In a litigious happy society, one would assume that anyone getting ready to partake in a construction project would scour over their construction contract with a fine-tooth comb, but sadly that isn’t always the case. Unfortunately, many dentists overlook the most important aspects in their dental office contract, leading to major problems down the road.
Here are some critical dental office construction contract components you need to understand before beginning your project.
The Scope of Work
The scope of work should be clearly defined in the bidding phase of the contract. More specifically-what work is to be performed and who is responsible for completing it. This might be the most important part of the contract as without a defined scope of work, there is no way of knowing what work must be done and who will be doing it.
Clearly Defined Financial Terms
It’s imperative for the dentist to have a clear understanding of the financial terms, including the total price, the payment schedule, and any other fees. These financial terms should be clearly defined and spelled out in the dental construction contract.
Properly Drafted Change Order
Changes are bound to happen in any construction project for a number of reasons, including budget limitations, mistakes or omissions in the design, the dentist changing requests or requirements, and differing site conditions outside of what was expected. The dental construction contract should grant the dentist the right to make certain changes to the contract and the scope of work.
Communication between contractor, architect, and designer is key to minimizing misunderstandings that could result in costly mistakes along with a change of orders.
Defined Construction Schedules
The contract should clearly define the expected construction schedules.
Warranties
Under most typical construction contracts, the contractor makes a general warranty to the owner regarding the quality of the work.
For example, the contractor may list that the project will be constructed in a workmanlike manner; the project will be constructed in compliance with all applicable laws, regulations, and building codes; the materials and equipment used will be in good quality; work not conforming with the requirements, such as substitutions that aren’t approved, will be considered defective, etc.
Contingencies
The contract should include contingencies, or an amount of money set aside to cover any unexpected costs that may arise.
Termination Clause
There are two types of termination clauses available; one for cause or default and the other for no cause or “for convenience”. Termination for default is serious, involving risks to both the owner and contractor if not handled properly. That’s why it’s so important for a properly drafted termination clause to include grounds for default to include the contractor’s failure to meet the time schedule, standards of quality, and failure to make payments to subcontractors and suppliers.
Liquidated Damages
Liquidated damages can be viewed as the opposite of an incentive in the contract. With liquidated damages, one party must reimburse the other party if certain milestones aren’t met, such as major delays. You’ll want to have these delays clearly defined in your contract so you can easily enforce this clause and establish liquidated damages as dollars per day or per week.
Before embarking on a construction project, no matter how big or small, it’s crucial to have a solid understanding of the key areas of the dental construction contract before you consider signing on that dotted line. Taking some extra time to thoroughly review and investigate the construction contract in its entirety, along with hiring the right team of professionals, is essential to protecting your business and ensuring a happy and successful outcome.
The HJT Difference
Your dental office is a direct representation of you, the dentist, and your visions. It’s important that it reflects you and the quality of care you provide to your patients. We’d welcome the opportunity to bring your visions to light through insightful designs that meet your clinical requirements and aesthetic criteria while optimizing efficiency and functionality for your practice’s everyday needs. You and your staff have adapted long enough, it’s time to de-stress and increase the positive vibes.
With our years of collective knowledge and experience, we have a deep understanding of the functionality and unique needs within the dental industry. We invite you to contact HJT (866) 213-1268 to start the dialogue regarding a plan for your current or new office and how we can implement your unique visions. We look forward to talking with you soon.