Construction contracts often focus primarily on the basic terms of an arrangement. The client outlines their expectations for the project, while the company explains details such as pricing and project timelines.
Yet, despite the best intentions of the business or professional offering construction services, unexpected issues might arise. Supply chain issues might alter the proposed budget or project timeline. Inclement weather, injured employees and a host of other complications can also arise with little warning and affect either the proposed timeline for the project or the budget. In some cases, disagreements might culminate in litigation alleging contract violations or construction defects.
How can construction companies protect themselves from client lawsuits when predicting what might go wrong is – to some degree – all but impossible?
By preparing for the unpredictable
There are numerous ways to address the possibility of project disruptions in a contract. Construction firms may need to include language that allows them to alter the budget and the timeline in special circumstances. These clauses may need to include terms regarding how they communicate with the client and the approval process for resolving the matter.
Construction firms may want to consider including alternative dispute resolution clauses in their contracts. It may be possible to attend mediation with a client and resolve a dispute that could otherwise result in litigation. The nature of the project influences what types of issues may arise and, therefore, what types of protective clauses are most beneficial. Construction professionals and executives running construction firms may need assistance creating custom contract terms for each client.
With the right contractual terms, construction businesses can more effectively avoid litigation and keep things amicable with their clients. Investing in custom contracts can limit the likelihood of a costly real estate dispute arising that affects a company’s reputation or the profitability of a project.