Why you need a contract
You should agree to a written building contract with your builder before work starts.  A written contract is a good way of ensuring everyone is clear on what they are responsible for – and what happens if things don’t go to plan.

If your builder is the main contractor they will organise contracts with all the subcontractors.  If it is a labour-only contract and you are managing the building project, you will need to arrange contracts with all the subcontractors (another reason to use professional project management).

What should the contract cover?
You should have your lawyer review the contract before you sign it.  The contract should cover:

• What the project includes and the work to be done
• The schedule for the work and what happens if there are delays (you may negotiate penalties for delays)
• The payment schedule – how much you will pay and when
• Who is responsible for what
• Details of the builder’s insurance and guarantees including the fixing of defects and damage caused during building
• How disputes will be managed
• Who pays for building fees and consents
• How changes and variations to the contract will be managed (there will almost inevitably be some changes as work progresses)
• What happens if costs go up?
• A requirement to leave the site neat and tidy on completion
• A definition of practical completion of the job
• The retention amount that is withheld until the work is completed.

Next step | 6. Arrange consents >>

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