Concept to completion: The contract through the project lifecycle
Gemma Nugent
Plain English Contract Advice for Contractors, Engineers, Consultants and Small Businesses | Lawyer | Facilitator | Trainer | FAIM
A contract's structure is like a roadmap. It tells us where to go in the contract to find the information we need.
Taking this further, the contract itself is also a roadmap, especially in a construction project. It guides the project through its lifecycle, from drafting through to lessons learned. Using it in this way promotes excellent project outcomes and strong commercial relationships
1. Concept-stage discussions
Contract initiation kicks off when the project is just an idea. It’s exciting to think about how to get the project off to the best start, taking into account desired outcomes, the maturity of the scope, the budget, the marketplace, the long-term future of the built asset, and so on. Your lawyer will be delighted to discuss the most suitable delivery model and form contract.Getting this right means a great project outcome and reduces the time spent negotiating.
TIP: Nurture a network of trusted lawyers and commercial managers who understand your business and your approach to client relationships so they can give you practical, meaningful advice about the best kind of contract for your project.
2. Briefing
When you are ready to go out to market, it’s time to brief a lawyer to draft a contract for inclusion in the tender documents. Tenderers need to understand and price legal and commercial risks.Your lawyer will need details about the project delivery framework, the tendering strategy, the level of definition of the scope, and critical project risks.
TIP: The secret to a great contract is in a frank, comprehensive briefing. The quality of drafting increases proportionately with the lawyer’s understanding of the project objectives.
3. Drafting
The goal is to draft a simple, understandable contract that addresses anticipated risks with practical contract administration processes.
TIPS: Opt for a lawyer who is passionate about plain English drafting. Standard form contracts can be helpful as a base, provided they can be tailored to the project's specifics.
4. Review
Key project participants should review the draft contract. This is a critical phase where misunderstandings and ambiguities can be ironed out.
TIPS: Engage all stakeholders in the review process, including project managers, designers, and contractors. Look for gaps in scope, unclear clauses, and potential conflicts. The goal is not just to protect the principal or head contractor’s interests but also to ensure fairness, transparency, and efficient contract administration.
5. Negotiation
Encourage suppliers to submit clarifications with their proposals. Energetic negotiations result in a robust contract, more accurate pricing and less room for arguments about variations.
TIPS: Approach negotiations with a collaborative mindset. Be firm but prepared to find creative solutions to contentious issues. Ensure that any changes are documented and understood by all parties
6. Execution
At execution, the parties confirm their expectations of each other by taking action to accept the contract formally. The document is transformed from a proposal into a legally binding agreement.
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TIPS: Use this opportunity to reaffirm the commitment to the project's goals and contract terms. Ensure all parties have a copy of the final document confirming acceptance, whether a signed contract, a letter of award, a purchase order or some other instrument.
7. Project Delivery
Contract administration is a critical part of project delivery. It involves monitoring both parties' performance, managing changes, and ensuring compliance with the contract's terms.
TIPS: Maintain open and continuous communication with all parties. Use project management tools to track progress, manage changes, and document compliance. Regular meetings can help address issues before they escalate.
8. Completion, close-out and post-completion
As the project nears completion, the focus shifts to finalising outstanding obligations, such as final payments, resolving disputes, rectifying defects and handover. Some contract obligations require management after completion, including warranties and defects liability periods.
TIPS: Review the project to ensure all contractual obligations have been met. Prepare a detailed close-out document summarising the work completed, any changes made, and lessons learned for future projects (including what contract processes worked well and not well). Implement a clear process for managing post-completion obligations and deadlines.
SoundLegal can help you get it right, end-to-end
The lifecycle of a construction contract is complex, requiring careful attention at each stage. By adhering to best practices from project initiation through drafting, delivery, and post-completion, a well-drafted contract can help ensure a successful project that meets the needs and expectations of all stakeholders.I’ve been intimately involved in every project lifecycle stage, both as an in-house lawyer and in private practice advising on large-scale commercial projects. I understand the challenges each stage presents. There’s no need to be overwhelmed; I’ll be with you every step of the way.
ABOUT GEMMA
I help construction, engineering and consulting businesses create and negotiate clear contracts so they can make more profit and achieve great project outcomes.
I founded SoundLegal to help SMEs in the engineering, construction, consulting and light industrial sectors manage their risk to support business growth, by finding practical, common sense solutions to contractual and other legal challenges.
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