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The importance of understanding Construction contracts19 Nov 2014

Lindford Consulting’s, clients range from Sub Contractor’s to global Main Contractors – but our view to all our client’s is the same; make sure you agree and understand the contract terms before you sign the contract and start the works.

Frequently we hear of smaller sized Main Contractors and Sub-Contractors who find themselves at a disadvantage by not knowing what contract terms they have signed up to and as a result they could potentially lose out financially

When contractual issues arise, these businesses will not be best placed to defend their position, if they don’t understand the contractual implications. .

So why does it happen? For most, it’s simply that the business has grown but their understanding of contracts hasn’t.  Where a Contractor was once working on an uncomplicated low value project they may be now constructing a mixed use development for an experienced developer, with third party interests.

Whilst the growth of a Construction company is a sign that what they are doing works well and a demonstration of  their success, it also brings a number of challenges in managing and delivering more complex projects and the contractual mechanisms that are required to deliver the project.

The days in which you gave an estimate, the client agreed, you built the works; to now, you pre-qualify, submit your tender, go through rounds of post tender queries and sign a contract, to complete to a timescale that is very tight and includes a liability for damages, can be very different.,  but what do you do? If you don’t fully understand the contracts, there could be clauses that you were maybe unaware of, equally there may be clauses included, that are in your favour.

If you haven’t got the appropriate advice before tendering for contracts – without sounding doom and gloom – your project is at risk.

What else do you need to know?

So you have checked the contract and all seems ok. The next part is to make sure that you are conforming to that contract and ensuring you record the progress being made. Good contract administration can play a key part if contractual issues arise and consequently a dispute occurs.

Make sure that you maintain records of works so that if I dispute arises you have detailed information in letters, emails, photographs and other documentation recording the facts of the events and how you responded.

Lindford Consulting can help review contracts, make recommendations to amend them, and ensure they are fully understood; this will protect you and your business. If you need contract advice or drafting – just drop us an email here, or call us today on 01727 861510

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