Construction Contracts: Why Risk Allocation Matters More Than Ever

Construction projects are becoming increasingly complex. Alongside traditional issues such as delay, defects and payment disputes, businesses now have to manage greater regulatory, design, product and building safety risks.

The Government's current programme of construction regulatory reform is intended to create a more coherent regulatory system and reduce fragmentation across the sector. (GOV.UK)

For businesses entering into construction contracts, this makes clear risk allocation particularly important.

Key questions for your construction contract

Before signing, parties should consider:

• Who is responsible for the design?

• Who bears the risk of unforeseen site conditions?

• What happens if the specification changes?

• Who pays for additional regulatory requirements?

• How are delays and extensions of time dealt with?

• Who is responsible for defective materials or workmanship?

• What insurance and indemnities are required?

• Are subcontractor obligations consistent with the main contract?

• What happens if the project becomes significantly more expensive?

  
  

A contract that appears commercially attractive at the outset can become expensive if these issues have not been properly addressed.

Protecting your business

Whether you are a developer, main contractor, subcontractor, consultant or commercial property owner, construction contracts should reflect the actual commercial deal and allocate risk to the party best able to manage it.

Good construction law advice is not simply about identifying legal problems. It is about protecting margins, managing project risk and avoiding disputes.

Our construction lawyers advise businesses on construction contracts, NEC and other standard-form contracts, development projects, variations, delay, defects and construction disputes.