What is the Importance of Terms and Conditions

An inevitable element of any construction project is the coordination and management of people. The importance of terms and conditions mustn’t be underestimated.

They’re implemented in order to determine and set out the expectations, boundaries, and scope of work which all parties, such as designers, principal contractors, and sub-contractors, and even the client, must work in line with.

In this blog we will look at what is included in typical terms and conditions, why they’re important, and how they are used in conjunction with Quality Assurance (QA) in order to deliver projects on time, within budget and to a high quality standard.

What are Terms and Conditions?

Terms and conditions are essentially the “rules of the game” which everyone involved in the project must comply with.

While specific terms and conditions vary depending on the type of project, they typically include conditions such as:

• Project scope
• Project timeline
• Quality assurance
• Payment terms
• Change orders
• Insurance and liability
• Warranties and guarantees
• Dispute resolution
• Termination
• Safety and compliance
• Confidentiality and intellectual property

The Importance of Terms and Conditions Explained

When you’re working with lots of people on a project, inevitably they will have different objectives and ideas of what is important.

Implementing clear terms and conditions is crucial as they provide transparency, establish clear expectations, and protect the individual interests of all parties - as well as those of the main stakeholders such as the client, designer, and principal contractor.

The result of having terms and conditions in place is that everyone knows what is expected of them and they will work toward a common goal.

Let’s look at this in more detail.

Mutual Understanding

Establishing clear terms and conditions ensures that all parties have a shared knowledge of the key critical success factors such as the project scope, timelines, main deliverables and and any other requirements that may be specific to the project.

This “singing off the same hymn sheet” reduces the likelihood of miscommunication and misunderstandings throughout the project.

Legal Protection

Better than a cigarette packet agreement, terms and conditions act as a legally binding agreement between all parties.

They will define the rights, obligations, and responsibilities of those involved, in turn protecting their interests should any disputes or conflicts occur throughout the project or after it has completed.

Risk Management

Any project entails an element of risk.

While workplace accidents and incidents are managed through assessment and controls, risks relating to insurance coverage, warranties, mechanisms for resolving disputes and change orders are managed through the terms and conditions, helping to mitigate the risks and ensure a smoother fulfilment of the project.

Financial Clarity

If there’s one thing that’s important to anyone, it’s their money.

Clear terms and conditions will ensure that all parties requiring payment are compensated appropriately and on time by specifying payment terms, pricing structures, and potential additional costs or fees.

The Relationship Between T&C’s and QA

As we mentioned earlier, Quality Assurance (QA) is normally a regular feature of the terms and conditions set out for a project.

Inclusion of QA ensures that everyone involved is aware of the quality standards that are expected and that they must work to, and inclusion of these standards within the terms and conditions ensures that they are communicated effectively.

Here are some key benefits to including QA in your terms and conditions:

Compliance

QA measures will ensure that the project is compliant with any relevant codes, regulations, or industry standards.

This compliance helps prevent violations which could result in safety hazards, fines, and ensuing legal issues.

Satisfied Clients

When you monitor quality standards, you may identify any deficiencies, errors, or defects in the construction process or materials - allowing you to do something about them before it is too late.

Maintaining high quality standards means that the construction company, designers, and contractors can meet and indeed exceed their clients’ expectations, leading to increased trust and satisfaction.

Cost Control

On a similar note to the above, monitoring and maintaining QA can help you to identify quality issues before they become a larger problem - minimising the outlay of rectification or reworking, reducing wastage, and preventing delays that can cause the project to overrun - all of which come at a cost.

Reputation

There are many factors that can influence a company’s reputation, one of the greatest is of course their delivered quality.

Ensuring high quality work can lead to referrals with prospective clients as well as repeat business.

On the other hand, poor workmanship and quality can ruin a company’s reputation, and even result in legal repercussions.

Continuous Improvement

Monitoring processes for the purposes of QA can also identify shortfalls or areas of improvement regarding procedures, tools and equipment, and materials, which can lead to optimisation and increased efficiency as well as high quality of end product.

You may even find a way to reduce manpower, or time taken to carry out a task - thus lowering overheads and production costs.

Don’t Forget Your Paperwork

Recording of QA goes beyond inclusion in your terms and conditions.

It’s important to record your QA endeavours throughout the lifetime of the project as it provides traceability, evidence, and accountability which are all crucial should you find yourself attempting to settle any legal disputes.

Recording your QA activities allows information to be shared between any stakeholders, including the client, project managers, and also regulatory bodies or enforcement agencies. This sharing of information provides transparency (it proves you’re not hiding anything), provides visibility into the overall status of quality within the project, and streamlines communication regarding quality.

In the long run, QA documents can allow knowledge and best practice to be shared between projects and throughout the industry.

It also helps to prevent repetition of mistakes and encourages consistency of outcomes through standardisation.

The Relationship Between Terms, Conditions and Quality Assurance

To understand the relationship between terms and conditions, and quality assurance, it makes sense to think of a family tree.

The terms and conditions sit at the top, while quality assurance sits somewhere below, among its siblings of project scope, payment terms, schedules, among others.

Quality assurance is put in place for similar reasons as the wider terms and conditions - to enable transparency, ensure common understanding and provide documented evidence should difficulties arise during a project.

So that’s the importance of terms and conditions clarified.  Without them, your project risks becoming a chaotic free-for-all. Due to their importance, formulating a list of terms and conditions for your project can be a difficult and time consuming task.

Get in touch today to let us help you produce your terms and conditions and take the strain out of your next project.