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What is a negotiated construction contract?

Updated April 17, 2017

A negotiated construction contracts is a written arrangement between a construction company and a client. The contract specifies cost, determines responsibilities and projects work schedules for a specific building project.

Identification

A construction contract is usually written following a construction tender where the cheapest bidder makes the deal. Negotiated contracts avoid bidding rounds and competition and they are mainly made between a contractor and a client that have some work experience with each other and a trusting relationship.

Features

Negotiated construction contracts are in writing and define the scope of the work to be performed. Various paragraphs specify the constructor's and the client's obligations in terms of permits, goods and services and manifest work and payment schedules, insurance requirements, and limitations of liabilities if something goes wrong. Most construction companies also include the extent of warranties in the written document.

Considerations

Negotiated construction contracts are usually financially less attractive for the customer as the price to be paid is negotiated with a single contractor without competing offers. However, clients might receive advantages from employing a specific contractor because the construction company's policies and methods are renowned, and its past work record has been of good quality.

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About the Author

Based in the U.K., Petra Turnbull has been working as a journalist since 1989. Her articles on the film and book trades have been published in "Screen International," "Dagens Naringsliv," "Film Magasinet" and other Scandinavian newspapers and magazines. She now manages her own book shop. Turnbull holds degrees in law and economics from Goethe University, Germany and Oslo Business School in Norway.