What to Include in a Construction Contract to Prevent Delays and Cost Overruns

Construction projects are notorious for going off schedule and over budget. If you’re a property owner, developer, or contractor in Florida, you already know how easily timelines can slip and costs can balloon. But many of these issues can be avoided—not on the job site, but in the contract.

At Ayala Law, we’ve helped clients handle the legal consequences of vague or incomplete construction contracts. In this blog post, we’ll break down exactly what to include in your construction contract to protect your project, your budget, and your time.

Why Do Construction Projects Go Over Budget or Run Behind?

Before diving into contract terms, it helps to understand what causes construction delays and cost overruns in the first place. In our experience, the most common reasons include:

• Poorly defined scope of work
• Miscommunication between parties
• Weather or material shortages
• Delays in permitting
• Payment disputes
• Change orders without clear procedures

Many of these problems can be anticipated and managed in the contract itself—if the right language is in place.

What Clauses Should Be Included in a Construction Contract to Avoid Delays?

1. Clear Scope of Work and Specifications

Search term match: “What should a construction contract include?”

Start with a clearly defined scope of work. Vague descriptions lead to misaligned expectations, disputes, and change orders. Your contract should include:

• A detailed description of all tasks and deliverables
• Specific materials and quality standards
• Architectural plans and engineering drawings as attachments

Why it matters: The more clarity upfront, the less room there is for disagreement later.

2. Project Timeline and Completion Deadlines

Search term match: “How to prevent construction project delays?”

Include a realistic construction timeline with:

• Start and end dates
• Milestone dates for specific phases
• Allowances for weather or permitting delays
• Penalties for missed deadlines (a “liquidated damages” clause)
• Bonus incentives for early completion (optional)

Tip: Define what constitutes a “substantial completion” and how final inspections will be handled.

3. Payment Schedule and Conditions for Payment

Search term match: “Construction payment terms in contracts”

Disputes over payment are a leading cause of delays. Avoid this by clearly laying out:

• When payments are due (e.g., at milestones or monthly)
• What documentation is required for each payment (e.g., lien waivers, invoices)
• Whether retainage will be withheld (typically 5–10% until final completion)
• Consequences for late payments

Bonus clause to consider: Add a “pay-when-paid” or “pay-if-paid” clause to clarify your obligations in subcontractor relationships.

4. Change Order Procedures

Search term match: “How to handle change orders in construction contracts?”

Change orders are one of the top reasons for budget overruns. A good contract includes:

• A written process for requesting and approving changes
• Clear cost impact assessments before any work begins
• Timelines for reviewing and approving changes

Avoid oral or informal change orders—they lead to misunderstandings and disputes.

5. Dispute Resolution Clause

Search term match: “What to do when there’s a dispute in a construction project?”

Even with the best planning, disputes can happen. Your contract should specify how they’ll be resolved:

• Mediation as a first step
• Arbitration or litigation as a follow-up
  Choice of jurisdiction and governing law

In Florida, many contractors and owners opt for mandatory mediation before filing a lawsuit. It can save time and money.

6. Force Majeure and Delay Clauses

Search term match: “What happens if construction is delayed due to weather?”

In Florida, hurricanes, heavy rain, and supply chain issues can disrupt a project. Include a force majeure clause that addresses:

• What events qualify (e.g., natural disasters, government shutdowns)
• Extensions allowed for certain delays
• Notice requirements if such delays occur

This protects both parties from being unfairly penalized for circumstances outside their control.

7. Termination Rights

Search term match: “Can I cancel a construction contract?”

Include terms that outline:

• When either party can terminate the contract
• What happens to payments, materials, and work completed
• A required notice period for termination

Why it matters: If the relationship breaks down, this clause prevents chaos and outlines a clean exit strategy.

8. Insurance and Licensing Requirements

Search term match: “Do contractors need insurance in Florida?”

Protect yourself from risk by requiring:

• Proof of general liability and workers’ comp insurance
• State licensing compliance for all contractors and subcontractors
• Bonding, if applicable

Without this clause, you could be exposed to serious financial and legal liabilities.

Final Thoughts: A Solid Construction Contract Is Worth the Time

We often hear from clients after problems arise. In many of those cases, the issue could have been avoided with a stronger, more detailed contract at the start. A well-drafted construction contract is not just a formality—it’s your first and most effective tool to prevent delays, control costs, and minimize disputes.

If you’re planning a construction project in Florida—whether you’re a property owner, developer, or contractor—don’t rely on templates or handshake deals, contact an experienced attorney in Miami at 305-570-2208.

You can also contact trial attorney Eduardo A. Maura at eduardo@ayalalawpa.com.

Schedule a case evaluation online here.

[The opinions in this blog are not intended to be legal advice. You should consult with an attorney about the particulars of your case].