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Contract Review and Risk Allocation

Most owners and other contracting parties prefer to use in-house standard form agreements. These may often be created or "blessed" by management or legal counsel in a general sense without regard to specific project conditions or requirements. When a contract is amended or incorporates separate documents, consider conducting a review of the contract in its entirety, looking for competing or conflicting duties, rights and obligations.

Because contracts will generally have successful results for all parties of the contract only if the contract reflects a mutual agreement on specific project conditions and obligations, contract reviews of standard form contracts for specific projects are a critical step in achieving favorable project results for all parties.

Some contracting parties will always seek to impose the harshest, most onerous terms possible, often cloaked in justifications along the lines of "protecting my client's interests" or "others agree to these provisions". Research on project dispute avoidance and dispute resolution indicate one-sided bargaining does not provide the best overall project outcomes and generally undermines the positive relationships necessary to overcome difficult project circumstances and build a sustainable working relationship. Organizations that seek to gain superior project performance and differentiate themselves from the competition should consider use of interests-based, principled negotiations based on mutual gain (see Negotiation Skills and Strategies).

Construction industry problems follow general patterns and have similar root causes. A detailed contract review can focus on these common problems and root causes during contract formation and negotiation, to permit the issues to be addressed before the problems arise.

Contact Contract Solutions Group for project specific contract reviews that cover more than fifty specific issues, and risk mitigation strategies for common or specific problems.



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