Building Project Contracts: Do You Need One And Who Creates It?

12 Jul Building Project Contracts: Do You Need One And Who Creates It?

When starting your building project, whether it’s a brand new forever home, an extension or renovation, or a beautiful barn conversion, it’s essential to have a legally binding agreement that outlines the responsibilities, expectations, and rights of all parties involved. This is where a building project contract comes into play. In this blog, we’ll look at the importance of building project contracts, why they’re necessary, and determine whose responsibility it is to create them.

What is a building contract?

A building contract is the foundation of a successful project. It’s a legally binding agreement between you as the customer (or client) and the contractor involved in your building project, outlining the terms and conditions covering the building work, including the rights and responsibilities of each contractor and subcontractor involved.

When drawn up, a building contract typically covers the specific needs of the building project, such as scope, specifications, payment terms, project duration, quality standards, warranties, and dispute resolution methods. It will also ensure all parties involved are protected, and the building process proceeds smoothly and efficiently.

Do you need a contract for your building project?

The short answer to this is: YES. The contract is essential for all parties involved – including you – as it establishes the framework for the entire project. As well as protecting you, it’s used to reduce potential conflicts and establish a basis for accountability, communication, and cooperation throughout the building process.

However, a contract is not a legal requirement despite all this. You’ll already have a verbal agreement when you find the right contractor and trust them to start work on your building project. But to make things watertight and official, a written contract is worth its weight in gold and should ensure your contractor won’t be cutting corners.

Who creates your building contract?

If you’ve appointed an architect or a dedicated project manager to oversee the project as your representative, they usually draw up the building contract for you. If you’re happy to deal directly with your builder or building contractor as a project manager without appointing a representative, it’s more common for your builder or building contractor to produce the building contract for you.

At Unicorn Construction, when we produce building contract agreements for customers, we use the JCT (Joint Contracts Tribunal) Intermediate Building Contract with contractor’s design (ICD) 2011. This template gives us a contract which has been used many thousands of times and is a balanced, trusted, and recognised contract that acknowledges the trades and skills within our industry.

This form of contract is commonly used for larger or more complex builds with more materials and the possibility of using specialist/nominated sub-contractors. It also gives us the flexibility that, should we take on any design aspect of the build, we can integrate this into the contract, which is where many similar contracts fall short.

However, it’s worth noting that any building contract agreement is only as good as the documents and enclosures contained or referenced inside it.

What should your building contract include?

A formal, legally-binding building contract should cover the most critical aspects of your building project, including what you’re paying for and everything agreed upon. The contract should also clearly state who the parties are to the agreement, with each party signing the contract to confirm they’re happy and willing to enter into the contract together.

The more detail you include, the easier it will be for all parties to know where they stand. Here are the essential elements to include in your contract:

Payment terms and schedule

Your contract will specify the agreed payment structure, including the total contract sum and what that consists of, your payment schedule, how the works will be valued and how often they’ll be valued, how you need to pay (whether in period or staged payments), and any provisions for contingencies or additional costs.

Project scope and schedule

Clearly outlining the scope of work beforehand is essential. The project scope should cover the specific project details, including plans and drawings, materials, required documents and enclosures, and expected quality standards. Any deductions, discounts, retentions, or defect liability periods should also be set out clearly. Also, including the start and completion dates should ensure your project stays on track – and on budget.

Delay compensation

With the best will in the world, building projects can be hit with unforeseen issues which can cause delays. Your contract should include an agreed amount of compensation from your contractor if they’re at fault, and any completion date passes until the project is complete. It should also set out how and when this compensation should be paid.

Of course, some delays are caused by customer changes that weren’t scheduled or included in the original contract. In this case, your contractor may be entitled to push back the completion date by a certain length of time to reflect the delay caused by the change.

Dispute resolution

In the event of a dispute, the contract must state how disputes will be resolved. This resolution can include specific professional bodies or people that all parties agree on should a dispute occur. In 99.9% of contract agreements, provided there’s transparency regarding all the above items, the contract will run smoothly, and there shouldn’t be a need to consider dispute resolution.

These elements should be a starting point for your contract. A more comprehensive building contract may include additional clauses and provisions that can be adjusted to suit your specific project. But consulting with an independent legal professional is advisable to ensure the contract is thorough, enforceable, and protects you and your building contractor equally.

Get contract trust and security with Unicorn Construction

As we said at the top of this article, a building contract is the foundation of a successful project. Whether you choose your architect or project manager to draw up your contract or give the responsibility to us, it will stand you in good stead in the long run. It will ensure your building project progresses smoothly, minimising risks and maximising the final outcome.

Of course, using Unicorn Construction for your contract and building requirements means you can guarantee a fully transparent approach at every stage. For more information on our contract and building services, call us today on 01626 364 521, email [email protected], or send us a message. You’ll have complete peace of mind right from the start to help you achieve the new home build, extension and refurbishment, or barn conversion you’ve set your heart on.