Key Contract Provisions to Check

🔹 1. Project Description & Scope

• Issue: Vague description of "Year 2025 Residential Units" with no specific quantity, type, or unit count.

• Red Flag: Ambiguity invites dispute over deliverables.

• Recommendation: Include a complete description of the number, type, and specs of housing units with reference to approved drawings.

🔹 2. Terminology & Definitions

• Issue: Phrases like “satisfaction of the OWNER,” “remedial works,” and “defective work” are undefined.

• Red Flag: Highly subjective and open to abuse.

• Recommendation: Add a Definitions section to clarify all technical and judgment-based terms.

🔹 3. Change Orders

• Strength: Requires OWNER’s written request for changes.

• Issue: No time frame for OWNER approval; potential for delay.

• Red Flag: Can stall work or billing cycles.

• Recommendation: Define processing time (e.g., OWNER to approve within 7 days). Allow automatic approval if no response.

🔹 4. Retention and Payment Terms

• Issue: No deadline for OWNER to release retention; no provision for partial retention release.

• Red Flag: OWNER could withhold full payment long after work is accepted.

• Recommendation: Include timelines (e.g., retention released 15 days after punch list completion) and partial release per phase.

🔹 5. Role of Project Manager

• Issue: Heavy reliance on PM’s discretion without checks.

• Red Flag: Potential abuse, delay in certifications and billings.

• Recommendation: Clarify roles and limits of PM vs OWNER. Add a dispute mechanism if contractor disagrees with PM decisions.

🔹 6. Delays, Extensions, and Liquidated Damages

• Issue: Delays beyond contractor's control (weather, supply issues) not clearly excused.

• Red Flag: Contractor unfairly penalized.

• Recommendation: Add exceptions to liquidated damages clause for force majeure, OWNER-caused delays, or official holidays.

🔹 7. Cost Inclusions and BOQ

• Issue: Permits, signatures, assessments, safety requirements, and as-builts not clearly budgeted.

• Red Flag: Risk of contractor underestimating total cost.

• Recommendation: Mandate that all such items are included in BOQ and contract price explicitly.

🔹 8. Quality & Workmanship

• Issue: Subjective standard (“most diligent and workmanlike”).

• Red Flag: Disputes over quality possible.

• Recommendation: Tie quality expectations to specific technical specs, drawings, and measurable standards.

🔹 9. As-Built Drawings & Final Acceptance

• Issue: No timeframe for OWNER to approve as-builts; costs not budgeted.

• Recommendation: Set a deadline (e.g., 10 days) for OWNER review. Ensure costs are part of contract sum.

🔹 10. Substitution Requests & Material Approvals

• Issue: Delays possible due to lack of response time.

• Recommendation: Set clear timelines for OWNER to approve or reject substitution proposals (e.g., within 7 calendar days).

🔹 11. Safety, Permits, and Compliance

• Issue: No clarity on who provides or pays for third-party permits, licenses, and damage from third parties.

• Recommendation: Explicitly assign responsibility and include cost in BOQ. OWNER should assist in facilitating necessary documents.

🔹 12. Warranty Period & Defects

• Issue: No deadline for OWNER approval or defect response.

• Recommendation: Specify turnaround time for approval or defect response (e.g., 7 working days).

🔹 13. Dispute Resolution

• Issue: Arbitration clause lacks cost-sharing mechanism and timeline.

• Red Flag: Could cause prolonged or expensive resolution.

• Recommendation: Add multi-step mechanism (negotiation → mediation → arbitration), define cost sharing, and deadlines.

🔹 14. Force Majeure

• Issue: Lacks clear relief claim process.

• Recommendation: Define notification timeline, documentation needed, and approval period for delay relief.

🔹 15. OWNER’s Responsibilities

• Issue: OWNER has minimal obligations stated, but retains wide authority.

• Red Flag: Imbalance in responsibilities can stall project or lead to disputes.

• Recommendation: Specify OWNER obligations: e.g., providing permits, approvals, access, prompt feedback.

🔹 16. Final Acceptance & Turnover

• Issue: “OWNER satisfaction” used again without clear criteria.

• Recommendation: Define objective standards and tests for final acceptance, tied to specs and plans.

📌 Key Risks Identified:

• Ambiguous language favoring OWNER

• No clear OWNER responsibilities

• Unbudgeted required items not in BOQ

• Absence of dispute resolution for variations and payment delays

• Over-reliance on Project Manager without checks

✅ Summary Recommendations:

1. Define all subjective terms and include a glossary.

2. Set timelines for OWNER actions (approvals, payments, feedback).

3. Include all regulatory and safety-related costs in BOQ.

4. Add force majeure protections and clear claim process.

5. Insert fair dispute resolution steps.

6. Clarify OWNER responsibilities and deadlines.

7. Create a balanced variation order process (cost & time implications).

8. Include provisions for partial release of retention.

Key Contract Provisions to Check