Whenever you enter into a significant financial transaction, it is essential to have a written contract. Building contracts are significant for construction projects because construction, in its nature, is complicated.

A construction agreement is a written document containing all agreed-upon information between the contractor and homeowner. It outlines the design and builds contract terms and agreements.


Why are building contracts important?

When building a new home or tackling a renovation, having a written contract has two main goals: to provide the mechanism of solving problems and record all of the agreed-upon terms.

With this in mind, the main things that building contracts cover are:

  • The scope of work

A house building contract will set out precisely what the project entails. A detailed specification is better and less risky than a sketchy one.

  • The price and payment options

Having a construction agreement that identifies the fixed price of the job with reasonable project costs will make it run more smoothly than one that does not. This includes all of the specific payments and how they are to be made, e.g., monthly, weekly, or at the end of each stage of construction.

  • The duration and timing of the project

It is wise to specify the duration of the construction in the design and build contract, and the project schedule should back this. It should also include any mechanism for delays outside of the contractor’s control.

  • Site work

Set out the basic safety rules, cooperation with other workers, regular working hours, and other site regulations in the building contract to make the work easy.

  • Responsibility for defects and mistakes

The builder essentially has the legal responsibility of any defects, usually for the next six years after completing the project.

This must be clearly outlined in the design and build contract.

  • Changes and problems

Sometimes, a project may experience unforeseen issues and problems. In case of any divergence to the plan, the building contract must clearly outline this, and it should agree on the process of making such changes.

  • Construction changes

There are times when the building plan changes mid-job. This is normal, especially when the homeowner wishes to add a few things to the building. The construction agreement should outline how this should be done and which specific amendments can be made.

  • Delays

It’s common to expect delays. The construction may have had some unforeseen problems such as heavy rains, finding archaeological remains, etc.

How these issues should be handled will be outlined in the building contracts.. The contract also outlines to the construction crew a specified period to deal with the issue before embarking on the project again.