Success in the construction business requires assuming and managing risk. Outdated or unbalanced contracts cost construction companies money and time, and can break business relationships. Negotiating a construction contract is one of the first and most important steps in creating a solid foundation for any building project. Ideally, contracts should align all project stakeholders’ interests toward project completion. Drafting a contract from scratch is time consuming, costly and still includes traps and loopholes that leave a contractor susceptible. Using fair contracts to get better project results with fewer claims makes sense for today’s construction industry, but how do you create an unbiased contract that balances risks and rewards appropriately among all parties? The answer: standardized contracts.
Getting engagement and “buy-in” from all parties on how a project should flow – and who’s responsible for each part – is key to a project’s success, and standardized contracts help expedite this process. Traditional, customized construction contracts often favor the drafting party and must be carefully reviewed by legal counsel due to their unique language. Likewise, studies by the Construction Industry Institute (CII) and other groups indicate that allocating risk unfairly damages project results. Fair and balanced standardized contracts set a foundation for construction projects’ success; unbalanced contracts set projects up for failure.