There are several steps to writing a simple construction contractor agreement that works. A construction contractor agreement is a document between a general contractor and a property owner. This document sets the construction scope, payment and time frame estimates of the project. It also outlines which parties are involved, the rights of each side and the projected start/end dates. This information is useful for construction bidding tips, as well. As a construction business owner, it is important to have a written legal understanding with your clients. Follow the steps below on how to write a simple construction contractor agreement that works.
Review Law Requirements
Review the state and local law requirements to write a simple construction contractor agreement that works. Several states require certain disclosures, notices and clauses to be included in construction contracts. Of course, work with your local state licensing authority for sample templates and resources for the area. These templates include .Docx and .PDF files that are ready to use. Usually, they cover building codes and labor agreement details specific to the city or state. To create a legally binding agreement, you must cover all law requirements in the local state. Certainly, review and understand law requirements to write a simple construction contractor agreement that works.
Decide The Type Of Contract
Before writing a simple construction contractor agreement that works, decide the type of contract you want. There are four types of contracts to choose from, and each impacts the types construction financing loans you can access. A fix-priced contract includes clauses for liquidated damages if the project is finished after the scheduled end date. A cost plus contract accounts for the cost of materials and labor. A time and material contract works for projects with uncertain expectations. Typically, the owner pays hourly or daily without a fixed percentage. A unit-pricing contract charges a standard fee without markups for specified units required for the project. Of course, you should specify which type of contract you’re using when writing a simple construction contractor agreement that works.
When writing a simple construction contractor agreement, go into detail with the project description. Communicate the exact description of the work you will perform. Additionally, list the tasks you will do in order to complete the project. Certainly, outline any and all materials, tools and equipment used to complete the project. Be specific with exact information on materials such as weight, number, type and use. For example, specify the number of paint cans, how much each holds, the type, such as latex, and what you will be using the paint for. This gives your clients an idea of how you plan on completing the project. Of course, include a detailed project description when writing a simple construction contractor agreement that works.
Another important element to focus on when writing a simple construction contractor agreement is payment expectations. Before writing down cost plans, send your client an estimate. These estimates are useful to generate contractor leads, as well. When the estimate is agreed upon, finalize it in your agreement. Give a detailed rundown of your payment schedule and cost estimates for the project. Include a price for every aspect of the project such as labor, materials and equipment. Also, specify the time you expect payments. This gives your clients an idea of what their money is being used for. Additionally, these specific price descriptions can be referred to if a client refuses to pay. Certainly, add payment expectations in your simple construction contractor agreement.
Finally, address risks when writing a simple construction contractor agreement. Include descriptions for each potential risk and how you plan on handling them. Focus on the risk of time, weather, funding, approvals and unexpected conditions. For each risk, make sure you agree upon who will incur the attendant loss and how the loss will be handled. Additionally, risks are usually unpredictable. Produce an understanding about what will happen if the project needs to be put on hold. Create a contract that will protect your business against any risks. It can be used as a liability in case a client wants to take legal action. Definitely address risk when writing a simple construction contractor agreement that works.
Certainly there are several steps when writing a simple construction contractor agreement that works. First, review law requirements to legally complete and address your contract. Next, decide the type of contract you want to create based on the project and client type. Additionally, write a specific description of the project you will be completing including all labor, tools, equipment and materials needed to complete the job. Of course, include payment expectations for set cost estimates and a time line of when you should be paid. Finally, address risk to save your business from unpredictable circumstances. Follow the points above to write a simple construction contractor agreement that works.