9. What Are the Contract Documents and Why Are They so Important

26/09/2022por Mentores

The general conditions define the framework of the contract, which defines all the rights and obligations of the parties concerned. The scope of work determines the amount of work a person must perform to fulfill their contractual obligations. It can also be used as a reference point for processing change orders and defect lists. Contract management is part of project management. As a project manager, you need to have a clear idea of this process. Contract management requires a lot of contract documents, and you need to understand them to manage your project`s contracts. The nomenclature is a document used for the call for tenders that lists all the work so that the contractor can evaluate the work for which it is bidding. It contains the quantity and price for each job and after the offer phase it will be an annex to the contractual document. Project Manual – Written documents prepared or made available for the procurement and construction of the Work, including, but not limited to, tender documents or other construction contract documents, geotechnical information and information about existing conditions, agreement, bond forms, terms and conditions, additional terms and specifications. The contents of the project manual can be linked in one or more volumes. What does Certified Payroll mean? This position covers certified payroll requirements for contractors working on federal construction projects. It is very important that the person preparing the contractual requirements and other “Division 00” documents has a clear understanding of the implications of what “contract documents” represent and what they do not represent; Failure to properly name the contractual documents can constitute a significant contractual error.

The project manual is the second part of the contractual documents. The project manual is sometimes referred to as “specifications”. The estimator must understand the terms of the contract and their impact on the offer price. All contracts must include drawings that are part of the work to be performed. Drawings illustrate the quantities, positions, dimensions, sizes, shapes, and shapes of the elements. These drawings can be architectural, static, electrical, mechanical, scenic. They must contain adequate information for the entire project that is being ordered. The scope of work is an important project management document. After signing the contract, any modification of this contractual document requires the consent of both parties. The contractor may require additional compensation for the additional scope of work. Gone are the days of handshake agreements.

Everyone in the construction industry should use written contracts. But a contract has more to offer than just putting it on paper. Nowadays, construction contracts have a number of different and integral components. Here you will find instructions on common construction contract documents. In the event of a discrepancy between the nomenclature and the other contractual documents, the price in the nomenclature shall prevail. A minor or a person with an intellectual disability cannot sign a contract. 1. Tender documents — Tender documents generally include the following elements: bid for bids, instructions for bidders, bid forms, and contract or contract form. The use of standardized forms for construction contracts makes it possible to use the same conditions for different projects.

Standardized forms also create a framework for the content of the contract. This way, they save you from forgetting to add basic contract documents and essential information when you create them. It is advisable that parties entering into a significant financial transaction have a written contract. When we consider a construction project, various stakeholders/parties such as owners, architects, consultants, contractors and suppliers, etc. are involved. Each stakeholder has defined roles and responsibilities and the performance of the stakeholders leads to the realization of the construction project. The performance of these stakeholders depends on various internal and external factors, which in turn lead to the success or failure of the project. Thus, a construction project is a complex system composed of different stakeholders and their respective outcomes, which involve a reasonable number of responsibilities associated with financial and performance risks.

As soon as two parties agree to have construction work carried out and the contractor begins the work, a construction contract is concluded, that the agreement has been concluded in writing and signed by both parties. However, imagine the level of risk each party bears if roles, responsibilities and their contractual rights are not clearly defined. If we assume and agree that the performance of each stakeholder will influence the success or failure of the project, is it not necessary to clearly define the roles, responsibilities and expectations of each stakeholder? Therefore, the first risk is not having a good contractual agreement!! The main objective of discussions/negotiations between the parties is to create a contract that clearly expresses the intentions of the parties, is based on reasonable and realistic expectations and incorporates motivations for cooperation and performance. While homeowners expect their projects to be built, completed, and fully operational on time and within or within budget, contractors expect to make a reasonable profit. The contract contains the contractor`s liability, risk assumption, remuneration and liability and allows the owner to exert maximum influence over the contractor by controlling the job description, change orders, as well as payment and guarantee procedures in the contract. Each party wants to minimize its risks at the same time – this is the second risk. Contracts are established according to the requirements of the project, the budget, the available resources, the conditions of the site, etc., i.e. the risks. Owners, contractors, designers, architects and engineers in the construction industry face repeated project risks that are common to almost every project and affect everyone. Some risks may be common to all projects, and some risks may be unique to some.

The main identified risks that affect most design and construction contracts include legal risks, permits, licenses, laws and regulations, changes in laws, such as changes in land use by the government, non-compliance with the law by the parties, different site conditions, construction defects and delays due to extension of deadlines.