A Brief Introduction About the Pre Construction Services Agreement
Large construction projects can take a long time to complete. These projects have several stages that define the concept, bidding, pre-construction, construction, and post-construction activities. The long term construction projects can only become successful if there is proper planning and strategies attached to it. For a proper construction project, you also need to get a pre-construction services agreement. Is it necessary to sign this agreement? Will your contractor provide you such an agreement?
Who Takes the Pre Construction Services Agreement?
A pre construction services agreement is drafted between a contractor and an individual for carrying out a two-stage tender process before commencing construction.
Purpose of the Pre Construction Services Agreement
A pre construction services contract uses the contractor’s expertise during the design development phase and the project planning period – called pre construction activities – and use the time to procure tenders and sub tenders to fix a price for the contract.
This contract helps the developer in achieving a more accurate cost estimate for the entire project even though he may appoint the same contractor. This could also be used when a final developer for a contract has not been identified because it is a PFI/PPP project. A PCSA provides a list of services that the contractor should provide. A PCSA, therefore, is a form of consultant appointment.
Contents of the Pre Construction Services Agreement
A standard pre construction contract template includes the following provisions
- Details of both the parties
- Nature of the services that would be provided by the parties
- Specific services that the contractor would provide
- Defining the liability of such services the contractor would provide
- Acknowledgment and guarantee of being appointed for the second stage of construction
- Details of the payment and the schedule of payment including deferred payment
- Scope of the work including preliminary design documents and construction documents
- Ownership of the document
- Fees and charges
- Rights and responsibilities of both the parties
- Termination of agreement
- Miscellaneous
How to Draft the Pre Construction Services Agreement?
When drafting this agreement, some points that need to be kept in mind are
- The nature of the services that would be provided and the responsibilities of both parties
- Importance of time element in the services
- Other parties involved and the coordination between them
- Cost of the project and ceiling on the costs
- The basis of compensation and evaluation of completion
- Method of raising invoices
- Compensation in the event of suspension
- Delivery and ownership of the documents
- Indemnification
- Representation and Warranties
- Liability for damages
- Insurance
Negotiation Strategy
Negotiation strategies would be about the cost and payment. One of the most important negotiation tactics here is whether the contractor would be appointed for a second time during the main construction project or not. Apart from that, discussions would be about the liability and insurance
Benefits and Drawbacks of the Pre Construction Services Agreement
There are a lot of benefits of pre-construction planning and having an agreement before construction begins. This agreement helps to get the advantage of the expertise of the contractor on every construction level. Before making any final decisions, the contractor’s expertise will help you to choose the right thing. This is a way to save your money without even sacrificing the quality of the construction projects.
If you find that the contractor has got a lot of experience in building such projects, then they can definitely help to reduce the construction time and improve quality work. With the help of a solid construction agreement, you can get accurate costing and schedules for your project. The risk to your project will also be reduced as all the unknowns will be removed from your project. If the issues are found out at an early stage, then risk can be removed in advance.
What Happens in Case of Violation?
In case, the client or the contractor violates the terms or responsibilities, then the given action will be taken against him. There is a section for the violation cases in the agreement and that’s why you should keep this in mind while preparing the agreement. Legal proceedings are the last option which can result in restitution(1), specific performance or injunctive relief. Otherwise, courts may award punitive damages or compensatory damages
In any long-term construction project, one should have this agreement because it can save your time and budget both. The proper planning and strategy made with the contractor can outline all the initial goals and also the responsibilities of the team. That’s why you shouldn’t think much before asking your contractor to provide you the pre-construction agreement.