Negotiating Your Construction Contract: Three Traps to Avoid!
By Roger Greenwald, AIA -A full service residential and small commercial architecture firm based in Wethersfield, CT, serving all of Connecticut.
Your architect has finished the plans for your new house or renovation. You love the design. But getting the project built requires a solid contract with your builder. As both a licensed architect and a national award-winning general contractor, I’d like to advise you on the 3 most common pitfalls which you should avoid:
Trap #1: NEVER sign the builder’s contract. It was written by the builder’s lawyer to to protect the builder, not you. Over the years I’ve helped scores of homeowners who were victimized by bad contracts. Don’t be one of them. Hire a construction lawyer to prepare a standard AIA (American Institute of Architects) contract. Most experienced architects include bid preparation and some bid negotiation in their scope of work. It’s well worth the cost to have your architect work with your lawyer to ensure that the contract is inclusive of all costs and protects you. In our next blog, we’ll go deeper into the key protections which that contract should contain.
Trap #2: Pay attention to the draw schedule: The draw schedule dictates how much is paid and the milestones which the contractor must reach to receive the payment. Every contractor will try to get you to pay him as much as possible in advance of the work. This puts you at his mercy by removing his incentive to complete. Most experienced architects will help you review the construction draw schedule to ensure that you’re holding back enough money to ensure that the contractor is motivated to complete, and to replace him if he fails to complete for any reason.
Trap #3: Avoid change orders. Every change order is like a bomb going off in the contractor’s office, disrupting the scheduled work flow. Honest contractors hate change orders because change orders slow them down. Owners hate change orders because they always seem to be more expensive than they should be. Only bad contractors love change orders. They hear the cash register ring every time a request for a change is made. So how do you avoid change orders? Simple: detail and specify the job properly prior to bidding and contract signing. An experienced architect will do this as a matter of course. A good architect will be specifying the job down to the make and model of the bathroom fan and toilet paper dispenser, and whether the fan is switched separately from the light. You get the idea. Good specs is essential to avoiding change orders. But the client must also be decisive and disciplined. Design carefully. Move forward deliberately. Try not to change your mind mid-course if you can help it. If you stick to these rules, your project will have minimal change orders, and your budget will be happier for it.
In our next blog, we’ll dive deeper into the essential points of a solid construction contract, including your ability to stop the job, your architect’s role if a problem arises with the contractor, and ensuring that payment of a draw does NOT imply acceptance of work which may later be discovered to be defective.
Stay tuned.
Regards,
Roger