You’ve probably heard people talk about construction contracts and wondered why they are necessary. While you can talk about everything you want for your construction project with your contractor, you can’t be sure they will keep their word. For this reason, sign a contract before construction starts. Here are more reasons to sign a construction contract before embarking on the project.
Negotiation Requires Time
In some cases, the contractor and project owners can assume that negotiations will take time and start without signing a written contract. However, this is a wrong assumption because the longer you wait without signing a contract, the greater the contractor’s and the project owner’s risk. That’s because sophisticated contractors and owners must disagree on some issues. To avoid this, sign a construction contract before starting the project.
You Can’t Assume Adequate Insurance
Insurance mitigates both the contractor and the project owners as part of their risk management plan. However, don’t assume that the contractor has adequate insurance to protect you against losses or workers’ injuries during the project. To ensure your protection, sign a contract that protects you from such risks before starting your construction project.
Compensation is Not about Numbers Only
During the proposal and bidding process, you might focus on the price that the contractor quotes. However, the contract should include factors like how you’ll pay the contractor, payment applications, documentation, and submittal. The agreement should also cover things like work scope changes and address problems that may arise during construction. If you don’t sign a contract before starting the project, you’ll have difficulties addressing such issues once the work begins.
Essentially, the contractor’s bid might have terms that you won’t accept. Signing a contract before commencing the construction work ensures that the contractor and the project owner are on the same page.