Chapter 6 - The construction contract

Abstract

This chapter presents various aspects of the construction contract which include schedule-of-value exhibit, guaranteed maximum price, change orders, and liquidated damages. After execution of the contract and prior to commencement of work, the architect will request the contractor to submit what is called a schedule of values for the project. This schedule will list the assigned value the contractor places on each component of construction. The estimate in a guaranteed maximum price contract is generally prepared by the general contractor on incomplete drawings and is based on projecting or anticipating what those final plans and specifications will contain and what their associated costs will be. Change orders can occur for many reasons: a change in scope as directed by the owner, a request from the general contractor for added costs due to a recognized, and an accepted omission in the contract documents or some unforeseen condition arising generally in the site can be inserted into the contract that will make those requests somewhat easier to resolve. A liquidated damages clause reinforces the need of adherence to a schedule, but the contract schedule will include any increases in the original schedule if and when change orders have been approved, increasing both contract sum and contract completion dates.