Construction contract: what it is, types, model and more

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A construction contract is an agreement in which one of the parties, the contractor, undertakes to carry out a work or service for the other party, the owner of the work, in exchange for previously agreed remuneration.

This type of contract is particularly common in the construction industry, covering everything from small renovations to large real estate projects .

Its main difference is the focus on delivering a final result, rather than simply employing labor. Thus, the contractor not only provides the labor, but is also responsible for supplying materials and managing the resources needed to complete the work.

It is worth noting that the objective nature of the contract results in well-defined clauses, ensuring that the scope of the project, deadlines and costs are clear from the outset. This minimizes the risk of litigation and conflicts throughout the process.

When to use a construction contract ?
This type of contract represents the ideal choice when you want to complete a specific project , which requires both the execution of tasks and the supply of materials.

It is especially recommended when the objective is to kenya whatsapp data ensure that the cost and deadline of a project are fixed from the beginning. For example, companies that intend to build a new office or carry out major renovations to their facilities can benefit from this modality.

For the construction contract to be advantageous, it is essential that the project has a clear scope, with a well-defined work plan .

Therefore, the details of the work, including technical specifications, materials to be used and execution schedule, must be included in the agreement. This clarity helps to avoid disputes, as the expectations of the parties are documented.

Furthermore, the contract is an effective mechanism for transferring the risk of project execution to the contractor. This includes risks related to delays and additional costs, as the contractor is responsible for maintaining the agreed budget and schedule.

Advantages and disadvantages of the construction contract
Opting for a construction contract offers several advantages. Firstly, it provides financial security for both the contractor and the client , as the total cost of the project is established at the outset.

This protects both parties from unexpected fluctuations in material or labor prices. In addition, well-designed contracts reduce the risk of delays, benefiting the project owner’s planning.

Another advantage is the delegation of responsibilities. When signing a contract, the owner of the work transfers to the contractor the responsibility for acquiring materials and executing the work.

This can result in savings in time and effort, as the project owner does not need to manage suppliers and teams.

However, there are some disadvantages to consider. Although the risk is transferred to the contractor, this can result in higher upfront costs, as the contractor tends to include a safety margin in their bid to cover unforeseen events.

In long-term projects, the rigidity of a construction contract can be a hindrance, as changing it over time can incur significant additional costs. In addition, there is a greater dependence on the competence and management of the contractor.

Take advantage and learn about the BIM (Building Information Modeling) methodology .


Learn about the types of construction contracts
There are several types of construction contracts, adapted to the different needs and complexities of projects. Knowing each one of them helps you choose the best way to hire the service.