How to Write a Construction Management Agreement?
One common problem in construction management is poor negotiation skills. A study from ResearchGate states that "negotiation is the main approach to resolve conflicts before they become disputes" (Bakhary, Adnan, & Ibrhahim, 2015). Creating an effective construction management agreement is a good solution to this dilemma. Before the conflict even begins, why not settle it at the very beginning?
1. Negotiate Your Offer
Set a fair offer for the other party and provide considerations for them. Communicate your plans and agreement orally before you proceed into the written agreement. Give them time to think about your offer but never coerce them into entering an agreement they are not comfortable with. Negotiating your offer is the key to start your agreement with them.
2. Draft Your Agreement
It is crucial to have a written copy of your sample agreement so that you have something to look back in case of misunderstandings and conflicts with the other party. Draft your agreement document and outline every little detail in it. Keep it simple and clean. Be sure to include the date, the other person's address, your header, and the signatures of both parties. The first paragraph should state your reason and purpose of the agreement.
3. Name the Parties Involved
Specify who is involved in the agreement and label the type of agreement you have. Commonly, people who are involved in this agreement are you as the owner, your construction manager, contractor, and other employees. Include whether they are directly hired or subcontracted along with their compensation and work schedule. Ensure that all parties involved can perform and concur with the agreement between two parties.
4. Set Your Terms and Conditions
Your contract agreement needs to specify your exact terms and conditions to avoid misunderstandings and conflicts in the future. Outline the details of your agreement like the plans of the project, the period it begins and ends, the cost of materials, and the confidentiality of your transaction with them. Be particular on your consequences and penalties if the agreement is breached or violated. Include your termination clause and provide other details.
5. Provide a Signature Area
Provide a clear space to affix your signature. Your legal agreement has to be signed before it becomes valid. Include a space for the date when the signature is signed so that you can trace when the agreement is validated. You may even have it notarized to make sure that your agreement is not forged or modified in the long run.
6. Review Your Agreement
Once everything is settled, make sure to review your agreement and the project report before sending it to any parties involved in the agreement. Let them review for further clarifications and adjustments on the agreement. Never sign an agreement letter if you haven't settled everything with each other.
General FAQs
What are the Basic Steps of Construction?
- Planning.
- Permits and Insurance in Building Construction.
- Site Preparation.
- Foundation / Substructure Construction.
- Superstructure Construction.
- Punch List.
- Warranty Period.
Why is a Construction Agreement Needed?
The purpose of the construction contract is to
- allocate the duties between the parties,
- recognize and allocate the risk to the different parties, and
- reduce the uncertainty surrounding the project and allow the parties to plan for the project and the future.
What is a Void Construction Management Contract?
A void construction management contract cannot be enforced by law. An agreement to carry out an illegal act is an example of a void agreement. For example, a contract between drug dealers and buyers is a void contract simply because the terms of the contract are illegal. In such a case, neither party can go to court to enforce the contract.
When is a Construction Management Contract Needed?
A construction management contract is needed when:
- You're hiring a construction manager to manage a construction project.
- You're being hired as a construction manager to oversee a construction project.
What does a Construction Manager Do?
A construction manager will supervise and manage contractors and laborers at construction sites. Often they meet with architects, specialized trade employees, and civil engineers on projects or upcoming builds. They must address emergencies, work delays, or other problems that affect the construction project.
