Having just completed a Sub Contract review for one of our clients , our Senior Commercial Manager Mark Catton MSc, FCIOB discusses the importance of reviewing a contract before entering into contract.
The size of the Sub-Contract can sometimes make reviewing the terms and conditions a daunting and time-consuming task so many times this is concentrated to just the scope, programme and cost. Unfortunately, in doing this many other clauses are missed which can add onerous conditions upon the subcontractor.
These conditions can be in the form of clauses which may give rise to:
- Condition precedents. These may either be implicit or implied
- Making the Sub-Contract back to back with the main contract conditions
- Setting defect and retention dates with the main contract rather than Sub-Contract dates
- Warrantying main contractor documents thereby indemnifying the main contractor if any errors or inaccuracies are found within.
Or words within the clause, for example would you accept:
- Best or reasonable endeavors
- Time is of the essence
- Fit for purpose
After the review has been completed my clients have a very clear understanding of the what the contract says which then enables a productive discussion with the contractor.
As part of the review process I state the reasons why a clause or wording is not acceptable or if it needs amending a suggested modification which would make the clause or wording acceptable. We want to work with the main contractor in a collaborative and co-operative manner to ensure that the subcontract terms and conditions are fair and reasonable for both parties and that both parties understand their responsibilities and obligations under it.
If you understand your responsibilities under the contract the chances of a dispute arising are greatly reduced, and you will be able to maximise the full benefit of the contract in terms of cost control and profit maximisation.
This is the benefit of using a quantity surveyor – although we may not be well liked for this, but we understand and know how to utilise construction contracts. A little time and money spent here can pay huge dividends later on. If you are asking ‘what does the contract say about this’ during the course of a project, then you are already on the back foot.
