The Key Construction Contracts Basics

When hiring a contractor, you need a contract that shows the responsibilities of every involved party. Whether your construction project is large or a small house, you need a contract stating what each party will do. Below are the basics that every construction contract should have to ensure smooth and successful project completion.

Contract Documents

A construction contract comprises several individual documents outlining various project aspects. Some contracts have multi-page, complex documents with several sections. Nevertheless, these documents cover different agreement aspects.

Contract Type

Depending on construction projects nature, contracts can vary. However, how players will handle the disbursement define the contract type. Other items like project specifications, duration, and quality can also determine the contract type.

Contract Negotiations

A contractor must prepare to sit with project stakeholders when the time comes. That’s because they need the necessary skills to allow the involved parties to strike a deal and eventually achieve the set goals. And contract negotiations should leave the parties satisfied.

Subcontracts or Direct Hires

A contractor has two options when completing a construction project. These are hiring their employees or subcontracting different tasks to independent contractors. And making this decision is not easy.

Subcontracting provides warranties that may simplify the work, while direct hires require extra management and oversight. However, direct hire gives a contractor control over quality and costs. The contractor can decide the option that works for them depending on the project’s scope and their relationships with the available subcontractors.


The agreement’s section is a crucial part of a construction contract. That’s because it specifies the parties that will participate in the building process and the dates for completing the project. The contractor and the project owner execute the contract agreement. And this section comprises clauses or sections that define the terms, conditions, and scope of the deal. It can have heavy legal writing, and the parties can involve lawyers when handling the specifics.

Construction contracts bind project owners and contractors. Therefore, take your time to understand the details of your construction contract before appending your signature on the dotted line.