Owner-Developers: Protect Your Construction Projects Against Price Escalations and Labor Shortages
Whether due to the lingering impacts of COVID-19 or new constraints stemming from the war in Ukraine, contractors are informing owner-developers that pricing and availability of labor and materials are problematic. A well drafted contract will have language that addresses remedies for excused delays, and the circumstances and conditions that entitle contractors to more time and/or money.
May 11, 2022 at 10:00 AM
5 minute read
Construction
Many owner-developers are receiving new contract language from their contractors to address possible cost increases, delays and shortages in labor and materials for their construction projects. Are owner-developers' hands tied or are there guardrails to prevent them from bearing the full burden of these risks?
The Baseline
A well-crafted construction contract will provide certainty over the cost and schedule of a construction project. For cost, contracts typically provide that contractors are compensated in either a fixed, lump sum or as a pass through of actual project construction costs plus a fee, often subject to a cap, called a guaranteed maximum price or GMP.
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