Construction Law Today : Construction Lawyer & Attorney : Joshua Glazov : Design Build Contracts, Construction Bankruptcy

No. 4: Changes

Changes are No. 4 on the list of top ten construction contract terms.  Few construction projects go from start to finish without a change.  It could be a change in the work, a change in the price, or a change in the schedule.  Usually, there's changes to more than one, and often more than one change.  Here we're going to cover the different kinds of changes, how your contract affects them, and how they affect your contract.

 Generally, changes fall into one of three types:

• Change Orders
   
• Construction Change Directives
   
• Minor Changes

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No. 3: Deadlines and Delays

Deadlines and delays are No. 3 on the list of top ten construction contract terms.  A construction contract will often have many deadlines, but one deadline looms largest: substantial completion.  That's because substantial completion is when the Work reaches the point where an owner can rent it, sell it, or work or live in it.  And there's usually a tight schedule for reaching that point. 

The deadline for substantial completion is often also critical to satisfy obligations to third-parties: local government requirements for completion by a specified date, availability of public incentives (e.g., tax credits or subsidies for a "green" building), or refinancing a construction loan before a permanent loan commitment expires.

Areas we'll cover here:

• Identifying deadlines
• "Excused Delays" that postpone deadlines
• Delays caused by an owner, or another, up-the-chain, contractor that postpone deadlines and increase contract prices
• Delay notices
• Delay damages

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No. 2: Price

Price is No. 2 on the list of ten most important construction contract terms. Sometimes you'll see the price called the "contract price" or the "contract sum." To keep it simple today, we'll just keep it as the "price." The price makes it to No. 2 because it's another of those few things you must have in a construction contract: one side (a prime contractor, subcontractor, sub-subcontractor, etc.) provides the Work (the "working side") in exchange for the other side paying the price (the "paying side"). There's three common ways to price construction work and many issues that affect each. Today we'll talk about each of the three types of pricing and introduce some of the important issues affecting each. At the end we'll also talk about Schedules of Value, an important price breakdown device that helps you keep track of how, when, and where the price is spent as the Work progresses.

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No. 1: Identifying the Work

Every construction contract is about building something: the "Work". You can have a construction contract without many of the other nine things on this top ten list, but you can't have one without the Work. That's why identifying the Work tops the list at No.1.

The Work is what the owner pays the prime contractor for, the prime contractor pays their subcontractors for, subcontractors pay their sub-subcontractors for, etc., etc. It's the most important thing one side wants out of the contract. When the contract doesn't identify the Work very well, controversy abounds. At best those controversies stress relationships among the those involved in the project. At worst, as Sir Topham Hatt says, they cause "confusion and delay!" And confusion and delay often lead to claims and disputes.

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