Understanding Construction Contracts

The Evolution of Construction Contracting: A New Era for Private Projects

At D. Hart Consulting, we understand that the landscape of construction contracting for private (non-governmental) projects has undergone significant changes over the years. What once was a straightforward three-party arrangement between the owner, architect, and general contractor has evolved into a much more complex process.

A Look Back: Simpler Times

In the past, the process was relatively simple. The owner would hire an architect or designer to create the construction plans. Once these plans were finalized, the owner would then enter into a construction contract with a general contractor. This contract was often a lump sum agreement, either negotiated or based on competitive bids from selected contractors. The construction documents included a written agreement between the owner and the architect, and a separate agreement between the owner and the general contractor. These contracts were typically concise, often just a few pages long.

The architect played a crucial role, not only in designing the project but also in supervising the construction and advising the owner on any deficiencies in the contractor’s work. The general contractor’s own workforce handled much of the construction, with materials supplied by vendors directly contracted by the general contractor. Specialized tasks, such as electrical and mechanical work, were usually performed by a small number of first-tier subcontractors. This model dominated the construction industry for much of the 20th century.

The Modern Era: Increased Complexity

However, the last few decades have seen a dramatic shift. The real estate development and construction market has become far more intricate. Owners now face numerous decisions regarding the structuring of their projects. The complexity of construction financing has increased, and so have the types and terms of construction contracts.

Owners must carefully select the design professionals and construction specialists who will bring their projects to life. They must also decide on the structure of the contracts, a decision that significantly impacts both the timeline and budget of the project.

What to Expect from Our Series

At D. Hart Consulting, we are committed to guiding you through these complexities. We will be publishing a series of articles that provide an in-depth look at the various types of construction contract documents an owner might need for a private works project. We will focus on the essential terms from an owner’s perspective, particularly those related to construction services contracts.

Our first article will explore the key factors that influence the types of documents and terms required for different projects. Stay tuned as we delve into the intricacies of modern construction contracting and help you navigate this evolving landscape.

We look forward to sharing our insights and helping you make informed decisions for your construction projects. If you have any questions or specific topics you’d like us to cover, please let us know!