What to Know Before Signing a Construction Project

If you’re a homeowner looking to add on to your home or remodel portions of it, you’re looking at a hefty expense. A remodel can cost anywhere from a few thousand to a few hundred thousand dollars. Because there’s so much at stake, it’s important to have a solid construction contract in place.

A contract is a necessity for any construction project, big or small. A construction contract is a legally binding agreement among all the parties involved, including the property owners, contractors, subcontractors, and architects. With a contract, homeowners can avoid costly disputes.

There are four common types of construction contracts:

• Fixed price contract. Also known as a lump sum contract, this contract type involves a set price for the entire scope of work. It’s commonly used when project details and specifications are clear from the outset.
• Cost plus contract. Under this agreement, the contractor is reimbursed for actual project costs and receives an additional fee, which can either be a flat rate or a percentage of costs. This contract works well when the full scope isn’t known.
• Time and materials contract. This contract pays the contractor based on actual time spent (hourly/daily rates) and materials used, often with a markup. It’s best for small projects.
• Unit price contract. In a unit price contract, the project is divided into units (such as per square foot or per cubic yard), each with a set cost. This contract is ideal for repetitive work or when quantities aren’t fully known.

No matter what you type of contract you choose, here’s what you need to include: 

• Scope of work. This outlines exactly what the contractor is responsible for delivering. It includes a detailed breakdown of tasks, materials, labor, equipment, and services. It should specify what is included and excluded from the project.
  The timeline sets the start and completion dates of the project, along with any milestones for key phases. It may also include penalties for delays or incentives for early completion.
• Payment terms. This part describes how and when the contractor will be paid. Common structures include lump-sum payments at milestones and progress payments based on work completed.
• Change orders. When construction projects evolve, change orders define how modifications to the original plan are handled. A change order process typically includes:
  • A written request detailing the proposed change.
  • Review and approval by both parties.
  • Cost and timeline adjustments.
• Warranties and guarantees. These outline what aspects of the work are guaranteed, such as structural soundness, proper installation, or material quality. It outlines:
  • Duration of the warranty.
  • What’s covered and excluded.
  • How to file a claim or request repair.

If you say something verbally, make sure it’s also in writing. Documenting conversations, agreements, and changes is also critical.

Contact Us Today

Construction projects often involve large sums of money, so it’s important to have a solid contract in place.

A Florida construction contract lawyer from Linkhorst & Hockin, P.A. can handle your contract-related concerns. We are familiar with contracts that are commonly used in the construction industry, as well as the state and federal laws involved. Schedule a consultation with our office by filling out the online form or calling 561-626-8880.

Source:

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