What is a construction contract?

by | Feb 16, 2015 | Construction and Maintenance

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A construction contract is a highly detailed legal document that states all aspects of an agreement which has been made between a construction company in Los Angeles and a property owner. The contract details the scope of work to be done, full details of the materials to be used and the cost. A construction contract is used when the project is complex and correspondingly expensive as well as smaller and less complex and less costly renovations. Construction contracts are written between the parties regardless of whether the project is commercial in nature or residential and as every project is unique, the construction contract reflects this although there are many common clauses as well.

When the contract is being written between a construction company in Los Angeles and the owner of a private residence it will contain three basic elements. The contract will stipulate the scope of the project, the schedule of work and of course the cost and the details of payment. The contract, once completed, will be signed by the owner of the residence and the construction company project manager.

The scope of the project is a detailed dissertation of precisely the work which is covered under the contract. This part of the contract will include detailed drawings and if necessary artist’s renderings of the project as well as specifications of the materials that will be included in the work. The contract will reinforce the understanding that both parties have; it is an exact representation of the work that is required.

The schedule of work focuses on the time issues; the starting date of the project will be specified as will the dates of important milestones and the date of completion. This is an important part of the contract as it is in this section that the process to be employed for inspection and QA is detailed.

The payment details include the total cost of the project and the dates when partial payments are to be made. A construction company in Los Angeles area will expect a deposit, usually this is about 5 percent of the projects total cost, partial payments are made during the construction process; these partial payments are often tied to the specified milestones. At the completion of the project it is usual for a certain amount to be held back from the final payment for an agreed upon period of time in the event there are problems that must be rectified. When the project is completed in compliance with the terms of the contract the final hold-back payment is made.

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