CONTRACT REVIEW CHECKLIST

This is a checklist of items to consider at tender stage when reviewing the contract. Although long, it is not exhaustive and is intended to reflect those terms and conditions which are most likely to have the greatest impact on the cost of completing the project.

Specific Risks: Time 1. Is the programme realistic for the works as defined and all provisional works packages? 2. Are there contractually binding target/ interim dates? 3. Are the possession and completion dates clear and unconditional? 4. Do you need to get al programme revisions approved? 5. If the works are divided into sections, are these sequential or to be completed in parallel?1 6. Are the sections clearly defined? 7. Can you claim extensions of time for events outside your control such as employer instructions,

weather? 8. Can you claim loss and expense for events outside your control which delay the works? 9. Can you claim lost productivity for events outside your control which disrupt the works? 10. Are LADs set at a reasonable level and subject to an overall cap on the total amount deductible?2 11. If the project was delayed by 4 weeks, would the LADs deducted totally eliminate your profit margin

for the project? 12. If the project duration is long, does the contract permit price fluctuations e.g. for energy price spikes? 13. Can the employer ask you to accelerate the completion of the work and, if so, is the mechanism for

being paid additional costs clear?

Specific Risks: Cost 14. Is the employer financially secure? 15. Does the employer have a reputation for paying on time? Has it signed the Fair Payment Charter? 16. Is the project being funded and if so, are the funders financially secure? 17. Is there a separate trust account for (a) the retention, and/or (b) all payments 18. Is the retention per cent acceptable? 19. What is the period between certification of instalments and the final date for payment? Does it match

your subcontractor payment expectations/periods? 20. Are there any advance payments? 21. Is set-off allowed between payments and/or between other projects with the same employer? 22. Is the procedure for changing the price due to instructions, risk events etc. robust and workable? 23. Is the percentage of the price represented by provisional sums acceptable? 24. Can the employer omit works and, if so, how would this affect your profit margin?

Specific Risks: Quality 25. Are the documents defining the works complete?3 26. Are the designs provided sufficient in detail, buildable and produced by reputable designers? 27. If the works are divided into sections, are the sections clearly defined? 28. Are you competent to supervise any innovative design, whether by a consultant or subcontractors? 29. Are you responsible for any design of or for the works? If so, have you verified that design before

pricing the works? 30. If required, is the cost of 12 years’ of PI insurance included in your price? 31. Are there ‘fitness for purpose’ clauses (which are not insurable)? 32. Is the defects period reasonable? Check it does not start again where defects are rectified. 33. Are any specific obligations in relation to deleterious or prohibited materials workable? 34. Are ground conditions, asbestos, antiquities, reserved planning matters etc expressly mentioned and

who bears the risk?4

General Approach to Risks 35. Are the consequences (time or money) of risk events allocated to the party best able to manage the

chance of those risks events occurring, or best able to minimise the impact of those events on the project?

36. Are any responsibilities for risk management balanced by a similar level of authority? 37. Are your responsibilities to insure against specific risk events either already covered by existing

insurances or included in your price? 38. Can the consequences (time and money) of risks allocated to you be passed to your subcontractors? If

not, can they be insured and/or managed? 39. Are the mechanisms to change the works, programme or methods of working robust and workable?

Scope of Works and Services 40. Are the works clearly defined? 41. Is it clear what is deemed included in the definition of the works? 42. Is it clear what you are not expected to do? 43. Are the client’s expectations and objectives for the project well-articulated and reasonable?

Working Together 44. Are roles and responsibilities clearly defined both within the building contract and, where known, for

other members of the project team? 45. Is the contract co-ordinated (or can it be) with those of the rest of the project team including your

proposed subcontractors? 46. Are document protocols clear (ie do electronic versions take precedence over hard copy or vice versa)? 47. What is the reputation of other members of the project team, especially the contract administrator? 48. What control does the employer have over the contract administrator and its independent duties? 49. What are the provisions relating to access during the works for third parties? 50. Are your rights to subcontract the design and/or carrying out of works clear and workable?

Miscellaneous Conditions 51. Is the form of contract suitable for the size, scope and complexity of the works? 52. Are you familiar with all your obligations, both express and implied, under the form of contract?5 53. Are the provisions on copyright and/or confidential information standard?6 54. Are you entitled to terminate the agreement? 55. What are the employer’s rights to terminate the agreement? 56. Are there additional methods for resolving disputes, other than litigation and adjudication? 57. Are the requirements to provide and procure documents such as bonds, guarantees, third party rights

notices, assignments and warranties known, limited in number and reasonable?7 58. How is the contract to be executed?8 59. What is your liability for latent defects? 60. Are there any other limits on your liability?

Author

Sarah Fox of 500 Words Ltd developed this checklist. She is a speaker and trainer who cuts through the complexities of construction law.

She has simplified this checklist into a four point analysis to evaluate contracts from those which are ‘good to go’ and those which are ‘disasters waiting to happen’. She runs workshops to teach you how to review your contracts and avoid them becoming speed bumps in the contract process.

She is also author of the 500-Word Contract™.

To find out how Sarah can transform your technical training, contact her via: 07767 342747 or by email: sarah@500words.co.uk

Footnotes 1 If sequential then ensure the date for commencement of later sections is linked to completion of the earlier sections, and is not fixed.

2 If there are no LADs then your liability for cost arising from delayed completion is unlimited. LADs act as a cap on your liability and should be

included. 3 The employer should provide drawings, bills, employer’s requirements, scope of works, specification, pre -construction plan. As a contractor

you may need to prepare some of the contractor’s proposals, contract sum analysis, detailed specification, schedule of rates, cost plan and activity schedule.

4 If not, then the cost and time for ground conditions are at the contractor’s expense. Note you cannot rely on employer surveys.

5 You should always read the contract, but where you are not familiar it is sensible to ask a lawyer to interpret your obligations to avoid

breaching them. 6 Any licence for material should be restricted to this project.

7 These documents can take significant legal and management time to agree and administer.

8 Documents executed as a deed give a 12 year liability for breaches of the contract; otherwise the limit is 6 years.