Review and Accepting Work order/Contract Agreement
A Work or Supply Order or Contract agreement is a Contract between a Contractor and the Project/Client/Owner. This solidifies any agreement between the two parties and assures work. Contractor should read the Work/Supply Order/Contract agreement and assure specifics to protect themselves from any unfair business risk in future during execution of the work/supplies or thereafter.
The Contract Agreement should mention the exact & agreed timeline of the project, scope of the work should be as specified in the RFQ document, Communication protocols should be clearly mentioned, and terms of payment etc. Contract Agreements should be very fair to both the contractor and the Owner/Project/Client, they can benefit Contractors more than common verbal agreements.
A Work/Supply Order/Contract Agreement is a formal written document that lays out the work, timeline, and other factors important to construction/supply. Knowing all of these factors can protect the Contractors because they can prove what the contractor or owner was supposed to do. The Contractor can prevent some of the more detrimental clauses by reading and not accepting unfair risk of future in their Contract Agreement. And the Work/Supply Order/Contract Agreement is a place for contractors to assert their rights and better their business. There are certain things that Contractors should watch out before acceptance.
Following are the elements that can positively or negatively impact the Work/Supply Order/Contract Agreement:
I. Scope of Work: A Work or Supply Order or Contract Agreement should always specify the scope of work. The scope of work is what a Contractor is hired to perform. A broad scope of work is hard to navigate and can be hard for a Contractors to complete. Since the work isn’t well defined it is easier to say that Contractor didn’t do the right work for the project. So a well-defined scope of work is crucial and should be reviewed with the RFQ documents before acceptance of the Work/Supply Order/Contract Agreement.
II. Supply Chain: Another crucial element to note in a Work/Supply Order/Contract Agreement is the supply chain and other operational risks. The supply chain or owner specified items aren’t always within the Contractor’s control and in those cases should not be the Contractor’s fault. However, some contracts try to push that risk onto Contractors. Reading and negotiating the Work/Supply Order/Contract Agreement will help prevent supply chain risk issues.
III. Warranty: A Work/Supply Order/Contract Agreement might specify the warranty on work; however, this is dependent upon project. This portion of the document does benefit the contractor. If a Contractor’s work is solid and well documented their reputation is fine. If by some odd accident there is an issue, in such case the responsibility matrix should be clearly defined & reviewed before acceptance of the Work/Supply Order/Contract Agreement.
IV. Insurance: Many Work/Supply Order/Contract Agreements specify Contractor insurance. All Contractors should know exactly what their contract specifies for insurance of Owner’s property, Contractor’s men & machines etc.
V. Conditional Payment: A growing number of Work/Supply Order/Contract Agreements have conditional payment clauses. “Pay if Paid” and “Pay when Paid” clauses are conditional payment types. The problem with this is that it delays contractor payment and sometimes results in non-payment. Thus a contractor must know if this clause is in their agreement before signing, otherwise, they risk their business.
VI. Arbitration: This clauses in a Work/Supply Order/Contract Agreement are more common. However, they force contractors to pursue any claims through binding arbitration rather than a Court/NCLT. This denies contractors the ability to take contract disputes to court. Depending on your business this might not be an issue, but it is something to look over before entering into a Work/Supply Order/Contract Agreement.