What’s Really in My Preconstruction Agreement?

I’ve talked a lot about why NS Builders uses a preconstruction agreement. And in this episode of NS Builders Podcast, I’m going to address your questions about what is really in my preconstruction agreement—the nitty, gritty details. 

But before we get started, here’s the legal disclaimer that you knew was coming…

I’m not a lawyer. I don’t play one on TV. I’m not married to a lawyer. And I certainly don’t claim to have any background or special knowledge when it comes to the law. That’s why I hired a lawyer. So any advice or tips I give in regard to what—or what not—to put into a preconstruction agreement is simply… well, my personal two cents. I was smart enough to have my lawyer go over it carefully and I would wholeheartedly suggest you do the same. Because what is legal in one State may not be legal in another. (For example, Massachusetts has a standard home improvement contract (HIC) which a contractor must use when doing a renovation.)  

Now that we have that out of the way… Here’s what’s in my preconstruction agreement broken down into sections. 

PRECONSTRUCTION RETAINER

After identifying the homeowner and contractor, I include the following:

“A preconstruction service is to be provided by the contractor and will include (but not limited to) cost estimating, value engineering, scheduling, construction phasing, constructability review, weekly design review with meetings with the homeowner, input from key subcontractors as to the building systems, means and methods of construction.” 

In summary: Explain what you are offering—the deliverables. And you’ll need input from design and your subcontractors—put together the pricing for plumbing, electrical, etc. so you can accurately provide an estimate.  

 

SCHEDULING AND ESTIMATING SERVICES

In this section, I explain in greater detail that we will: 

  • prepare preliminary estimates for each phase of the work as the information becomes available—design document budgets, construction documents, etc. 

  • provide value engineering input—we’ll explore options and alternatives to find a way to hit the target budget

  • evaluate market conditions and work to obtain competitive pricing

  • prepare a preliminary schedule in big blocks (i.e., site work, foundation, rough mechanicals)

  • update and revise the approved master schedule as necessary—as the design unfolds more accurately, the budget and schedule may need tweaking

  • monitor progress on both design and preconstruction activities 

CONSTRUCTABILITY REVIEW W/BID DOCUMENTS

This is where I discuss:

  • work sequence, relationships, period of performance—this is where you need feedback from the trades so you can build out the schedule

  • lead times for materials and equipment procurement

  • job site conditions and depiction of conditions—looking at the drawings and making sure they are accurately communicated and the details need to be easily understood

  • site restrictions/access work areas/disposal sites/parking

  • utility connections—outline the plan to deal with the backlog in scheduling for utility contractors 

  • weather-related factors that could impact a start date of the project

SIGNATURE PAGE
Our second page is pretty much the signature page. I add a paragraph that generally includes:

  • “Specific to this agreement for the project at (fill in address) we are …” and then I provide a brief summary: 

    • building a new single family home with (architect)

    • we expect to start construction (date) with a projected target schedule of (number of months)

    • outline our target construction budget—although this number may change as you move forward in the project, you want to have something to start with, to aim for

    • our fee—based on what our time is worth and how many hours we will spend on the project; explain why we require a nonrefundable retainer for the preconstruction phase

    • signature lines—we use PandaDoc, a digital document signature platform; we make it super easy for a new client to receive and sign our preconstruction agreement and return by email

TIME TO GET TO WORK

Once the signed preconstruction agreement is emailed back to us, it goes straight to accounting. The client is billed for the retainer. And the project management team is advised that we have another exciting project to get started on.  

It’s time to discover what NS Builders can intentionally craft for you! Contact us today to get started on your custom dream home. Together, we can make it happen. 

—Nick Schiffer

Nick SchifferNS Builders