Allocation of risk is one of the principal drivers that determine whether a relationship between owner and contractor or contractor and subcontractor results in a beneficial partnership. A beneficial partnership is a two way agreement that fairly distributes risk between both parties. Unfortunately, many contractors consider negotiation of risk related contract terms and conditions of secondary importance. While the initial bargaining stage of a project presents the best opportunity to negotiate risk, there is typically a disregard to risk concerns and a principal focus on price and construction specific requirements. That leaves plenty of need to negotiate language in a difficult setting.
Nevertheless, for some degree of risk control, negotiation over the most significant areas of risk concern should most definitely be pursued. Those are the terms and conditions relating to insurance requirements and indemnity provisions. Since in most cases the risks associated with construction contracts are addressed through a combination of insurance and contract indemnification provisions, a careful review of those provisions both individually and collectively is critical to properly protecting the assets of the company.
Considering these important areas of concern is an important step in the contract negotiation process. These areas of concern can often be successfully negotiated because the other party may be in an immediate need for your services or desire your favorable pricing. Changing the wording in a contract may not seem so disadvantageous. This environment leads to many opportunities for negotiating final terms and conditions in your favor and for your best protection. Druml Group can lead the way. When our recommendations for language changes are successfully negotiated, your risk goes down and your security goes up.