.

Contract Sum

The contract sum is the total amount the owner agrees to pay the contractor for completing the work. The construction contract should clearly explain how the project is priced, when payments are due, and what requirements must be met before payment is issued.

Unit Pricing

Unit pricing establishes a predetermined price for each unit of work, material, or service. The final contract amount may vary based on the actual quantity of work performed.

Understanding the scope of work, project timeline, and payment structure is essential before signing a construction contract. Clearly defining these terms can help builders manage expectations, control costs, reduce disputes, and better protect their interests throughout the project.

Contingency

A contingency is a portion of the project budget set aside to cover unexpected costs or circumstances that arise during construction. Even the most carefully planned projects can encounter issues that were not anticipated when the original budget and contract were prepared.

Contingency funds may be used to address unforeseen site conditions, material price increases, design changes, construction errors, delays, or other unexpected expenses.

Contact Us Today

Construction projects require a lot of knowledge, especially when it comes to terminology. Understanding these terms can help builders better manage projects, communicate with clients and subcontractors, and recognize potential issues before they become costly disputes.

A Florida construction contract lawyer from Linkhorst Law Firm can assist you with your construction projects. We have also handled many unique construction contract matters and can help make sure your projects run smoothly. Schedule a consultation today by calling 561-626-8880 or filling out the online form.

Source:

learn.aiacontracts.com/articles/key-construction-contract-terms/