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There are many additional benefits if you have a written contract for a construction project. Even if the parties “trust each other,” a contract written at the beginning of the project provides a clear roadmap on how the parties will continue to carry out the work. This contributes to the smooth running of the project and reduces the risk of potentially fatal problems. Without this written roadmap, each party may have certain assumptions about what the agreement is or how the other will behave in a given situation. These assumptions are often false and can prove fatal for a project. One of the main problems with unwritten contracts is that each party`s memory changes over time, especially in the event of litigation. Similarly, people are sometimes simply dishonest about the terms of the agreement, when a dispute arises, large sums of money are at stake, and another like (or not entirely in agreement with) “truth” will improve their position. These problems can usually be avoided by a written contract. Duke and Carmen stated: “Cost-plus with GMP provides a cap on construction costs and total costs for which an owner is responsible. If the party that provides the work according to this method of price goes through GMP, it is responsible for such overruns… Cost-pluses with GMP and a cost-sharing agreement can encourage both parties to enter into a construction contract in the most efficient way possible.  Just as contracts are binding and legally enforceable agreements, construction contracts are legally binding agreements that concern the parties involved in a construction project.
The two parties involved are the contractor and the owner or owner. Work contracts generally include several sections on the scope of the work, payment information, a financial timetable, construction schedule and expected timelines. Contracts may also include arbitrations in the event of disagreement with the contractor and certain protocols for delays and setbacks of a different nature. It is important that your construction contract is complete and unequivocal. A thorough construction contract can guarantee the completion of a project on time and on budget. A “reference date” is a reference date from which changes in conditions can be assessed. In a work market, the inclusion of a base date is generally used as a mechanism for the distribution of risk between the owner and the contractor for changes that could occur between the contractor`s pricing of the offer and the signing of the contract. This can be a very long time and the changes that occur can have a significant impact on the cost of the work.  A well-written contract also provides protection to both parties. The main guarantees generally apply to payments, but construction contracts can also dictate what to do in the event of a dispute.
As a general rule, the contractor needs a constant steam of financial resources to complete the project and a contract can outline a practical compensation plan.