Every paragraph in every contract has usually already been paid for in blood, sweat and treasure—by someone. And in most cases, after each painful experience, it’s the designer who has been forced to take a haircut. But you needn’t have to go through so much pain, as there are easier ways to obtain a contract.
You can hire a lawyer to provide you with your first contract. You can also get or purchase a boilerplate contract from a trade association like the AIA or ABC, a fellow contractor, or a round table group such as RAR. You can also check your local licensing websites for state contract rules and requirements.
Whichever contract you use, make sure to have it looked over by an experienced lawyer with construction contract experience in the states that you do business. As a guide, here are some of the features in our design-build contract, many of which have been paid for in our blood, sweat and treasure.
1. Construction Cost
The cost of construction is over and above the cost of design development. The scope, terms and cost of construction will be agreed upon with a separate document, provided at completion of the CD phase. The construction contract will be a fixed-price agreement, though it may include allowances for certain items (i.e., certain finishes) not finalized during the design process. (This paragraph we noticed was needed after too many clients thought the cost of design was included in the pre-sales construction scope estimate.)
The building permit and time to secure the permit will be included in the construction agreement. (Permits are not included in this design agreement). Obtaining the permits may be moved forward if clients schedule and/or the complexity of the permit process warrants it. Should the client agree to obtain permits prior to the completion of the drawings, the client will be provided with a cost estimate or allowance for permit submission and AHJ fees.
3. Additional Design Work and Consultants
As noted in the text of this proposal, the design cost is a budget based upon a number of hours at our design rate of $XXX/hr. We will keep careful track of the hours and apprise you if we anticipate needing additional design time. When the construction contract is ratified, we will provide an accounting of all design time completed to date.
Authorities Having Jurisdiction – Additional design costs, permitting costs and construction costs may be required due to changes required by the permit department or other authorities having jurisdiction after the drawings have been filed.
Design Budget – The design budget is most likely to be exceeded when the scope of work expands from the original design program in the proposal. If you ask us to complete additional design or project development/costing work not specified in the scope above, you are explicitly asking for more design work and should anticipate exceeding the design budget above. Should this extra work cause us to exceed the design hours above, you are explicitly agreeing to an extension of the time and cost at our rate of $XXX/hr.
Engineering/Consultants – Consultants, such as structural engineers, geotechnical engineers, acoustical consultants and MEP engineers may be necessary depending upon the scope of work and the requirements of authorities having jurisdiction. Unless specifically included, these are excluded from this design agreement. The client will be provided with an estimated cost of the consultant’s services prior to the beginning of work.
Design During Construction – Design time is often required during construction for a number of reasons. Sometimes finishes are not finalized, or finish selections are reconsidered by the homeowner. After walls are opened during demolition, structural anomalies or systems can be discovered in the wall, which may require additional design development to resolve.
4. Termination of Design Contract
Termination of contract before commencement of design – You may cancel this agreement by mailing a signed notice to Landis Construction. The notice must explicitly cancel the design contract and must be postmarked before midnight of the third business day after you sign this contract. The notice must be mailed to: Landis Construction Corporation, 7059 Blair Road NW, Suite 300, Washington, D.C., 20012. If you cancel, the seller (Landis Construction) may not keep any part of your cash down payment.
Termination of design contract after commencement of design work – Homeowner may terminate the design contract at any point before substantial completion of the architectural drawings. Homeowners shall have the right to use the drawings as outlined in “Ownership of Drawings” section above. A reconciliation of design hours used to that point against dollars paid will be supplied. Homeowners will be refunded any hours paid for and not used, but also shall be responsible for design hours used in excess of the payments made to that date.
Termination of design contract by contractor – Contractor may terminate contract at any point during the design phase for irreconcilable differences. Homeowner shall in such cases have the right to collect any portion of deposit representing work not yet completed.
5. Late Payment
Any payment balances left outstanding after 30 days from when they are due will have an interest charge assessed of 2 percent per month (24 percent annually) or $150/month, whichever is greater.
6. Hazardous Materials
Our scope of work does not include investigation or remediation of asbestos, mold or any other hazardous material at the project or in the vicinity of the project. If we suspect a material has a hazardous material, we will notify the owner and provide a cost for testing and/or remediation at the appropriate phase of the process.
While testing may take place during the design or construction processes, remediation typically occurs only as part of construction. (We often have the client contract and pay directly with the remediation subcontractor to lower our liability and insurance costs.)
7. A Note About Neighbors
It is said that fences make good neighbors. When it comes to construction, good neighbors are maintained through proactive communication and mutual understanding and respect. Construction is inherently a noisy, dusty and sometimes invasive undertaking.
It is imperative that you approach your neighbor(s) as soon as is realistic to share your renovation intentions. Keep your neighbor(s) informed through the design process as much as possible. Please inform us of any neighbor issues or sensitivities, so these can be addressed early on.
If your project includes an addition, particularly if you live in an attached home, your project may require access from your neighbor’s side of the property line. Your neighbor may view your addition from a negative perspective. Certain scopes of work in certain municipalities require the notification and consent of neighbors (or, without consent, a longer waiting period).
A hostile neighbor can not only make your entire project unpleasant but can also potentially slow down the entire process. The costs of any neighbor negotiations, compromises or offerings are the sole responsibility of you, the homeowner.
These seven paragraphs are meant to spur you to look at your own design contract. How long has it been? QR
Christopher K. Landis, AIA, owns Landis Construction in Washington, D.C. He brings 30 years of remodeling design, construction and management experience to this series of columns for the magazine. You can reach him at firstname.lastname@example.org.