Before a new project can begin, the construction contract needs to be negotiated. When California developers sit down with the people who will make their dreams a reality, paying attention to the language could prove useful. It could help keep the project from going over budget.
Having some control over labor costs is a good place to start. Developers could require any labor costs not previously approved to go through them. This is one place where costs can easily get out of control. Retaining some oversight when it comes to the cost of labor may help keep that from happening.
As projects move forward, it may become apparent that some changes need to happen. Change orders occur often in construction projects, and they can also be expensive over the long term. Negotiating acceptable pricing for the changes helps keep those costs from getting out of control. Requiring contractors to provide detailed invoices with actual costs should be standard, but it may not be, and developers need to make sure the language gets into the contract.
Developers should also have the right to audit the costs associated with ongoing work when appropriate. The agreement should require contractors to provide the needed information. Without this express language, contractors may be under no obligation to comply.
These are not the only types of provisions that require specific language in order to protect California developers. Anticipating where potential cost overruns could occur is a good place to start. From there, making sure that the contract addresses as many of these matters as possible could help keep the project in budget and keep possible risks to a minimum.
