The inclusion of a flat-rate replacement clause is not without risks. The agreed amount may not be sufficient to cover the entire damage suffered by the owner. Or it may be higher than the amount a court would have ordered. However, with a lump sum indemnification clause, the owner can be assured that he or she will recover a certain amount to delay construction, and the contractor can limit his or her risk. Learn more about the 10 different documents or clauses that can be included in a good construction contract. No matter what you build, a solid contract is one of the first steps towards project success. A construction contract is an agreement between a client and a contractor that defines the details of a construction project. The details of a construction contract should include all aspects of the project, including payment, the nature of the work performed, the contractor`s legal rights and more. The success of construction depends on clearly defined expectations and timelines.

Errors or delays have a negative impact on both owners and contractors, resulting in additional costs for owners, as they cannot use the property on the date set for the intended purpose and incur additional costs for the contractors` work and equipment. Construction delays can be protected by the contracting authorities with a lump sum compensation clause in their agreement. Lump sum damages are a fixed amount per day that the contractor pays to the owner for each day of delay in construction.