We doubt we need to convince you, a contractor, how important it is to negotiate the terms of a contract between you and the buyer of your services. You know that the contract will protect your right to payment for work done. There’s a particular part of the construction contract, however, that we would like you to focus on now. We put together a list of eight answers to questions that may help you understand what to consider in the Scope of Work Clause for construction contracts.
Why is the Scope of Work Clause so important?
It’s not just important. It is critical that the Scope of Work Clause accurately describes your performance obligations with respect to the construction project. The Scope of Work Clause will determine whether your performance satisfied the contract terms. In addition, in projects where you are only responsible for part of the construction work, the contract must distinguish between your responsibilities and liabilities for your project portion and the responsibilities/liabilities assigned to other contractors. In addition, the buyer cannot ask for modifications that are outside the Scope of Work Clause. Remember, you are not obligated to perform work that is outside your contract’s Scope of Work Clause. So, take the time to accurately describe and circumscribe the scope of your work in the written contract that defines the project.
As the contractor, am I the one who describes the work I will perform on the project?
Usually, when the project is out for bids where one general contractor will win the bid for the entire project. This is not always the case. If the buyer puts a contract out for bids to several contractors who will take responsibility for various project pieces, then the buyer must describe the construction work covered for each project portion.
Many times an item under construction will require specific technical specifications. How can we describe technical characteristics of the work within contract terms?
The terms of the contract will describe the Scope of the Work but the parties may attach the technical aspects to the contract in the form of an appendix. The attachments will describe the specific professional standards that you will use, the equipment or material specifications, and even drawings. The technical description may also express expectations for workmanship quality and operational expectations when you have completed the project.
Wait. I’ve entered into contracts that don’t mention professional standards, although we adhere to those that apply. Do I understand correctly that our contracts should state what professional standards we will use right there in the contract terms?
Yes. These widely used and internationally accepted standards will govern your work under the project so you want them set out in the contract terms and agreed to by you and your buyer. Also, your contract may set out more than one set of standards since various parts of the project may require different standards.
Ok, let’s step back a minute to talk about the technical drawings. Who provides the drawings for the project?
It depends. Sometimes the buyer will furnish basic drawings and then require that the contractor draw up detailed drawings that refine the basic ideas. Sometimes the buyer will have the right of approval for the detailed drawings.
What if the specifications or drawings are not accurate? Am I liable for the inaccuracies?
Suppose your buyer provides the basic drawings and retains the right of approval over your refined drawings. If it later turns out the drawings were incorrect, you will want the buyer to accept responsibility since he provided the basic drawings and approved your refined drawings before the construction started. If the buyer does not have right of approval for drawings, you will want the contract to provide who is responsible — or design an impartial process for determining who is responsible.
If I provide technical drawings for a particular project, do I retain ownership of them or does the buyer own them?
That is a great question. Often, construction contracts will include a confidentiality clause that imposes a duty on the purchaser to treat as confidential information those technical documents, such as drawings, created and owned by the contractor. In such a case, the contract will specify the consequences of a breach of confidentiality. Sometimes the contractor will transfer ownership of the documents to the buyer and the contract should reflect that concept. In other cases, the contractor will turn over technical documents to the buyer but specify the buyer’s limited ability to use them. If the buyer and the contractor both contribute drawings, consider having the contract clearly define how the parties will treat the technical documents with regard to confidentiality and to errors or inaccuracies.
Our contracts usually carry a guarantee against defects and shoddy workmanship. Do you have any suggestions about that topic?
Yes. The contract should reflect the contractor’s liability for defective or shoddy workmanship. You may also wish to include a guarantee period during which you (the contractor) will accept responsibility for inaccuracies in technical documents if the buyer advises you of the inaccuracies before the end of the guarantee period. You will want to tailor your guarantee provision to reflect that your responsibility covers the whole project — or just the project portion that you created. Consider defining “defect” and negotiate remedies for the defects. You may want to consider imposing a limitation that you will not assume liability for damage due to: normal wear and tear; inaccurate information or drawings provided by the buyer; faulty operation by the buyer or his staff; and improper repairs or alterations done without your consent.