Did you know that the global construction market will grow to $8 trillion by 2030?
Beginning a construction project isn’t as simple as signing checks. To create a formalized agreement and set out the main expectations among the parties, you’ll need to summarize the contract.
The construction contract sets legal boundaries for both the client and the construction company. When you’re entering into this kind of deal, you want to be sure you and the worker are both clear on the outcomes and terms.
Before signing a contract, review this guide to help understand what you should include.
Detailed Description of the Work
A detailed description of the work should be an essential part of any contract agreement. This section should outline the size, scope, and required materials for the project as specified by the owner. This is to ensure that all parties have a clear understanding of the expectations of the project.
This description should include the scope of the project and what activities the contractor will carry out. It should also discuss the materials and methods to execute the work. All of this should be clearly outlined in the agreement to ensure everyone is aware of their responsibilities in the project.
Timeframe of the Project
The timeframe should define the expected start and completion dates of the project. It should include specific intervals for any progress reports or payments. This also includes penalties for failure to meet certain milestones.
As a part of the timeline, the contract should also include details of any milestones. This includes the delivery of any materials or completion of particular stages of the project.
Additionally, contract agreements should outline what happens if the project is not completed on time. This helps avoid costly delays and misunderstandings about when the work is due.
Payment Structure and Payment Schedule
The structure should outline how and when the payments will be made. This includes a flat rate, a retainer, or an itemized list of payments based on stages of construction. The schedule should list the dates and amounts of payment due by each party.
All deadlines and payment due dates should also be included, along with any costs associated with late payments. By outlining these criteria and details, both parties can accurately track and manage their finances. Clear payment guidance is important to avoid any disputes between the contractor and the client.
If you will use a loan to finance the construction, it is important to include provisions on the payment for the construction loan. It should outline how late fees and any interest will be charged on the loan.
If you are planning to use a loan, you might want to consider a low doc construction loan. They offer flexible repayment options and interest rates over the term of the loan.
Essentials of a Construction Contract
In conclusion, a construction contract agreement is essential in any construction project. It outlines the budget, responsibilities, and timeline of the project. Make sure you understand the agreement and negotiate the best terms for your project.
If you need help in creating an agreement, get in touch with a qualified attorney to help you draft a contract that meets your needs. Get started on your contract agreement now and protect your project.
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