When it comes to construction contracts, it’s easy to think of them as just another piece of paperwork. But if you’re not careful, that paperwork can turn into a nightmare that leaves you burned. Whether you’re dealing with a small job or a major project, understanding the ins and outs of your contract is crucial to protect yourself and your business.
Read Every Line—Yes, Every Line
We’ve all been there—staring at a 90-page document filled with legal jargon, just itching to sign and get the job started. But take a breath and grab a highlighter. The fine print is where the trouble hides. Special conditions, scope of work, payment schedules—these are the sections you need to comb through. Make sure everything you’ve agreed to verbally is there in writing. If something doesn’t sit right with you, don’t hesitate to mark it up and send it back. Remember, contracts are negotiable.
Consult the Experts
If you’re dealing with a company for the first time, don’t take any chances. Legal counsel might cost you a few bucks, but it’s a small price to pay compared to what you could lose if something goes wrong. A fresh pair of eyes, especially those trained in legal matters, can catch potential pitfalls that you might miss.
Boilerplate Isn’t Always Safe
A lot of construction companies use standard AIA contracts, which might seem like a safe bet. After all, they’re used by many large-scale construction outfits. But even these “boilerplate” contracts can hide some nasty surprises. Always check for any added clauses specific to the job. If a contract that’s usually 25 pages suddenly balloons to 100, it’s time to ask some questions. You don’t want to find out too late that you’ve agreed to terms that leave you holding the bag.
Build Good Relationships, But Keep Your Guard Up
Once you sign a contract, you’re in a partnership—whether you’re the GC or the sub. Your success depends on mutual respect and trust. But don’t let that lull you into a false sense of security. Keep your focus on delivering the job as promised, and document everything. This includes daily diaries by your foremen, noting the weather, work completed, and any issues that arise. This might seem like overkill, but if things go south, these records could be your saving grace in court.
Payment Terms: Know When You’ll Get Paid
One of the biggest pain points in construction contracts is the payment schedule. You need to know upfront when and how you’ll get paid. Some companies hold your money for 30 days, others for 60. Can your cash flow handle that? If not, it’s time to negotiate. A larger GC with a history of working with you might advance payments, but don’t count on it. Always clarify payment terms before you sign on the dotted line.
Simple Contracts Can Be Just as Binding
Not all contracts are thick as a brick. Sometimes, a two-page proposal with a signature line at the bottom can be just as legally binding. Don’t underestimate the power of a simple contract. If it’s clear, concise, and both parties agree, that’s all it takes. But simplicity doesn’t mean you should skip your due diligence. Even a short contract can come back to bite you if you’re not careful.
Documentation Is Your Best Defense
If things go wrong and you end up in court, documentation is your best defense. Make sure your team is religious about keeping records—especially when it comes to site conditions, progress, and any issues that arise. Cases have been won or lost based on the quality of field documentation. Don’t wait until it’s too late to start taking this seriously.
In the world of construction, contracts are the foundation of every job. They’re there to protect you, but only if you know what you’re signing up for. Take the time to read, understand, and negotiate. It could mean the difference between a job well done and a project that leaves you burned.