This will be a quick look at some of the necessary documents needed by contractors before they can begin a new construction project. Many of these documents, such as the surety bond and liability insurance, protect the contractor from claims made against them during or after the project about their work. This can be a huge comfort financially. Moreover, without these 6 documents, the job cannot legally and professionally go ahead.
Contract Agreement
First, a contract agreement needs to be written and finalized. This is an agreement between the contractor and client about what the project is, how it will be completed, how much it will cost and how it will be paid for. This agreement should include details about insurance, as well as information about the responsibilities of the contractor and project asset owner regarding any disputes or claims.
Nothing on the project can move forward until the contract agreement has been mutually confirmed and signed by both the contractor and the owner of the project.
Surety Bond
A surety bond is a legal agreement between three parties that assures the client that the contractor will complete the project. If for whatever reason, the contractor does not finish the work satisfactorily, then the surety will pay compensation to the client. A trusted and professional surety provider will know and be able to advise you on what you need to provide for your new client regarding the completion of their project. A surety bond will protect you and your business from claims made against you by clients or third parties.
Surety bonds are generally needed for construction projects. In fact, any contract by the federal government that will cost more than $100,000 must have a guarantee of the contractor’s satisfactory performance.
Liability Insurance
Another important step that you can take to protect your business from financial losses is to get liability insurance. You are not likely to be hired for a project if you cannot show that you have liability insurance. This kind of insurance covers you, the contractor, for injuries and accidents that occur on the project, product claims, costs for property damage, and issues of copyright infringement.
If you are sued for claims covered in the insurance policy, you will be safe from the potentially very large financial burden that this would pose. It is a very sensible thing to invest in, and you will struggle to find work without liability insurance anyway.
Contractor License
A contractor license is a kind of permit or authority that allows contractors to legally accept and complete contracted work in their state. Moreover, the license gives construction traders the right to charge over $500 for their services. Any individual who wants to start a business in construction, hire workers, bid on projects, and advertise first has to become a licensed contractor.
Before you start the construction project, make sure your contractor license is up-to-date, as you will need it to complete the project. Studying for continuous education exams online will allow you to renew your contractor license easily. If you do not have a license, you forfeit the right to compensation for your services, and you could be civil and criminal penalties.
List of Materials and Traders Required
This is a very thorough and detailed list of all of the materials that will be needed to complete the project, as well as the quantities and prices. You will also need to include all of the tradespeople you will require, for instance, X amount of electricians and X amount of plumbers, in order to keep to the construction schedule and finish the project on time. This is an important document as it helps to set the budget for materials and labor and works alongside the construction schedule for the construction project.
Schedule of Construction
This takes us to our next important document. Your construction schedule is very handy as it keeps you on track to complete the construction work on time. This schedule should give a detailed account of all activities within the project, their duration, and planned start and finish times. Moreover, this document should detail information regarding building permits and whether they have been issued
This has been a brief guide to 6 of the vital documents you need in order to start a construction project. From a contract agreement to a surety bond, liability insurance, and a contractor license, these documents protect a contractor’s financial position and provide peace of mind. What’s more, you will not easily find work without them.
Finally, the list of materials and laborers needed and the schedule are essential in the organization and planning of the project and its budget and time frame. Without these, there is no project.
