Delegation of authority Top management should not take time to read contracts.  This should be the primary responsibility of project management, with training and a specific delegation of authority.  Project management should be provided with standard language to meet typical omissions such as access and getting paid for stored materials; typical exceptions such as pay-upon-pay; and typical strikeouts found in notification or indemnity sections.  Authority should not be delegated to approve certain language such as liquidated damages, failure to be paid for stored materials, credit terms, and the like.

Legal involvement All contracts above a threshold amount should receive automatic legal review.  But, legal review is not a substitute for project management.  Your lawyer will typically not find omissions such as access, or recognize impractical arrangements for change orders. backcharges, and notification.  Contract terms are too important to delegate to your lawyer.

Dealing with Onerous Clauses This is a list of the typical problem areas for the producer.  A detailed legal review is available below.

• Pay-upon-pay    This is often accompanied by "condition precedent" language.  There are several ways around this that work for the GC and work for the producer.
• Access    This is a typical omission.  The GC owes the producer access to the job site for the crane and delivery vehicles.  That means they should be able to proceed to the place of erection under their own power.  The reach and required crane size should fit your plan.  Reach and access should be written into the contract.
• Extra work    This is typically not well clarified regarding charge backs and verbal changes.
• Stored Materials    Offsite storage is typically excluded but it is essential to the producer.  I suggest that you do not accept a contract unless it provides payment for offsite stored materials and pays yard rent if the job is delayed.  If you have the right delivery schedule and price, my experience is that payment for offsite storage can be worked out.
• Indemnity    This is typically one sided.  Click on the detailed legal review below.
• Termination    In the event of termination for convenience of owner, as the producer you want to recover all your costs, offsite as well as onsite.  Typically a contract is limited to costs incurred on the job.  What about special purchase materials.  What about forming?  Does the contract include such things?
• Retainage    This is the time to negotiate partial or complete payment of retainage earlier than the date of substantial completion.
• Liquidated damages    I suggest that you do not accept any liquidated damages clauses.  Strike them out.  This could be a walk away item.  If you have the right delivery schedule and price, my experience is you will not be asked to walk away.

1. Price index escalators adjust contract price based on a published index.  These are imprecise but easy to administer. There is no agreement on the best index to use.  Engineering News Record publishes a construction steel index.  Don't use scrap steel price, it is way too volatile.  It is best to avoid this type of escalator.
2. Quoted steel price based on your actual steel invoices vs. your quote at bid time.  These are the fairest in theory, but are subject to bidding games and thus contract administration problems.  This method is best for the producer and should be included in all long lived negotiated work.

• The Top-10 Contract Provisions.  Prepared by lawyer Brad Parrott and presented at the 2004 PCI Convention.   Includes negotiating tips.  This is an excellent reference. click here
• Gate Precast presented an excellent Powerpoint on contract language at the 2004 PCI Convention. Click here.  this may take a few minutes to download if you have a low-speed line.
• PCI review of the AGC Standard Contract. click here.

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