Construction contracts are typically tedious, detailed things attempting to address all conceivable legal issues that may arise in the course of a project. With large contract values and a complex effort, these complicated contracts probably make sense.
But it seems all the attention to fine tuning the wording and working out the “mutually acceptable terms and conditions” for the various legal and financial issues can distract from what the contract should focus on.
During a particularly tedious contract negotiating session where every word was being parsed; we, in jest, proposed scrapping the entire proposed agreement and substituting the following:
“We, _______(contractor) promise to do what we’re supposed to do, how we’re supposed to do it, when we’re supposed to do it and you ____ (owner) promise to pay us $____”
While this brought some much needed levity to an effort we eventually successfully concluded, we do think it gets to the point of any agreement.
1. “What you’re supposed to do” is the scope of work covered by the agreement. It’s rare for contract drawings and specifications to fully and clearly define the scope of work included in the agreement so details and clarifications are important.
2. “How you’re supposed to do it” are the means and methods to achieve the desired results. Plans and specifications go a long way towards clarifying this, as do applicable industry standards, but sometimes “how you do it” is as important as “what” and needs to be clearly stated.
3. “When you’re supposed to do it” is the schedule for the work including any intermediate milestones or other dates important to the project’s success. By the way, scope to be completed for intermediate milestones needs to be well defined and frequently isn’t. If a part of a facility needs to be ready early for some reason, what does that mean and how well is “ready” defined?
4. “Promise to pay” defines the compensation for the work covered by the agreement.
Next time you’re reviewing or preparing a contract, take a step back and see if these 4 items are clear and complete. If not, take the time to have a meeting of the minds on these items – there are a lot of potential grey areas that are better resolved now than later. You’ll have a more successful project and probably won’t have rely on all those other parts of the agreement.