How Do You Negotiate & Understand Construction Contracts?
If you are building an investment property, you need to understand how the contract negotiation process works. This seems complex, but if you break it down into subsets and try to visualize who is in charge of what then it becomes substantially easier to understand. The key point of difference in construction contracts is who is in charge: you, a project manager, or the architect (who often doubles as a project manager). Hire an architect as your project manager if you want to follow a hard-bid model. This is when the architect designs the project, then runs the construction as well. Hire a general contractor to run the project if you want to follow the design-build method. This construction contract has the contractor running it, but in a less authoritarian fashion than the architect would. It’s more of a team effort than the hard bid. Ensure that the project will stay on budget or close to it. One way to do this is to give a lump sum to your project manager, whether the project ultim
