{"id":887419,"date":"2016-03-02T10:22:50","date_gmt":"2016-03-02T17:22:50","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=887419"},"modified":"2016-03-02T10:22:50","modified_gmt":"2016-03-02T17:22:50","slug":"construction-corner-construction-contract-basics","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/construction-corner-construction-contract-basics\/","title":{"rendered":"Construction Corner: Construction Contract Basics"},"content":{"rendered":"<p>Christine L. Chipman and Laurann Asklof | Shipman &amp; Goodwin LLP | March 1, 2016<\/p>\n<p>In a previous Construction Corner Post we discussed the primary elements of a design contract for a school construction project. In this post we will describe the basic elements of a <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/waiver-of-time-of-performance-provisions-in-construction-contracts\/\" target=\"_blank\">construction contract<\/a> for a school construction project where the constructor is a general contractor.<\/p>\n<p>The basic business terms of a <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/some-construction-contract-basics-necessities-and-pitfalls\/\" target=\"_blank\">construction contract<\/a> include:<\/p>\n<ul>\n<li><strong>Scope of the Work<\/strong> \u2013 what is the contractor building?<\/li>\n<li><strong>Schedule for the Work<\/strong> \u2013 when will the work be completed?<\/li>\n<li><strong>Compensation to be paid for the Work<\/strong> \u2013 how much will the contractor be paid?<\/li>\n<\/ul>\n<p><strong>Scope of the Work<br \/>\n<\/strong>The Scope of the Work is principally defined by the plans, drawings and specifications prepared by the project architect.\u00a0 These documents, often referred to as the \u201cconstruction documents\u201d, are incorporated into the contract by reference.\u00a0 The construction documents should be sufficiently detailed and complete to provide the contractor with a \u201croad map\u201d to the completion of the project. Complete and comprehensive construction documents will lead to more reliable bid prices and a more successful project outcome.\u00a0 Because a <strong>state assisted public school project <\/strong>is not to go out to bid until the construction documents have been reviewed and approved by the Department of Administrative Services, the construction documents for these projects are relatively complete when the request for proposals is issued (published).\u00a0 For <strong>public school projects that are not state assisted and private school projects<\/strong>, scheduling issues can drive a decision to bid a project before the construction documents are as complete.\u00a0 It should be noted that there may be a \u201cprice to pay\u201d for bidding a project prematurely as contractors will likely include a sum in their bid price to protect them against the uncertainties associated with the further development of the \u00a0construction documents. If construction commences prior to the completion of the construction documents, change order requests should be anticipated and it may become increasingly difficult for the project to be completed within the initial project budget.<\/p>\n<p><strong>Schedule for the Work<br \/>\n<\/strong>School projects are often particularly time sensitive in that they must be completed during summer recess. As a result, the completion of the Work according to an established schedule is critical.\u00a0 The contract generally includes a date for the commencement of the Work, a time frame for \u201csubstantial completion\u201d of the project and provides that final completion be achieved within a certain number of days after substantial completion.<\/p>\n<p>Although the construction schedule may take different forms, a common form is referred to as a critical path method schedule (\u201cCPM Schedule\u201d).\u00a0 Simply put, a CPM Schedule includes all elements of the work required to complete the project, the time that each element of the work will take to complete, the dependencies between the various elements and the dates for milestones and deliverables.\u00a0 Logically, a delay in the performance of one element of the work on the critical path will have an impact on the timing of various other elements.\u00a0 An updated CPM Schedule incorporating the delay will illustrate that impact.\u00a0 Whatever the form of schedule selected, the contract should clearly describe the scheduling requirements along with the obligations of the contractor for timely reporting of anticipated delays and schedule changes.\u00a0 Given the time sensitivity of school projects and the costs associated with delay, a liquidated damages provision for the assessment of liquidated damages against the contractor for failing to complete the project on schedule is frequently included in school construction contracts.\u00a0 This provision will give the contractor an additional incentive to timely perform. Please note that a properly drafted liquidated damages provision is essential to its enforceability against the contractor.<\/p>\n<p><strong>Compensation<br \/>\n<\/strong>The contract price for a general contractor is most commonly based on a lump sum amount.\u00a0 The contract should set out the amount of the lump sum, the basis for payment, the schedule for payment and the requirements for payment.\u00a0 Most commonly, payments are invoiced and paid monthly based on the percentage of completion of the work.\u00a0 The contract should require that the contractor submit a schedule of values which allocates the entire lump sum amount to the value associated with all of the elements of the work. The schedule of values is thereafter used as the basis for determining the percentage of completion of the work and the amount payable to the contractor.\u00a0 A stated percentage of each monthly payment is generally held back from each monthly payment (which is referred to as \u201cretainage\u201d) for the protection of the owner.\u00a0 Connecticut statutes provide limitations on the amount of retainage that may be withheld in public and private projects.<\/p>\n<p>For <strong>state assisted school construction projects<\/strong>, the form of <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/construction-contract-fundamental-rules\/\" target=\"_blank\">construction contract<\/a> to be used&#8230;<\/p>\n<p><a href=\"http:\/\/www.ctschoollaw.com\/2016\/03\/construction-corner-construction-contract-basics\/\" target=\"_blank\">To finish reading this article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Christine L. Chipman and Laurann Asklof | Shipman &amp; Goodwin LLP | March 1, 2016 In a previous Construction Corner Post we discussed the primary elements of a design contract for a school construction project. In this post we will describe the basic elements of a construction contract for a school construction project where the&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/construction-corner-construction-contract-basics\/\">Continue reading <span class=\"screen-reader-text\">Construction Corner: Construction Contract Basics<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9],"tags":[72],"class_list":["post-887419","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","tag-construction-contracts-2","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Construction Corner: Construction Contract Basics - Advise &amp; 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