1. Standard Industry recognised form

Standard industry recognised forms are generally structured to be fair to all parties, placing risk on the party best placed to carry it. They have also been tested in the courts and so have precedents for resolving any disputes. They are also well known by builders and consultants and so reduce the chance of ‘misunderstandings’ and mean that builders can price their risk appropriately.

Run Projects generally recommend the JCT suite of contracts (subject to the project requirements) and have experience of setting these up and administering them correctly.

2. Clearly defined payment procedures and amounts

It is essential for a contract to clearly define what amount is owed for the works and in what instalments it is to be paid. Most contracts also include an allowance for ‘retention’ which is money held back and only finally released to the contractor when all final issues are resolved. A usual retention term is up to 6 months depending on the size of the project. The retention acts as an incentive for the contractor to fulfil all his obligations. This is usually 3-5% of the contract value.

Run Projects will review and verify all invoices before you see them, smoothing the process and keeping things simple for you.

3. Defined start and completion dates

All contracts should have a start and finish date. If there are changes to the programme during the works these should be agreed and a new completion date set. Without a completion date the contractor only has to finish in ‘reasonable time’, which is open to debate.

Run Projects will administer the contract on your behalf, issuing notices to redefine the completion date if and when required.

4. It defines how changes are handled and documented

Changes occur on the majority of projects, often due to no fault of the client or the contractor. It is important that these changes are fairly agreed between all parties and documented so that there is a record.

Run Projects will negotiate and document all changes for you, keeping you fully informed at all times.

5. Penalty Clauses for late completion

Some people ask about including penalty clauses in their building contract should the Contractor deliver the project late. These are generally not enforceable in law and the only provision for charging the Contractor for late completion is liquidated damages. Liquidated damages must be a genuine pre-assessment of the loss that would be incurred by the client if the project overruns (for example rent payable, insurance costs etc), and must not be intended as a penalty.

Do you want advice on a Building Contract or general advice about your building project? Call Run Projects now on 0203 488 1181.