Construction Contract Risk Identifier

Contract Risk Assessment — Prime Contract Review Summary Project: [Project Name] Contract Type: [Lump Sum / Cost Plus / GMP / Design-Build] Owner: [Owner Name] Contract Version Reviewed: [Date of contract draft] Reviewer: [GC Name], Contracts Manager NOTE: This is an internal risk summary for preconstruction planning. Legal review by outside counsel is recommended before contract execution. IDENTIFIED CONTRACT RISKS: RISK 1 — LIQUIDATED DAMAGES AMOUNT (HIGH) Clause: Article 15, Delay and Liquidated Damages Risk: Liquidated damages are set at $[Amount] per calendar day. At the current project duration of [X] months, a 30-day delay would result in $[Amount] in liquidated damages. Assessment: Evaluate whether the LD rate is proportionate to the owner's actual damages (carrying costs, lost revenue). An excessive LD rate that functions as a penalty may be unenforceable, but enforceability requires expensive litigation to establish. Recommended action: Negotiate a cap on liquidated damages (typically 5-10% of contract value) and ensure the float management provisions protect against float consumption by the owner. RISK 2 — DIFFERING SITE CONDITIONS NOTICE PERIOD (MODERATE) Clause: Article 8, Site Conditions Risk: The contract requires written notice of a differing site condition within 3 calendar days of discovery. This is a short notice window that could result in waiver of additional compensation if the field team doesn't recognize and report conditions immediately. Recommended action: Establish a jobsite protocol requiring the superintendent to evaluate any unexpected subsurface or concealed condition as a potential DSC notice event. Provide a notice template to the field. RISK 3 — DESIGN REVIEW RESPONSIBILITY (MODERATE) Clause: Article 4, Contractor's Responsibilities Risk: The contract states the contractor "shall review and coordinate all construction documents and shall notify the owner of any discrepancies prior to commencing affected work." This language transfers some design review responsibility to the contractor and may limit differing conditions claims for errors that were observable during document review. Recommended action: Complete a thorough document review during preconstruction and issue formal written notifications for any identified discrepancies before contract execution or before work in affected areas begins. RISK 4 — PAYMENT TERMS AND RETAINAGE (MODERATE) Clause: Article 11, Payment Risk: Retainage is 10% throughout construction, reducing to 5% only at substantial completion. On a $[Amount] project, this represents significant working capital tied up for the project duration. Recommended action: Negotiate retainage reduction to 5% from the start, or negotiate a retainage release schedule tied to project milestones.