A standard building contract is designed for large or complex building construction projects, where detailed contract provision are needed. Standard building contracts are suitable for project procured via traditional or conventional method. Project features using standard building contract:

• The owner is responsible for the design and land which is usually supplied to the contractor by the architect or the design team working on the owners behalf. However, standard building contract also have optional provision for” contractors designed portion” if the appointed contractor is to be responsible for the designs of the specific of the work.
• Depending on the type of standard building contract used the owner (through its advisors) will need to provide drawings and specification, work schedules or bills of quantities to specify the quality and quantity of work at tender stage.
• Standard building contract are administered either by the architect, quantity surveyor or a contract administrator.
• Works can be carried out in sections of overall construction process.

The construction contract agreement being a principal documents sets a date specifying parties to participate in the construction process.

Creating a good construction contract is a skill that every builder should not inside out, various contractors use different check list when creating a construction of building contract. There are commonalities that should be followed no matter what form the printed contract takes. In good contracts the builder steps the most basic of line items. Adopting the contract to the complexity of the project, there are 7 major areas to be considered when developing a successful construction contract for your business:

Contract documents:

The so called construction contract is often a combination of individual documents detailing different aspects of a construction project. It can be complex multi page document with many section. It offers details on different aspects of a construction agreement.

Contract type:

Different types of construction contract used within the construction industry itself but professionals general prefers certain ones. Construction contracts types are usually defined by the manner in which the disbursement is going to be made. But they may also specified other terms such as duration, quality, specification other issues.

Successful contract negotiation:

When the times comes for a builder to seek down with union representatives or project stakeholders needs to be prepared. A good negotiator should have the characteristics and skills to allow for the right deal to be struck one that achieves set goals while living both parties satisfied face to face negotiations although rare, can sometimes make things even worse. Certain tricks and methods make sure that everyone leaves the table failing that they have a good deal.

Direct hire or sub contract:

Builders have two options for completing work on project direct hire own employees or sub contract the work to independent contractors which is not an easy decision to make. Sub contracting can offers warranties that can make your work easier, while hiring someone directly requires additional efforts, as far as over site and management is concerned. But direct hiring often gives the builder more control over cost and quality. Based on the scope of the project and relationship with sub contractors, the project manager will make decision based on what is most cost effective, efficient and timely.

Construction contract agreement:

The contract generally contained several sub sections or clauses or sometimes appended documents that defined the scope, item, terms and conditions of the construction agreement. The legal writing can be heavy and both the parties often involve a lawyer when dealing with specific documents.

Differing site conditions:

Differing site conditions can increase construction cost and delay ground on the project. A contractor developing contracts needs to know how to handle this possibility and include language that protects against the unforeseen circumstances. Normally, affecting the schedule and causing delay considering the repercussion of delay. It is crucial to document how such obstacles effects the general constructions.

Construction contracting escalation clause:

Escalation clauses are often written into construction contracts. They are more typically included in large construction projects, where the job might require more than one year to complete and when it carries substantial financial burdon and risk e.g. the potential for economic changes, such a gas shortage or oil glut may require the contract escalation clause, even on small or medium size projects. If executed properly escalation clause protect contractor from unpredicted costs of construction.

Following can be considered as types of contracts useful for construction work:-

Lump sum or fix price contract:

Lump sum or fixed price contract is the type of contract, where all construction related activities are regulated with a total fixed price agreement. These are favoured in situations when a clear scope and a defined schedule is negotiated and accepted. For e.g. if there is necessary to shift the liability to the builder and prevent changes in order for undetermined work then this type of contract is best suitable for the situation due to present risk, a contract holds some percentage cost.

Cost plus contract:

Actual cost, purchase, other expensed incurred from the construction work. Before the negotiation begins a specific expense amount must be included in cost plus type of contract. These amount represents a percentage of material and labour cost which covers the continuing cost of operations and the contractors profit. Cost can be direct indirect and it must include critical cost expects of the contract.

Time and material contracts where scope is not clear:

These contracts are used when the capacity and quantity of time and material is undetermined, which makes the project risky. The owner and contractor are compatible with the tariff of per hour, per day including possible additional cost during construction. Periodically the owner can determined a duration of the project with contractor which must be performed to reduce the risk at minimum.

Unit pricing contract:

These are commonly called hourly rate contract which combines reimbursable expenses and fix price type of contract. These contracts can be adjusted during the process in which the owner offers certain quantities and prices for pre determined number of items included for construction.

Bilateral contracts:

Both parties involved in a bilateral contract promises to implement certain things or ideas which can reduce the overall construction cost.

Unilateral contracts:

In unilateral contract one party which is the bidder requires performance from the other party rather than a promise and offer maker cannot be sued for abandoning the project or not being able to finish his or her work. Because, he or she did not make a promise. Therefore, only bidder is required by the law to comply.

Implied contracts:

The contract can be implied either by factor or law

Implied on fact:

The joint agreement creates obligations and creates intention among the parties where both are not expressed in words. This type of contract is not articulated directly but through facts and circumstances, which demonstrates the shared intention to achieve an agreement made between the parties.

Implied on law:

This is known as quasi contract because the contract does not represent a real agreement.

Express contracts:

During formation of the express contracts the parties are forming conditions either orally or in writing. This offer is wholly accepted with the terms and conditions of the offer maker.

Simple contract:

A simple contract is written or oral. Following mentioned things are not required for contract to be legal in binding. 1. Witnesses, 2. Signature, 3. Seals.