Contract Clauses to Watch Out For in Construction Contracts

1. Overtime:

Sometimes there will be a clause in the contract with wording to the effect of:

If, for whatever reason, the general contractor decides that the schedule needs to be sped up then the general contractor can tell you to work your people overtime to meet his schedule but he will not reimburse you for the overtime and/or expenses related to the overtime.

OUCH! Chances are when you put your bid together you did not plan on working your employees overtime therefore you did not list your employee wages at overtime rates (you would have lost the bid) so you do not have money in your bid to pay for this overtime.

But if the general contractor decides to speed up the job for whatever reason then you are going to have to either work your guys overtime or bring in more workers, both of which could end up costing you money in the long run.

If you sign construction contracts with the overtime clause written this way, nine out of ten times you will be held to this clause and then end up with a loser job (and very possibly not even enough money to pay the overtime labor).

When that type of clause is in a contract that a general contractor wants us to sign we refuse. We ask that the contract be changed to be worded something like the following:

If, for whatever reason, the general contractor decides that the schedule needs to be sped up then the general contractor can tell you to work your guys overtime and the general will reimburse you for all costs related to overtime work plus a reasonable (5%-10%) profit.

This is better because A) now the general contractor will think twice about speeding up the job and B) it allows for reimbursement of your overtime expenses should the job be sped up.

Construction Contracts Continued on Page 3