We recommend seeking the advice of a qualified construction attorney to put together a contract that fits your specific needs. Your contracts need a well-defined scope of work, clear payment terms, a reasonable schedule, and a proper change order clause. No work should ever be performed based on verbal agreements. Get everything in writing, always, no exceptions.
Let's take a look at some things you need to remember when you're in the process of negotiating contracts:
Don't rush to get a contract signed. Rushed arrangements usually leave one or both parties dissatisfied. It's understandable if you want to get the negotiation done, but taking the extra time to examine your contract will benefit you tremendously in the long run.
You might know what you need from a contract regarding overall business output, but you could get trapped by the legalese. Get a lawyer you trust on board to frame the wording in a way that protects your overall interests. Even if you're good at negotiation, involving an expert is always a good idea.
Term sheets are a broad overview of the terms of your contract. Before you get into the specifics, it's a good idea to ensure that all parties agree on the big picture.
Negotiating a complex and lengthy contract is an inherently tedious process. In the beginning, ensure you've agreed upon the necessary details. Making some headway is crucial to the overall success of the negotiations. After establishing a rapport with the other party, you can dive into the deeper, more complicated issues.
The flowery language on a contract might make for good reading if you're of a particular leaning, but you need to understand what it translates to in the real world. How much will you be making?
Emails are notoriously difficult to decipher at times. You aren't aware of the sender's body language, and sometimes people can confusingly word things because they don't have the best command of the language. If you're unsure about some issues in your contract, pick up the phone, and have a conversation. It will help sort things out.
The first draft of your contract is just a starting point. It's called a 'negotiation' because you will be changing certain aspects of the contract. Don't be alarmed if there are certain things in there which aren't to your liking.
If you're not naturally assertive or find it challenging to be demanding when the situation calls for it, ask for help from someone capable. It could be your business partner or even a spouse.
You don't want to make outlandish demands that the negotiating party can't afford. Take some time and do your research. See what similar services or products cost in the industry. Ask some construction experts for advice.
Final thoughts
It's worth repeating that you should always take care to state clearly in writing the terms of your quote or estimate and offer a client the opportunity to ask questions before approving the work. That way, both parties can avoid misunderstandings about expectations and project costs before the work begins.
Negotiating a contract is like a long game of chess, except both parties need to come from the table victorious. Before you begin the process, figure out your short- and long-term goals. Having a clear vision will help you better navigate the tricky waters of contract negotiation.
While nobody knows your contracting business as well as you do, seeking expert financial advice right away is crucial for your survival. For a free initial assessment of your business, please don't hesitate to contact me.
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