What You Need to Know Before Signing a Construction Contract

As a construction contractor, you have to deal with clients eager to get to the actual construction. With worries about cost overruns, and timetables at the forefront of their minds, far too many clients fail to fully consider the importance of understanding what kind of contract they’re getting into. This creates headaches for both you and them down the road when small misunderstandings turn into big problems. It’s vital that both you and your clients go through each of the pre-construction steps thoroughly, so that you understand what a bid bond in construction is, and that you’re ready if your bid is accepted. Do all of this and you’ll be building the kind of productive and trusting client relationships that translate into great projects. Untitled1 There are many types of construction contracts, but two broad categories that are important to be familiar with are: the single contract and the multiple prime contract. Single contracts are the simplest option. It’s a basic agreement between a single owner or corporation and a single contractor (called the prime contractor). The single contractor is ultimately responsible for the entire job, even if they hire sub-contractors to conduct part of the work. This contract is helpful for its simplicity, especially in terms of who’s responsible for the work done. Multiple Prime Contracts are more complex. They’re generally reserved for bigger multi-phase projects, like hospitals or building complexes. Here, there are multiple prime contractors who are each responsible for their individual projects within the larger project. With the complexity of the project, dividing up the legal responsibilities simply makes more sense. This is particularly true when one set of work may not interact at all with another set, meaning there’s no reason to give oversight and responsibility to one contractor for both. Once you’ve got a contract written up with all the cost estimates, details of the work to be done, etc., it’s time to read it thoroughly. It’s critical for demonstrating professionalism and avoiding mistakes and misunderstandings. Double Check Your Contract Bonds Your contract bonds are a crucial reason to square everything away with the contract. As you’re creating your bid proposal and then your contract, you need to be considering your bonding requirements. Bear in mind that the requirements are not universal — they change with every job. Your company should already have a contractor license bond, but Bid and performance bonds are based on the scope of the project. What’s important is to stay on top of your bonding requirements and make sure you’re always complying. Otherwise you’re putting your company at legal risk. Once you submit all your bonds with your final proposal, along with material samples and whatever else the contract requires. Then, you’re ready to get started!  
"By Eric Halsey." Construction Today Blog. N.p., n.d. Web. 17 Sept. 2015.