As a construction owner or project manager, you know that disputes can derail even the most promising projects. With construction disputes continuing to climb in 2025, the stakes have never been higher. The good news? Most conflicts stem from preventable contract gaps around payment, change orders, schedules, and quality standards.
Why Your Contract Strategy Matters
The unexpected is inevitable in construction. Weather delays, supply chain disruptions, design modifications, and unforeseen site conditions are part of the reality. Your contract should serve as a detailed roadmap that guides all parties through these challenges, not a vague document that creates more confusion than clarity.
Ten Critical Elements Every Contract Needs
1. Establish a Crystal-Clear Change Order Process
Your contract must outline exactly how changes are communicated, documented, approved, and priced. Define who has approval authority, what format change requests must take, required response times, and how pricing adjustments will be calculated. When everyone follows the same process, tracking accountability becomes straightforward rather than contentious.
Action item: Create a standardized change order form template and reference it explicitly in your contract. Require written approval before any work proceeds.
2. Modernize Your Force Majeure Clause
Traditional force majeure provisions covering earthquakes and floods aren’t enough anymore. Recent years have taught us that pandemics, global supply chain breakdowns, cyberattacks, and international conflicts can halt projects just as effectively as natural disasters. Your clause should reflect today’s expanded risk landscape and clearly define what qualifies, notification requirements, and how costs and delays will be managed.
Action item: Work with legal counsel to ensure your force majeure language covers contemporary disruptions, including material shortages and international trade restrictions.
3. Define Scope with Surgical Precision
Vague scope descriptions are dispute magnets. Instead of “install lighting system,” your contract should specify fixture types, quantities, locations, electrical requirements, control systems, and installation standards. The more detailed your specifications, the less room for interpretation—and conflict.
Action item: Attach comprehensive specifications, drawings, and product data sheets. Reference specific building codes and industry standards that must be met.
4. Set Concrete Timelines and Define Completion
What exactly constitutes “substantial completion” versus “final completion” on your project? Your contract needs to spell this out, along with milestone dates, critical path activities, and weather day allowances. Equally important: define how delays are documented, who’s responsible for schedule impacts, and what the consequences are for missed deadlines.
Action item: Include a baseline project schedule as a contract exhibit. Establish clear procedures for scheduled updates and delay notifications, including required supporting documentation.
5. Leave No Payment Questions Unanswered
Payment disputes are among the most common—and most avoidable. Your contract should detail payment schedules, what constitutes completed work for billing purposes, invoice requirements, approval timelines, retainage percentages and release conditions, and procedures for withholding payment due to deficiencies.
Action item: Create a payment milestone schedule tied to measurable completion points. Specify the exact documentation required with each payment application.
6. Customize Every Contract
Resist the temptation to reuse a generic template. A one-size-fits-all approach creates gaps that lead to disputes because general language can’t address specific project circumstances.
Action item: Start with a solid template but invest time customizing it for each project’s specific scope, site conditions, local requirements, and stakeholder relationships.
7. Build in a Dispute Resolution Framework
Your contract should establish a tiered dispute resolution process: informal negotiation timeframes, mediation procedures, arbitration provisions if applicable, and litigation terms as a last resort. Agreeing with this process upfront, when relationships are good, makes resolution far easier if disputes arise later.
Action item: Consider including a “dispute review board” provision for large or complex projects, where an independent panel can provide non-binding recommendations before disputes escalate.
8. Allocate Risk Clearly and Fairly
Your contract must explicitly assign responsibility for various risks: delays caused by weather, material price escalations, unforeseen site conditions, design errors, permit delays, and quality defects. Clear risk allocation, backed by appropriate insurance requirements, prevents finger-pointing when problems occur.
Action item: Review risk allocation with your insurance broker to ensure adequate coverage for the risks you’re accepting. Consider whether owner-controlled or contractor-controlled insurance programs make sense for your project.
9. Define Quality Standards and Inspection Rights
Don’t leave quality expectations to interpretation. Your contract should establish specific quality standards, workmanship criteria, material specifications, and testing requirements. Define who conducts inspections, when they occur, what documentation is required, and how deficiencies will be identified and corrected. Include your rights to access the site for observation and inspection at any reasonable time.
Action item: Reference industry standards (like ACI, ASTM, or local building codes) explicitly. Establish a punch list process and define how warranty work will be handled after substantial completion.
10. Address Insurance, Bonding, and Indemnification
Your contract must specify minimum insurance coverage requirements (general liability, workers’ compensation, builder’s risk, professional liability), bonding requirements (bid bonds, performance bonds, payment bonds), certificate of insurance requirements and renewal notices, and indemnification obligations that outline who protects whom from third-party claims.
Action item: Set up a system to track insurance certificate expirations and ensure continuous coverage throughout the project.
The Critical Final Step
This should be obvious, but it’s often overlooked: ensure every party signs the contract and every subsequent change order. Unsigned documents may not be legally binding, leaving you vulnerable despite your careful planning. Establish a formal signature and approval process, and don’t allow work to proceed without proper documentation.
Taking a Proactive Approach
As you develop contracts for your next project, review each of these ten areas systematically. Ask yourself: “If this becomes contentious, does our contract provide a clear path forward?”
At KBCm we make sure you have a comprehensive, well-crafted contract as your foundation so that you’ll spend far less time and money managing disputes down the road. Contact Skyler 940-366-2231 for more information.
