Chapter 4 - Construction contracts pros and cons

Abstract

This chapter discusses pros and cons of construction contracts. A letter of intent is a contract of restricted scope that can authorize the start of construction to perform a limited amount of work. A complete set of documents, plans, and specifications prepared and reviewed by the design consultant — the architect and consulting engineers — before being issued for bidding purposes is a critical component of the lump-sum contract approach. The comfort level of a cost plus a fee contract depends on the quality and integrity of the contractor. While contractor selection is a key ingredient in a successful cost-plus project, equally as important is defining the nature of the work as closely as possible. A construction-management contract is often referred to as an “agency” contract, since the construction manager acts as the owner's agent, performing work on the owner's behalf on construction-related matters. A construction-management contract is often referred to as an “agency” contract, since the construction manager acts as the owner's agent, performing work on the owner's behalf on construction-related matters.