Importance of Special Contracts in Construction
Construction Contracts set expectations for a specific project and protect all the parties involved. For this purpose, this blog has jotted down the features of construction contracts and the significance of special contracts to help you get familiar with these terms.
Construction contracts are agreements between parties to perform construction work. They outline the terms and conditions under which the work will be performed, including the scope, payment terms, and other relevant provisions.
Features of construction contracts
Several key features are commonly included in construction contracts:
Scope of work: The scope outlines the specific tasks that will be performed as part of the construction project. It should be detailed and clearly define the responsibilities of each party.
Payment terms: The payment terms specify how and when the owner will pay the contractor for the work performed. This may include a schedule of payments and any progress payments or retainage provisions.
Change orders: Change orders are used to modify the scope of work or the contract price after the contract has been signed. They should outline the changes being made, the impact on the schedule and budget, and any additional compensation that may be due.
Warranty provisions outline the terms under which the contractor will be responsible for defects or problems arising after the construction project is completed
Termination provisions: Termination provisions outline the circumstances under which either party may terminate the contract and the procedures for doing so
Dispute resolution provisions: Dispute resolution provisions outline the process for resolving disputes that may arise during the construction project. This may include provisions for mediation or arbitration
What are Special Contracts
Special contracts, also known as design-build contracts or turnkey contracts, are a type of construction contract in which a single entity, known as the design-build contractor, is responsible for both the design and construction of a project. This differs from traditional construction contracts, in which separate entities typically handle the design and construction phases.
Benefits of Special Contracts
There are several benefits to using a special contract for construction projects.
One of the main benefits is that it streamlines the process by having a single entity responsible for both the design and construction phases. This can lead to more efficient and timely project completion, as there is less coordination required between separate design and construction teams. Additionally, because the design-build contractor is responsible for both the design and construction, they have a greater incentive to ensure that the design is feasible and can be constructed within the specified budget.
Another benefit of special contracts is that they can offer cost savings compared to traditional construction contracts. This is because the design build contractor is able to provide a lump-sum price for the entire project rather than separate prices for the design and construction phases. This can make it easier for the owner to budget for the project, as they know the total cost upfront.
In hindsight, Special contracts, or design-build contracts, can offer a number of benefits for construction projects, including streamlined processes, cost savings, and the ability to provide a lump-sum price for the entire project. However, it is important for the owner to carefully consider the potential risks and ensure that the design-build contractor is held accountable for the quality of the project.
There are also potential risks associated with special contracts. One risk is that the design-build contractor may prioritise cost savings over quality, leading to a project that is not up to the owner’s standards. Additionally, because the design-build contractor is responsible for both the design and construction, there may be less oversight compared to traditional construction contracts, where separate design and construction teams are held accountable for their respective phases of the project.
In conclusion, Construction contracts can vary significantly depending on the specific project and the parties involved. It is important for both the owner and the contractor to carefully review the terms and conditions of the contract to ensure that their interests are protected and choose the contract which is well-fitted for their project.
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