A construction project is a vast and complicated collaboration between a large range of stakeholders. Many of the relationships are formalised in a contract, and the way that that contract is formulated can be decisive to the success of business partnerships and working relationships.
If mistakes are made in the contract, there is a chance that you will be obligated to act against your own interests. Get it right in the first instance, and you lay the groundwork for a successful project, eliminate the risk of ‘landmines’ and ‘obstacles’, protect your interests, and enable everything to proceed as envisioned.
The importance of contracts
We all intuitively understand the importance of a solid contract that leaves no stone unturned and narrows down into the specifics. However, before putting pen to paper, it can pay to remind oneself of the importance of perfecting the contract in advance.
- A contract provides a ‘fall back’ which both parties can rely upon in the case of a dispute. In this way, it reduces the lengthiness and complication of a dispute, by providing a clear reference point that clearly outlines all eventualities.
- A contract generated by a construction business advisory expert gives you power to enforce your rights, in the case of a default of the agreement or a breach of the terms. Depending on trust alone is risky business. Even if you do trust a partner, management may change, or financial circumstances may pose an unforeseen obstacle to the completion of duties.
- A contract takes the burden off of memory and talk, and places it on paper. It’s a clear outline of commitments made by both parties, and provides a guide against which actions can be judged and held to account.
- A contract can reduce conflict and mitigate risk. If both parties have taken the time to be clear about expectations and negotiations of terms, then a contract can ensure both parties are on the same page and reduce the circumstances conducive to conflict.
- Contracts empower compliance, which needs a clear legal standing and basis.
- Contracts embody the company brand and values, and provide a manifestation of your goals and expectations.
- Contracts help to secure cashflow. They increase the likelihood of you being paid and in a timely manner.
- Contracts provide opportunities for increased profit. Contracts are widely understood as negotiable, and through successful negotiations, a contract can actually be a mechanism for securing a valuable business partnership in which a fair price is paid out or received for goods or services rendered.
- Contracts can protect confidentiality. Business and trade secrets and information need to be protected, and a strong contract can ensure that there is a clearly outlined set of consequences against breaches, ensuring that information stays confidential.
Not all contracts are created equal
While the value of a contract is inestimable, and its use totally necessary and unavoidable, not all contracts are created equal. Executed poorly or with a lack of expertise, the risk is that a contract will actually place your business at a disadvantage.
The purposes of a contract are to support a fair, equitable trade that protects the interests of both parties – and the quality of a contract can be judged against how well it protects your interests, fosters the relationship, and drives efficiency in the carrying out of services or delivery of goods.
A quality contract that has undergone a construction contract review is a contract that minimises risk. Therefore, a thorough and expert risk assessment of contracts is a pivotal step towards ensuring that your contracts will support, not hinder, your business success.
Here at Guardian PC, our highly qualified team of construction, legal and technical experts offer a contract review service. We bring expertise across program management, commercial and contract management, contract administration and procurement, for the civil engineering, manufacturing, and mining industries.
Our team is available to help you mitigate contract risk, establish contract legitimacy, and favourable and fair terms, with our in-depth advice – delivered to improve results and offer peace of mind before a binding agreement is entered into.
Ready for any circumstance
The range of circumstances in which a contract may have to be drawn up and agreed upon can be extensive. Creating a contract for each of these circumstances, on an ad hoc basis, is a work-intensive prospect and one which allows room for mistakes.
Guardian PC has developed a suite of contracts based on our extensive experience. These cover you for scenarios including:
- Terms of Sale
- Purchase Order Terms and Conditions
- Sub-Consultancy agreement
- Subcontractor Agreement with Guarantor
- Subcontractor Agreement with No Signature
- Supply Agreement
Templates of these contracts can be viewed on our website on our Suite of Contracts page.
For more information on construction contract reviews, Security of Payment Act and adjudication, resolution of subcontractor disputes, virtual safety walks and diaries, and construction and engineering business advisory contact Guardian PC on (02) 8316 7510 or email@example.com