Negotiation of Private Construction Contract
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| The competitive bidding process is not the only means by which construction contracts can be entered into. Sometimes, it is not a matter of choosing which contractor will perform the construction, but rather merely the particulars surrounding a project that will be performed by an already designated contractor. The negotiation of a private construction contract encompasses everything from what work will be performed at what price to when the construction will begin and end.
The owner and contractor can greatly benefit by a negotiated construction contract because there is more time and effort spent hammering out issues that could possibly cause disputes later on down the road. When negotiations commence, a contractor is able to clarify ambiguities and obtain answers to questions that could very well affect the terms of the contract. With a better understanding of the owner's expectations comes a finished product that will likely meet the owner's expectations.
Without the benefit of a competitive bidding process, the contractor has little incentive to limit the price for his services. However, it is often the case that when an owner chooses a contractor outside a bidding environment, issues other than price predominate. For example, if an owner has previously worked with the contractor, knows the level of quality to which the contractor adheres, and knows that the contractor has expertise in the particular area at issue, the fact that the contractor may charge more for his services may be considered merely a fact of doing business with the desired contractor. Copyright 2010 LexisNexis, a division of Reed Elsevier Inc. |