Unlike other industries, a construction contract isn’t one single document. Instead, it is a collection of documents that are prepared by a number of different parties. Therefore, Clients, Contractors and Subcontractors need to read all the documents several times for proper understanding.
The value of having a good understanding of the contract terms is priceless when it comes to avoiding any breach of contract and ensure successful performance.
Here is a list of the most common construction contract documents, and why they are included.
Contract Agreement
Letter of Acceptance
Letter of Tender – Technical Part
- Financial Part
4. Addendums and Technical Clarifications
5. Particular Conditions of contract - Contract Data
- Special Provisions
6. The general Conditions of Contract
7. The Employer’s Requirement
8. The schedules
9. The contractor’s Proposal ( Drawings)
10. Other Documents ( Other Clarifications, Bonds and Guarantees)
“Letter of Acceptance” means the letter of formal acceptance of the Contractor’s Letter of Tender. It is issued and signed by the Employer.
The purpose of the Letter of Acceptance is to confirm that the Employer accepts technical and commercial part of the Contractor’s Letter of Tender.
According to FIDIC, Letter of acceptance means the letter of formal acceptance, signed by the Employer, of the letter of tender. If there is no letter of acceptance, the expression of “letter of acceptance” means the contract agreement and the date of issuing or receiving the letter of acceptance means the date of signing the contract agreement.
According to FIDIC , The letter of tender, signed by the Contractor, stating the Contractor's offer to the Employer for the execution of the Works.
Written information adding to, clarifying or modifying the bidding documents. An addendum is generally issued by the owner to the contractor during the bidding process and as such, addenda are intended to become part of the contract documents when the construction contract is executed.
This is typically an addition or amendment to the general conditions section. This document will detail the specific clauses and conditions for each task or project. For instance, if there are specific instructions that only apply to one job or portion of the build, they will be included in this document.
Contract Data:
According to FIDIC , contract data means the pages completed by the employer entitled contract data which constitute Part A of the particular conditions
Special Provisions:
Special provisions are included in contracts as required to define work or procedures not covered in the standard specifications, and as necessary to supplement or modify items in the standard specifications. Each contract includes a table of contents for job special provisions.
General conditions are essentially the framework of the construction contract documents. They provide the “hows” of the project.
Most importantly, general conditions establish all the rights and obligations of the contracting parties. Additionally, it will lay out the roles of every party and the responsibilities of each.
Any time an issue arises on the project, the game plan on how to proceed is usually found here, with detailed clauses. This includes how change orders are processed, how payment apps are approved and any and all notice requirements that may arise on a job site.
“Time” seems fairly obvious. However, these provisions detail more than just the deadline to complete your work.
For example – when is the date of commencement? It can be right after you sign the contract, but many contracts provide for a Notice to Proceed to be issued before the contractor can start work. It could also be helpful to define what constitutes substantial completion, and setting progress milestones can help clarify a project’s timeline.
Delays and extensions should also be touched on in this section. Construction projects and delays go hand in hand. What happens when you are unable to complete your work because of delays? If questions like this are left unaddressed, they can lead to contractor losing both time and money. Does the contract allow for extensions? This depends on whether the delays are categorized as “compensable” or “non-compensable” by the contract. Typically, if the delay could have been avoided by one of the parties, they are considered non-compensable.
These provisions typically fall under one of three categories:
(1) change orders;
(2)changes in directive;
(3)minor changes.
1) Change Orders are amendments to the contract. They are essentially a mini-agreements to adjust the work, price, and schedule of the initial contract. When they’re validly executed (pursuant to the contract), change orders become a part of the original contract. But change orders also have the potential for creating chaos – so make sure the general conditions discuss how change orders must be agreed upon, executed, and billed.
2) Change Directives can get risky if they aren’t limited by the general conditions of the contract. These provisions authorize the owner to unilaterally make changes to the work, with the price and schedule changes will be agreed upon later. If this is in the prime contract, subcontractors will often be bound by similar terms. Regardless – it’s important to understand whether change directives can be made and how they’ll be managed.
3) Minor Changes are the 3rd types of changes that may be allowable under contract. These are simple adjustments to the project that don’t affect either the price of the time to complete performance. Still, there’s always the chance that one side might consider something to be minor while the other side sees it as a material change to the job. For clarity, it might be a good idea to set parameters for what’s considered a “minor” change under the agreement.
The Employer's requirements are project-specific components of the construction contract that document the: • fitness for purpose criteria for the project. • Contractor's scope of work and design and how it is to fulfil those obligations. • technical criteria to be satisfied. • other project-specific obligations.
A clearly defined scope of work, also known as a statement of work, is a crucial element of a construction contract. This document will describe, in detail, the precise tasks and objectives of each contractor.
The scope of work determines the amount of work an individual needs to complete to fulfill their contractual obligations. It can also be used as a reference point when dealing with change orders, and punch lists.
Contractors and subs need to know what type of work falls outside their scope of work to avoid performing additional work without additional compensation.
A scope of work, also called a statement of work, is a written agreement that describes the work to be performed. It is commonly used in project management to track progress.
On a construction project, it might be a separate document attached to the construction agreement or it may be a section of the contract. A good scope of work includes enough detail to ensure that everyone on the project can stay on the same page.
The scope of work might be the most foundational piece of a construction contract. It should clearly communicate the expectations of the contractor or sub. Without a clearly defined scope of work, the potential for defects, payment disputes, and project delays will soar.
The scope of work will outline who is responsible for completing which task, the project schedule, and any other necessary details for contractors and subs. It establishes a baseline of rights and obligations. A scope of work isn’t set in stone, though – they’re commonly modified via change orders and partial terminations.
If a contractor is asked to perform work that wasn’t included in the original contract, it’s critical to request a change order in writing.
Project Overview
A short, concise statement summarizing the project description. The overview should list critical objectives that must be achieved in order to complete the project successfully.
2. Milestones & Deliverables
This section should detail all the expected project goals that need to be reached throughout the lifespan of the project. It will ideally include enough relevant information to provide contractors and subs a clear understanding of the project requirements.
3. Scope and Technical Details
The project scope will give you essential details regarding the precise tasks and their technical aspects. Specific methods and techniques required for the completion of a contractors performance will be listed, along with the evaluation criteria.
Schedule and Timeline
Not a full detailed construction schedule, but rather a general list of tasks, and related tasks for the project and when they are expected to be completed. Contractors need to plan around their deadlines. To do so, they should be told the overall anticipated project timeline, delivery dates, and any relevant completion milestones.
This section of the scope of work will define the administrative procedures on the project. How are change orders handled? When and how are payments going to be issued? These questions are ideally answered in this section, along with any other pertinent contract and legal requirements.
Every construction project should include a set of drawings or blueprints. Drawings provide a simple overview of the project as a whole. They should be presented to contractors before any construction activities begin.
This document informs the contractors what and how to build the structure. Construction drawings are a collaborative effort between the architect, the clients, and the contractor. Ideally, these are the most up-to-date version of the drawings.
The section for construction specifications is where all the technical data and requirements can be found. The specs should detail the materials and techniques expected to be used on any given task. It will outline all the quality standards, acceptable materials, and any quality testing necessary to ensure compliance.
The architect or the engineer will prepare these, and the client will verify them. In turn, the client will then provide the specs to contractors who are expected to perform according to those details. However, any defective specifications might result in the client being liable to the contractor for increased costs they may have incurred due to the specs.
In some cases, the contractor may want to substitute one material for another for a variety of reasons. Contractors should always adhere closely to the specifications prepared by the architect or engineer. However, in the event that a change is necessary, it is important to follow the steps required to make a substitution request
A bill of quantities isn’t always included, but it can be helpful. A bill of quantities is an itemized list of the various materials, parts, and labor required. This list is typically provided during the bidding process.
The purpose of this is to allow prospective bidders to be able to estimate their costs more accurately and simplify the evaluation process. Typically, bills of quantities are prepared by a quantity surveyor or building estimator.
A well-formulated construction schedule should be detailed, constantly updated and readily accessible to everyone on the project.
Construction schedules can be developed in a number of different ways, such as Critical Path Method, Gantt charts or any other schedule that meets the project’s needs. Schedules can be relatively simple outlines of the project.
However, the larger and more complex the project is, the greater the need for more formal, detailed approaches. Detailed construction schedules keep everyone aware and informed about the project status, which can reduce both conflicts and delays.
A schedule of values is provided by a contractor and lists all the work items from start to finish. It will allocate the entire contract sum among the various portions of the work. The schedule of values is also a useful management tool to form the basis for submitting and reviewing progress payments. This document can help keep the cash flowing and bills paid on time.
Anytime there are conflicting provisions in a contract; there should be an established totem pole of priority to determine which provision in which document will prevail. Therefore, many contracts include an”order of precedence clause” that deals specifically with this issue. A standard order of precedence will start with any change orders, the agreement, special conditions, general conditions, specifications, drawings, then any other documents that form the contract documents.
PART 1 – BIDDING PROCEDURES
Option A – One-Envelope Bidding (alternative Section I and II to be used for One-Envelope bidding procedure)
Section I: Instructions to Bidders (ITB)
This Section provides relevant information to help Bidders prepare their Bids. Information is also provided on the submission, opening, and evaluation of Bids and on the award of Contracts. Section I contains provisions that are to be used without modification.
Section II. Bid Data Sheet (BDS)
This Section includes provisions that are specific to each procurement and that supplement the information or requirements included in Section I, Instructions to Bidders.
Option B – Two-Envelope Bidding (alternative Section I and II to be used for Two-Envelope bidding procedure)
Section I: Instructions to Bidders (ITB)
This Section provides relevant information to help Bidders prepare their technical and price Bids. Information is also provided on the submission, opening, and evaluation of Bids and on the award of Contracts. Section I contains provisions that are to be used without modification.
Section II. Bid Data Sheet (BDS)
This Section includes provisions that are specific to each procurement and that supplement the information or requirements included in Section I, Instructions to Bidders.
Section III. Evaluation and Qualification Criteria
This Section specifies the criteria to determine the lowest evaluated Bid and the qualifications of the Bidder to perform the contract. Two alternative Sections III, Evaluation and Qualification Criteria are provided to address the possibility of having or not having prequalification of Bidders.
Section IV: Bidding Forms
This Section includes the forms which are to be completed by the Bidder and submitted as part of his Bid.
Section V. Eligible Source Countries of Japanese ODA Loans
This Section contains information regarding eligible source countries under Japanese ODA Loans.
PART 2 – WORKS REQUIREMENTS
Section VI. Works Requirements
This Section contains the Specification, the Drawings, and supplementary information that describe the Works to be procured.
PART 3 – CONDITIONS OF CONTRACT AND CONTRACT FORMS
Section VII. General Conditions (GC)
This Section contains the general clauses to be applied in all contracts. The text of the clauses in this Section shall not be modified.
Section VIII. Particular Conditions (PC)
This Section consists of Part A, Contract Data, which contains data, and Part B, Specific Provisions, which contains clauses specific to each contract. The contents of this Section supplement the General Conditions and shall be prepared by the Employer.
Section IX: Annex to the Particular Conditions - Contract Forms
This Section contains forms which, once completed, will form part of the Contract. The forms for Performance Security and Advance Payment Security, when required, shall only be completed by the successful Bidder after contract award.
