Georgia Construction, Bond & Lien Law Blog


The Construction Contract Process

Posted in Contracts by Blue Blog on the February 22nd, 2015

As our long-time readers know, Mark Cobb is adjunct faculty at Thomas University.  Currently, he is leading a class on construction law and business, and one of his students, Travis Williams, Jr., is our guest blogger.  In addition to being a student, Travis is a co-owner of Thomasville Glass and Exteriors, where he specializes in estimation and sales for commercial projects.  Thomasville Glass is a full service family owned glass company that was founded in 1961.  In 2008 Thomasville Glass was recognized by Glass Magazine as a Top 50 glazing contractor in the U.S.

by James Travis Williams, Jr.

Construction Process

Much of the work that is done at a company in the construction or development field is done before any manual labor begins. Having people in place to successfully bid and or negotiate contracts is extremely vital to construction companies in today’s market. As the economy changed so to has the margins in the construction field, one mistake could make a potentially profitable job very costly. It is important to know what type of contract you are agreeing to before you sign the dotted line.

There are many different types of contracts, but the two most common in construction are the single contract and the multiple prime contract. The single contract is the more simple of the two and it is an agreement for a specific project between an owner and a contractor. Multiple prime contracts are more complicated. A multiple prime contract usually covers construction that will be completed in phases, consisting of different construction contracts for different phases, as well as including multiple contractors at once. Multiple prime contracts are typically seen on larger projects such as hospitals, large industrial structures and resorts.

In order to be execute a construction contract you must first find a project that is a good opportunity for your company. Secondly, you will need to check the pre-qualification section of the specifications in order to make sure your company is eligible to bid on the project. Next, you need to estimate the project in order to find the exact costs of materials and labor. It is very important to read the specifications very carefully when bidding a project, a lot of money is lost by people who do not know what they should be supplying. After these costs are considered you will need to cover your overhead expenses as well as add in profit. Once you have completed the estimating process you will be able to submit a bid to either an owner or general contractor, depending on your line of work. Once a bid has been accepted you will begin the contract execution process.

Once you have agreed upon price and terms with the owner or general contractor they will send you an agreement detailing what is to be included in the project. These documents must be signed and returned to the general contractor / owner. This is a very important time in the contract process, and is when many mistakes are made. Every contract needs to be read carefully before signing, even though you may have had verbal commitment for something that does not mean it will hold up in court if that were ever necessary, but what is written on that contract most likely will. Therefore, do not assume anything when signing a contract, always take your time and read the small print, or you could be making a costly mistake.

Next, you will need to provide insurance certificates and bonding capacity in order for them to be verified by the appropriate party. One thing to consider is that items such as additional insurance or additional bonding capacity will increase the costs of a project. Usually these items will be seen in the pre-qualification section of a project.

Your company will need to have a submittal package (samples of the materials as well as color charts etc.) approved by the owner before ordering material. Remember, the subcontractor is obligated to supply the project with materials that were specified on the plans, or have an approved equal vendor that has been approved by the architect and or owner. Depending on your trade, mainly subcontractors, you will be asked to supply the appropriate party with shop drawings. Shop drawings are a set of elevations detailing the size, location and type of material to be used.

Comments Off on The Construction Contract Process

Comments are closed.