What to Include in a Guaranteed Maximum Price Construction Contract
A Philadelphia commercial real estate lawyer provides assistance to developers and to general contractors who are involved in construction projects. We know the ins-and-outs of construction agreements and we can provide you with legal assistance in making an agreement that is protective of your rights and that is likely to result in a positive outcome from your participation within the construction project.
There are different kinds of construction agreements that developers and contractors can enter into for both residential and commercial construction projects. One of the most common types of construction contracts is a guaranteed maximum price construction contract. If you are going to be entering into this type of contract, you will need to understand exactly what the implications of this contract structure are. You are also going to need to make certain that the clauses of the contractual agreement are sufficiently protective of your legal interests so you do not end up losing money as a result of the development.
Curley & Rothman, LLC can explain guaranteed maximum price construction contracts and can provide you with invaluable insight into what types of clauses should be included in these contracts in order to protect you. We can also help you to make certain that you have made smart and informed choices when it comes to reviewing a contract, and we can assist you during the contract negotiation process so you can arrive at a deal that protects your interests and that the other party is willing to agree to. Give us a call as soon as possible to find out more.
What to Include in a Guaranteed Maximum Price Construction Contract?
A guaranteed maximum price construction contract is a contract in which the contractor agrees not to exceed a certain price for a construction process. The contractor assumes the risk of cost overruns caused by things like severe weather.
When you are creating a guaranteed maximum price construction contract, there are a few key clauses that you want to make sure are included in your contract so you can protect your interests and ensure the contract works for you. Some of the terms to make sure you include are:
- The maximum price of the project. This is the most important term of a guarantee maximum price construction contract because it determines the maximum amount a developer will spend for the project to be done through completion. The contractor needs to ensure that he has set a high enough price to avoid being left with substantial financial loss if the project has significant cost overruns. Developers want to make sure the price is as low as possible, so careful negotiation will be necessary to achieve a guaranteed maximum price that both parties will agree to.
- The distribution of savings. The contact should specify what happens if the project comes in below the maximum price. Does the developer get to keep all of the savings or is it split up in some way between the developer and contractor.
- The specifications for materials. It is important a contact be detailed regarding what materials should be used within the construction project. Clauses related to materials that are to be used will protect the developer by ensuring that a contractor who is facing the potential for cost overruns does not cut corners and use lesser quality and cheaper materials in order to protect his profit margin.
Your contract may also need to contain many other important clauses to protect your rights. If you are a contractor or a developer who is entering into a guaranteed maximum price construction contract, you should contact a Philadelphia commercial real estate lawyer as early as possible in contract negotiations so you can ensure the final agreement represents your interests. You also must make certain you have a lawyer review the agreement before you sign so you don't agree to a contract that puts you in a bad situation.
How can a Philadelphia Commercial Real Estate Lawyer Help With A Guaranteed Maximum Price Construction Contract?
Curley & Rothman, LLC can provide you with assistance in determining what kind of construction contract is most appropriate for you and will result in the best possible outcome for you as you develop property as a developer or contractor. We can also assist you in contract negotiation and in making sure that contract terms are protective of your interests. To find out more about the ways in which we can help you, give us a call today at 610-834-8819 or contact us online.