Construction Management Fee Contract: Understanding the Basics
Construction projects require a significant amount of planning and coordination, from the initial design phase to the final inspection. This is where the services of a construction manager come in handy.
A construction manager oversees all aspects of the construction project, from budgeting to scheduling, hiring subcontractors, and ensuring that the project meets all legal requirements. In return for their services, construction managers typically charge a fee which is stipulated in a contract known as a construction management fee contract.
What is a Construction Management Fee Contract?
A construction management fee contract is a legal document that outlines the terms and conditions of an agreement between the construction manager and the owner of the construction project. It details the scope of the construction manager`s services, including their responsibilities, compensation, and any additional charges.
The contract specifies how the construction manager will be paid for their services, which is often based on a percentage of the total project cost. The percentage typically ranges from 5% to 15%, although the exact amount can vary depending on the complexity and size of the project.
What Does a Construction Management Fee Contract Include?
A construction management fee contract typically includes the following sections:
1. Introduction: This section identifies the parties involved in the contract, including the construction manager, the owner or developer, and any other stakeholders.
2. Scope of Services: This section outlines the specific services that the construction manager will provide, including project planning, budgeting, scheduling, hiring subcontractors, and overseeing construction activities.
3. Compensation: This section details the compensation to be paid to the construction manager for their services, including any additional charges that may apply.
4. Payment Terms: This section specifies the payment terms for the construction manager`s services, including the payment schedule and any late payment penalties or interest charges.
5. Term and Termination: This section outlines the duration of the contract and the circumstances under which it may be terminated.
6. Representations and Warranties: This section contains any representations and warranties made by either party regarding their ability to fulfill their obligations under the contract.
7. Confidentiality: This section specifies any confidentiality requirements regarding the project or the contract.
8. Indemnification: This section outlines the extent to which each party agrees to indemnify and hold the other harmless from any claims, damages, or losses arising from the project or the contract.
Conclusion
A construction management fee contract is an important legal document that outlines the terms and conditions of an agreement between the construction manager and the owner or developer of a construction project. It is important to carefully review and understand the terms of the contract before signing it to ensure that both parties are protected throughout the project.