A construction contract allocates risk between you and your builder. Before you sign, it's worth understanding exactly where that risk sits — because once construction starts, your leverage to renegotiate is limited.
Here are five risk areas an independent contract review examines.
1. Scope Definition
Ambiguous scope is the single biggest source of disputes. If the contract refers to documents that aren't attached, uses vague language like "as required," or leaves key elements to the builder's discretion, you're carrying the risk of scope gaps. A review ensures every scope reference is specific, complete, and tied to a numbered document.
2. Variation Mechanisms
Every contract allows variations — the question is how they're priced and approved. Does the builder need your written approval before proceeding? Are variation rates clearly defined, or left to "reasonable rates"? Can the builder claim delay costs as part of a variation? Clear variation procedures protect you from unmanaged cost growth.
3. Program and Delays
The construction program should be part of the contract, not a separate document the builder controls. Key dates, milestone requirements, and liquidated damages (or extensions of time) should all be clearly defined. Without this, delay claims become difficult to assess — and difficult to reject.
4. Payment Terms
Payment terms should align with completed, verified work — not with the builder's schedule. Check whether progress claims are tied to milestone completion or to time elapsed, whether retention is held, and whether the definition of "practical completion" is clear. Unclear payment terms can lock you into paying for work that hasn't been properly completed.
5. Defects Liability
The defects liability period (typically 12 months) is your safety net for issues that emerge after handover. Check that the period is clearly defined, that the builder's obligations to rectify are specific, and that you have a mechanism to enforce rectification — typically through retention or a bank guarantee.
The Value of a Review
A contract review before signature is the cheapest risk management you'll ever do. Once signed, every ambiguity is interpreted in someone's favour — and it's rarely yours.