Building Contract Template: What It Is & How to Use One
Construction projects are, by their very nature, complex and long-running events with many moving parts. Even small-scale developments for just one building require multiple contractors and tradespeople to complete the work.
A comprehensive and detailed contract is vital to capture key information and keep projects and budgets on track.
Many companies start the process with a pre-designed template and modify it to suit their requirements.
This article examines why a building contract is important, what it should contain, and how to amend and personalise a contract template to tailor it to your project needs.
Understand the Importance of a Building Contract
A building or construction contract is a vital document in the arrangements between the different parties. It covers everything from the scope of work to timescales, payments, and what happens when there are changes, delays or disputes.
Construction contracts are a framework and a vital tool for creating parameters and detail, managing expectations, defining costs, and keeping projects on track.
Whatever template you use, certain key elements should always be present in a construction contract.
Define the Scope of Work
Defining the scope of the work is the bulk of any construction contract. Most projects are developed in phases. Each phase should be listed, with as much detail as possible, including quality standards, compliance, and completion dates.
It should be clear who has responsibility for design and who has responsibility for building.
The contract should include a detailed schedule with milestones, other time-sensitive requirements, and linked payment instalments.
Establish Clear Roles and Responsibilities
It’s vital to include precisely who is responsible for each element of the different phases. Vague wording or any lack of clarity at all means that this is arguable at a later date, and if there’s a dispute, things can get complicated.
Detail Payment Terms
An accurate and detailed payment schedule is one of the most essential elements of a construction contract. It should include the total cost, stage payments with dates, and specify how to make payments. Large, complex construction projects often have a payment plan.
If there are other expenses like inspection fees for building control or equipment hire costs, these should all be itemised along with a clear allocation of who is liable for payment.
Incorporate a Dispute Resolution Clause
Disputes in construction contracts are commonplace. They are caused by delays, disagreements over the scope and quality of the work completed, changes to the project, and arguments over payment.
Always include a provision about dispute resolution; dispute resolution in construction is a well-trodden path. Adjudication, arbitration, or litigation are the standard options.
Any construction contract should have a detailed dispute resolution clause clearly stating what will happen. The wording should provide for a progressive process that covers all eventualities and the impact this has on delays and costs.
Challenges of Construction Projects
Construction projects are renowned for their challenges.
Building developments are typically characterised by multi-party involvement with numerous contractors and subcontractors, technical complexities, lengthy timelines, and high-value investments and outcomes.
If something slips during a construction project, it can have a devastating domino effect. Building contracts are designed to manage and predict the different project elements and define what should happen when alterations, disputes, or delays occur.
Manage Project Changes
Things rarely go according to plan. Construction projects can be beset by weather problems and unexpected difficulties and delays, such as product supply problems, budget overspend, or even uncovering archaeological sites.
So, it’s not unusual for projects to change tack or alter development elements as work progresses.
A building contract can anticipate that parties may want or need to change the scope of the building works, and make provision to manage alterations and avoid derailing the project.
Monitor Progress and Compliance
Most building contracts are managed in phases, so a contract should capture the details of each stage of the development.
There should be a comprehensive schedule and timeline for inspection of the work and provisions for remedying substandard outcomes and resolving problems.
There must be robust provisions for non-compliance when things are not going according to plan and clauses that cover dispute management.
Utilise Building Contract Templates
There are lots of sources for building contact templates. The JCT (Joint Contracts Tribunal) and the New Engineering Contract (NEC) organisation provide ready-made templates. You can choose from different documents and find one that best aligns with your project.
Customise Templates Effectively
A template is just that, so you must personalise the document to reflect your requirements and project.
Other than adding the identity of the different signatories, parties will want to adjust sections to reflect the nature of the build. Comprehensive templates will suggest provisions and provide various options.
But how do you know a contract is watertight and compliant with legal regulations?
Access Legal Expertise for Modifications
A quick scan online for a building contract template will find multiple sites with disclaimers that lawyers have not produced their contracts. It’s vital to take legal advice to ensure your contract documents accurately reflect your requirements.
An experienced construction lawyer can advise on including and excluding provisions and wording changes. Remember, if anything goes wrong, this is the reference document that you’ll rely on in court.
Using an expert construction legal team like Helix Law to draw up your contract provides access to years of experience. Plus, you can be secure in the knowledge that your document is legally valid and complies with current legislation and regulations.
Specialists are on hand to manage any changes to the scope of the works or challenges to the contract and can help resolve disputes quickly to minimise delay and costs.
It’s also worth involving lawyers when alterations to the scope of the work are required or a dispute is brewing. They’ll be able to help guide and advise, even on poorly drafted or inadequate contracts, to protect your position.
Frequently Asked Questions
What Are the 5 Elements of a Construction Contract?
The five key elements of a construction contract are the personal details and identification of the contracting parties, the scope of the works, the responsibilities of all signatories, the start and completion date and the fees and costs. In addition to these five elements, other clauses will cover areas like disputes and dispute resolution.
What is the Standard Construction Contract in the UK?
The Joint Contracts Tribunal (JCT) contracts are the most widely used in the UK construction industry, covering around 70% of building projects.
The JCT is comprised of seven member organisations representing a wide range of interests and involvement in the construction sector. They produce contracts, other standard documentation, and guidance notes to create a balanced spread of risk between the parties.
Building Contracts Establish Legal Clarity for Construction Projects
A properly drafted and comprehensive building contract is vital for any construction project. It’s essential to take legal advice whether you’re responsible for providing the contract or are one of the signatories.
Helix Law offers a team of construction experts with a wide-ranging collective experience in building projects. We provide thorough and legally compliant construction contracts with advice from the outset to project completion. We’re ready to help manage challenges, project changes, delays, and disputes.
Building contracts are the most essential tool on the construction site, the foundation document that delineates expectations, rights, and responsibilities. Our expert construction litigation team act in building contract disputes across the country. We have acted in adjudications and enforcement in hundreds of disputes including in technology and construction disputes with hundreds of thousands and millions in dispute. If you are in the midst of a construction dispute Contact Helix Law today and a member of our specialist team will be happy to assist you.
