The Importance of Reviewing Your Construction Contract Before You Sign
Monday, 07 September 2026
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Posted by: Ernest Roper
 Signing a contract without fully understanding its terms can expose a contractor to significant financial, legal and operational risks. Contractors are often eager to secure work, maintain cash flow and build relationships with clients and may overlook the critical step of reviewing the contract before signing.
A construction contract is the tool that governs the rights, responsibilities and obligations of every party throughout the life of the project. Once signed, its provisions are binding and may have adverse and / or unanticipated impacts.
Every construction project carries risks, and these risks are allocated in the contract document. Reviewing the contract helps identify these risks before work begins, allowing the parties to address them while they are still negotiable rather than after a dispute arises. Contractors should carefully examine clauses dealing with: - Payment certification and payment periods.
- Retention monies and security requirements.
- Delay damages and penalties.
- Indemnities and limitations of liability.
- Design responsibilities.
- Defects liability obligations.
- Grounds for termination.
- Notice requirements for claims.
- Dispute resolution procedures.
Failing to review these clauses could have catastrophic commercial consequences and affect the success of a project. For example, failure to comply with contractual notice provisions alone can result in the loss of legitimate claims for additional time or compensation due to time-barring provisions.
While these standard forms provide balanced contractual frameworks, they are frequently amended through Particular Conditions or Special Conditions. These amendments can significantly alter the allocation of risk and responsibility between the parties.
A critical part of the review process is understanding the contract being signed. Where a contract or particular clause is misunderstood, construction contracts can directly affect project profitability, cause delays, result in rejected claims or lead to disputes.
Where risks are identified prior to signing the contract, a contractor may negotiate amendments, clarify responsibilities or adjust pricing to reflect the associated additional risks. This opportunity is lost once the contract is signed. Contract review is therefore an important commercial risk management tool. When a contract is properly understood, disputes are reduced, communication improves and the contract administration process becomes more effective and efficient, contributing to project success.
A generic contract review checklist that could be applied to bespoke and standard form contracts would include the following: | Item | Clause | Review Questions | | 1 | Parties | - Are the parties clearly defined and are the signatories authorised to sign the agreement?
| | 2 | Scope of Work | - Is the scope of work clearly defined and comprehensively described?
- Are all necessary construction drawings received?
- Does the contract price match the scope requirements?
| | 3 | Roles and Responsibilities | - Are the roles and responsibilities of each party clearly articulated?
| | 4 | Schedule | - Is the schedule clearly articulated with a site mobilisation date, practical completion and or final completion dates?
- Do the dates mentioned in the contract match the current timeline, or do they still reflect outdated timelines referred to in your tender submission?
| | 5 | Payment Terms | - Are the payment terms consistent with what you have anticipated in your tender submission or have they been amended?
| | 6 | Variation Orders | - Does the contract include mechanisms for variation orders and is this understood?
| | 7 | Notices and Claims | - Do you understand the notice and claim requirements of the contract and have they been amended in any way?
| | 8 | Force Majeure | - Does the contract have a provision for unforeseeable events and how does it address this?
- Are there limitations on which events qualify under this clause and what are they?
| | 9 | Penalties / Delay Damages | - Are penalties / delay damages applicable?
- Is the quantification of the penalties / delay damages commensurate with the risk you have priced in this regard?
- Are the applicable dates for penalties / delay damages correct?
| | 10 | Practical Completion / Sectional Completion | - Are these dates correct, and are they as anticipated when the works were priced?
| | 11 | Dispute Resolution | - Do you understand the dispute resolution process and which process to follow, e.g. adjudication, arbitration or litigation?
| | 12 | Limitation of Liability | - Are the types and limits of recoverable damages clearly defined and where required, clearly articulated in the contract data?
| | 13 | Contract Data | - Is the contract data correctly and fully populated as applicable?
| Taking the time to review a construction contract will assist in preserving the commercial health of a construction company and reduce avoidable risk. Should you have any queries, please contact the Association.
Bilaal Dawood | Head: Membership Services
|
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