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Contracts With Trades Should Include Six Key Clauses
The most important outcome for a quality-focused builder is to deliver a home that is consistent with the sales contract and meets the buyer's expectations, according to Quality Matters, the e-newsletter of the NAHB Research Center 's National Housing Quality Program.
Achieving this result requires clearly established guidelines and effective communication between the builder and the many trade contractors who actually construct the new home — up front.
According to the National Housing Quality (NHQ) program, there are six key clauses that should be included in a trade's contract in order to deliver a quality home.
- All trade partners will put competent people on the job site at all times.
Clearly, it makes sense to deal with reliable and reputable contractors, but while this may seem like a simple concept, it is not always standard practice. Ensuring that each worker fully understands the builder's expectations and requirements for each task on the job site makes good business sense and is an important part of reducing cycle time. A shortage of qualified work crews is a common stumbling block during the busy construction season, so it's necessary to be specific about expectations for quality.
- A competent crew leader will be in charge of all crews at all times and able to communicate with the builder's field management staff on the job site.
Lack of training and language barriers between construction supervisors and workers can contribute to poor workmanship. Regardless of the ethnicity of the trade's various crew members, the builder should require that the company provide an established crew leader who is accessible at all times and able to communicate effectively with the field superintendent. By addressing potential issues during the contract process, areas of difficulty can be anticipated and solutions addressed before the work begins.
- Trades must self-inspect each phase of the work before reporting to the builder, or to the builder's field management staff, that the work is complete.
By providing a clear outline of the task at hand for each trade, builders can help to minimize circular activity. The need to continuously repeat and correct the same tasks can be limited with a simple checklist based on the scope of work. Field crews should be required to check their work against this list on their own before requesting an inspection by the superintendent. This saves time and encourages the trade contractor to take responsibility for getting the job done right the first time.
- All work will be completed in accordance with applicable building codes, industry standards and established construction quality standards.
Most builders have an established set of quality standards they follow, so the requirement to comply with those, as well as local codes and industry standards, should be no problem for a quality trade contractor. Don't leave the definition of quality up to chance. Clearly defined standards should be included in the contract and enforced in the field.
- Trades must take the time to identify recurring errors in their work and train crews as needed to reduce similar errors in the future.
Production and site efficiency is important to a builder's bottom line, so field training techniques must support this priority. Hot spot training, an effective process used by all NHQ Certified Trades, is simple to implement and helps to reinforce best practices. The graphics-based technique helps illustrates the right and wrong way to do a task.
- Trades will confirm in writing that all materials and/or equipment covered by the contract were installed in accordance with the manufacturer's instructions.
There is an unfortunate perspective common in the construction industry — "When all else fails, read the instructions." However, this should be the first step to quality, not the last. A copy of the installation instructions should be available for reference at all times on the job site. This allows a trade to check his work, and the builder to verify the manufacturer's intentions.
All said, the builder is the trade contractor's customer in this process, and thus sets the terms of the contract. By defining an acceptable level of competency and including a detailed stipulation in the contract, a builder can establish the first line of defense against defects and warranty claims.
The information contained in this article does not constitute legal advice. Be sure to consult your lawyer for advice regarding the wording of your contract forms or the terms of particular contracts. For more information on the NHQ Program, visit www.nahbrc.org/quality.
 Home Builder Contracts and Management Forms Available at BuilderBooks.com
“Home Builder Contracts & Construction Management Forms, 2nd Edition,” available through BuilderBooks.com, provides help for developing contracts with the trades.
The publication includes a CD of 95 of the most useful business forms and contracts that can be easily adapted for your business.
To view or purchase this publication online, click here, or call 800-223-2665.
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