This article addresses factors that should be discussed and considered when drafting a contingency clause in a construction contract with the goal of helping to set clear expectations and avoid disputes.
The best contracts provide the parties with a clear allocation of risks and responsibilities, and a process for handling inevitable project challenges. Contract negotiations can enable parties to have the difficult conversations allocating risks before the start of a project. An effective negotiation, in turn, aligns the parties’ expectations and helps avoid costly disputes born out of misunderstandings of the parties’ respective rights and responsibilities on the project.
This final installment of a three-part series on contingencies in construction contracts addresses factors that should be discussed and considered when drafting a contingency clause in a construction contract with the goal of helping to set clear expectations and avoid disputes. Part I The Best Laid Plans: Contingency in a Construction Contract explained what a construction contingency is and Part II The Best Laid Plans: Contingency in a Construction Contract discussed the two primary schools of thought on how a construction contingency fund should be used and managed.
Reprinted courtesy of Samantha Schacht, Construction Executive and Josh Levy, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
Ms. Schacht may be contacted at samantha.schacht@huschblackwell.com