General Conditions of the Contract for Construction

3. Contract Administration and Communication

Effective communication is vital for project success. The General Conditions establish protocols for formal communications. All contractual instructions, changes, and clarifications are typically required to be in writing.

• The Contract Document: The Contract comprises the Agreement, General Conditions, Special Conditions, Drawings, Specifications, and Addenda.
• Directives: The Architect has the authority to issued supplemental instructions and clarifications. For changes that affect cost or time, a formal Change Order is required.
• Submittals: The Contractor must submit Shop Drawings, product data, and samples for the Architect's approval. These submittals demonstrate how the Contractor proposes to conform to the design intent, but they do not relieve the Contractor of responsibility for deviations from the contract documents.

4. Schedule and Progress

Time is of the essence in construction contracts. The Contractor must develop a Construction Schedule showing the sequence of activities, timing, and critical path.

• Completion Date: The contract specifies a Substantial Completion date, at which point the facility can be utilized for its intended purpose.
• Delays: The General Conditions address Excusable Delays (such as acts of God, labor strikes, or changes ordered by the Owner) versus Non-Excusable Delays. If an excusable delay occurs, the Contractor may be entitled to an extension of time (Time Extension) without incurring liquidated damages.
• Liquidated Damages: If the Contractor fails to complete the work on time due to their own fault, they may be required to pay a predetermined sum per day for the delay, compensating the Owner for lost use of the facility.

5. Payments and Financial Terms

Financial provisions are heavily detailed to ensure cash flow for the Contractor and security for the Owner.

• Progress Payments: Based on the Contractor's Application for Payment, the Architect certifies the value of work completed and materials stored on-site. Payments are typically made monthly, less a Retainage (usually 5% or 10%).
• Retainage: A sum withheld until final completion to ensure the Contractor finishes all punch list items and corrects any defects.
• Final Payment: Issued after the Owner accepts the work, the Contractor submits all warranty documents, and all liens or claims are settled.

6. Changes in the Work

Changes are almost inevitable in construction. The General Conditions provide the mechanism for these adjustments:

• Change Orders: A written instrument signed by the Owner, Contractor, and Architect authorizing a change in the work, adjusting the Contract Sum, and extending the Contract Time if necessary.
• Construction Change Directives: Issued when the parties cannot agree on the cost of a change. The Contractor must proceed with the work, and the cost is resolved later through negotiation, arbitration, or litigation.
• Minor Changes: The Architect often has the authority to order minor changes that do not affect cost or schedule, known as "Field Orders."

7. Quality and Acceptance

The standard for quality is typically that the work must be "free from defects" and executed in a "workmanlike manner."

• Inspection: The Architect has the right to inspect the work at all times to ensure compliance. Failure of the Architect to inspect work does not relieve the Contractor of their obligations.
• Correction of Work: If the Architect identifies defects or non-conforming work, the Contractor must correct it promptly at their own expense.
• Substantial Completion: The stage when the work is sufficiently complete so the Owner can occupy or utilize the facility for its intended purpose.
• Final Completion: Occurs after all punch list items are completed, warranties are submitted, and retainage is released.

8. Insurance and Bonds

To protect all parties financially, the General Conditions mandate specific insurance coverages and surety bonds:

• General Liability Insurance: Covers bodily injury and property damage occurring during operations.
• Workers' Compensation Insurance: Required by law to cover injuries to the Contractor's employees.
• Performance Bond: Guarantees that the Contractor will complete the project according to the contract terms. If the Contractor defaults, the surety steps in.
• Payment Bond: Ensures that the Contractor pays their laborers, subcontractors, and material suppliers.

9. Safety and Site Conditions

The Contractor is generally responsible for safety programs and precautions to prevent accidents. This includes complying with OSHA regulations and protecting adjacent property.

Regarding site conditions, if subsurface or latent physical conditions differ materially from those indicated in the contract documents, the Contractor is typically entitled to an adjustment in the contract sum and time. This is known as the "Differing Site Conditions" clause.

10. Termination and Suspension

The contract outlines specific grounds under which the agreement may be terminated:

• Termination for Cause: The Owner may terminate the Contractor if they repeatedly fail to carry out the work, fail to pay subcontractors, or violate safety laws. The Contractor may terminate if the Owner fails to make payments.
• Termination for Convenience: The Owner may terminate the contract at any time for their own convenience. In this case, the Contractor is compensated for work performed and reasonable demobilization costs but is not paid for anticipated profit on unperformed work.

11. Dispute Resolution

Construction projects are complex, and disputes are common. Modern General Conditions often include a multi-tiered dispute resolution process:

1. Initial Decision Maker: Often the Architect or an independent third party renders a preliminary decision.
2. Mediation (strong> Parties attempt to reach a voluntary settlement with the help of a neutral mediator.
3. Arbitration or Litigation: If mediation fails, the dispute is resolved through binding arbitration or a court of law, as specified in the contract. Arbitration is faster and less formal than litigation but is generally binding and rarely subject to appeal.