What should a construction contract include?

Finding a builder to carry out our home project, whether eco-friendly or conventional, is a complex task, and its success largely depends on establishing a solid foundation and agreements in the contracts signed throughout the design and construction process.

Various stakeholders will participate actively and passively in the project. First, the client must find an architect or architectural team to whom they will entrust most of the work. Second, we will hire a builder or construction company to handle the work, supervised by the architect as well as a technical architect.

In the case of Slow Studio, we manage the entire process, so that once the project is drafted, we handle the selection and comparison of builders to make your job easier; however, this is not common among all architectural teams. It is important to be cautious of architects who create designs without knowing the cost or taking responsibility for construction costs, as these are guaranteed problems.

Whether supervised by the architectural team or not, we will always need to sign a contract with the construction company prior to building.
Let’s look at what signing a contract with a builder entails.

Finding a builder / initial contact

First of all, it is worth mentioning again that it would be most logical to leave the task of finding a builder for a house to the architect who designed it, as they are the person who best knows the design and needs of the future home, as well as its finishes and details.

In our studio, for example, we always offer the possibility of working with our trusted builders and also of comparing different quotes from builders the client may know.

In any case, the architect must always be on our side, not the builder’s. That is, they must be independent and not come as a recommendation from one another; this ensures that the architect will supervise the construction’s rigor without any conflict of interest and will always defend our interests.

Moving on to the search process for our builder, if the process is open, it usually begins once the house design is finished. In other articles, we develop this process further, but this time we will delve into the construction contract due to the many important details we must consider when drafting it.

Generally, at Slow Studio, we choose to provide an approximate reference price based on square meter rates before starting the design, establishing a maximum cost per square meter. We can do this thanks to our experience with previous projects and having worked with various builders and materials.

Subsequently, once the final design is finalized, we establish the exact construction price, which is the one that will be finalized under contract with a builder.

Finally, to begin the selection of builders, we will need the bill of quantities.

The bill of quantities

The bill of quantities is a document prepared by the architect that includes all the details defined in m² or linear meters for each of the construction elements that make up a home.

It is advisable to prepare this document with the help of a quantity surveyor – technical architect – who will be responsible for monitoring the work during its construction phases.

Usually, the format is a multi-page table or database divided by work items.

Each item corresponds to a section of the construction; for example, the interior finishes section includes details for each of the interior materials such as coatings, paints, or even custom furniture, if any.

Each element includes a total number of square meters, and this is what the builder uses to calculate the total price of a project. For example, if we indicate that we have 200 square meters of laminate wood flooring, the builder must set a price for this finished element.

Tendering process

Once the bill of quantities is available, it is time to choose the builder who will handle the work and all related processes.

By comparing the proposals from each builder, the client, always supported by the architectural team, must choose the one that best fits the conditions, needs, and construction budget for their future home.

Experience in the construction world is vital in these cases because, to perform a comparison of builders, a professional will know where we can save and where we should prioritize quality.

In many cases, the accepted proposal is not the cheapest, as it may be of lower quality, provided we do not exceed our maximum budget.

This ensures a transparent and open process where, of course, the architect always stands by the client, negotiating with each builder.

Selecting one or more builders

Some projects may require hiring more than one builder; for example, if we build a wooden house, we will likely need a team to handle the foundations and concrete work, while another would handle the wooden construction.

Other times, the builder themselves may subcontract a different company to perform a task in which they are not specialists.

It is important to know that, in the second case, the builder will be responsible for the subcontracted company.

Furthermore, in any case, the architect and their team play an essential role in site management, coordinating construction details between builders as well as their respective delivery deadlines.

Drafting the construction contract

We have reached the most important part of the process as well as today’s article: the drafting and signing of the construction contract.

This document is vital as it establishes a rigorous guideline regarding delivery deadlines and finish qualities agreed upon between the client and the builder.

Additionally, the construction contract must detail penalties for delays in delivery deadlines, elements that do not meet the desired quality, failure to comply with agreed costs, as well as material certifications or construction processes.

In the case of building an eco-friendly home, the contract must include material control processes and construction systems to guarantee both their origin and correct operation.

Furthermore, in any type of contract, we must include the definition of the relationship between each party—that is, defining the roles and responsibilities of the architect, the builder, and the client, while also stipulating the hierarchy and relationship between them.

Finally, we must not forget the annexes, whose role may seem irrelevant but actually serves as the documentary basis for the entire project. In the annexes, we must include all the project documentation for our house: general and detail plans, as well as the bill of quantities and the final budget agreed upon with the builder.

On the part of the architectural team, it is important that all plans are properly detailed and dimensioned, also featuring the appropriate legend to allow anyone to read them.