✅ Construction Contract Essentials Checklist
There is a reason why checklists are used in aviation.
They make sure that important and critical items are not left aside or missed, ensuring safe flying and a smooth ride.
What Every Owner Should Know Before Starting a Project:
📄 Before You Sign the Contract
🔍 Choose the Right Contract Type
- Lump Sum (Fixed Price): Best for clearly defined scopes.
- Cost-Plus: Flexible, but requires strong cost tracking.
- Time & Materials: Use only for limited, small-scope work.
- Guaranteed Maximum Price (GMP): Flexibility + cost control.
- Design-Build: One entity handles both design and construction.
📝 Review Key Contract Clauses
- Scope of Work: Clearly defines what’s included/excluded.
- Project Schedule: Milestones, completion dates, and delays accounted for.
- Change Orders: Outlines how changes will be approved and priced.
- Payment Terms: Includes schedule, milestones, retainage, and final payment.
- Warranties: Details timeframes and responsibilities for defects.
- Termination Clauses: Explains rights to cancel for cause or convenience.
- Dispute Resolution: Includes method (mediation/arbitration/litigation) and venue.
🛡️ Insurance Checklist
🔨 Contractor Must Provide:
- General Liability Insurance Covers property damage and bodily injury caused by contractor operations. Must include:
- Products & Completed Operations Coverage: Protects the owner in case defects or damages arise after the project is completed (e.g., faulty wiring causing a fire six months later).
- Owner listed as Additional Insured
- Waiver of Subrogation in favor of owner
- Workers’ Compensation Insurance Covers medical costs and lost wages if a worker is injured on-site.
- Builder’s Risk Insurance (if contractor-supplied) Covers damage to the work during construction (fire, theft, vandalism, etc.).
- Automobile Liability Insurance For contractor-owned vehicles used on-site.
- Umbrella/Excess Liability Coverage Extends limits of liability coverage—important for high-value projects.
- Professional Liability Insurance (if design-build or any design work is involved) Covers design-related errors or omissions.
- Certificate of Insurance (COI) Must name the owner as Additional Insured, include Waiver of Subrogation, and confirm Products & Completed Operations coverage remains active for the duration of the statute of limitations (typically 1–2 years post-completion, depending on state and contract terms).
🏠 Owner Should Provide:
- Homeowner’s or Property Insurance Ensure construction is covered—notify your insurance provider.
- Builder’s Risk Insurance (if owner-supplied) Required for new builds or substantial renovations.
- Owner’s Liability Insurance Covers third-party claims during the construction phase.
- Course of Construction Endorsements May be necessary based on your existing policy terms.
🧠 Due Diligence Tips
- Hire a Construction Manager or Owner’s Representative
- Have the contract reviewed by a qualified attorney
- Request lien waivers with every payment
- Avoid excessive allowances—demand defined selections
- Ensure all insurance policies are in effect before work begins
🚧 During the Project
📂 Stay Organized
- Keep all communications and approvals in writing
- Track progress against schedule and budget
- Review change orders carefully before signing
- Verify insurance and COIs are current throughout the project
- Maintain a log of inspections, deliveries, and milestones
📤 Closeout Checklist
- Final inspection completed
- Punch list resolved
- Lien releases from all trades and suppliers
- Warranty documents delivered
- Final payment made only after full completion
Need help setting up your next project for success?
As an Owner’s Rep and Construction Manager, I make sure you’re protected—every step of the way.
Contact me here to learn more.
Peter