While there is no way to eliminate all of an owner’s risks on a construction project, the most important, and often most overlooked, tool to minimize those risks is the construction contract. Proper negotiation, drafting and administration of a construction contract can provide a plethora of protections to an owner, ensuring, among other things, that an owner: (1) will not pay twice for the same work if a mechanics’ lien is filed; (2) has the full range of remedies available to it in case of a contractor’s breach; (3) is protected in case of payment or performance failures by its contractors, subcontractors and suppliers; and (4) enjoys all of the warranties for which it has bargained.
1. Make sure that all subcontractors and suppliers are made aware of the total contract price and the time for payment.
