If you`re involved in the construction industry, you know how important it is to have a clear understanding of the contracts and agreements that govern your projects. Unfortunately, these documents can be dense and difficult to parse, especially if you`re not familiar with the terminology they use. That`s why it`s important to have a comprehensive contract glossary at your disposal.
Here are some of the key terms you`ll encounter in construction contracts, along with their definitions:
1. Change order: A written order requesting a change in the scope of work, schedule, or budget for a construction project.
2. Contingency: A sum of money set aside in a contract to cover unforeseen circumstances or changes in the project.
3. Cost-plus contract: A type of contract in which the contractor is paid for their actual costs plus a percentage of profit.
4. Delays: Any event or circumstance that causes a delay in the completion of a construction project.
5. Liquidated damages: A specified amount of money that the contractor must pay to the owner if they fail to meet an agreed-upon deadline.
6. Performance bond: A type of insurance policy that guarantees that the contractor will complete the project as specified in the contract.
7. Punch list: A list of minor items that need to be completed or corrected before a project can be considered complete.
8. Retainage: A percentage of the contract price that is withheld by the owner until the project is complete and all obligations have been met.
9. Subcontractor: A company or individual hired by the general contractor to perform a specific task or tasks on a construction project.
10. Warranty: A guarantee that the work performed under the contract will meet certain standards or specifications for a specified period of time.
These are just a few of the many terms you`ll encounter in construction contracts. Having a clear understanding of these terms is critical to ensuring that your projects run smoothly and that everyone involved is on the same page. So if you`re involved in construction, take the time to familiarize yourself with these and other key terms to ensure success.