Five Common Traps in Construction Contracts — And How to Avoid Them

Construction contracts are among the most consequential documents in any development project. Yet common drafting errors and oversights continue to cause delays, disputes, and significant financial loss for both principals and contractors. Here are the five traps we see most often.

1. Vague Scope of Works

An imprecise or ambiguous scope of works is the single most common cause of construction disputes. When the scope is unclear, both parties fill in the gaps with their own assumptions — which rarely align. Invest the time to make the scope exhaustive, cross-referenced to drawings and specifications, and clearly define what is excluded.

2. Inadequate Time and Extension of Time Provisions

Many contracts do not clearly specify what events entitle the contractor to an extension of time (EOT), the notice requirements for claiming one, or the consequences of failing to give notice. Without these protections, contractors can lose EOT entitlements on procedural grounds even where the delay was clearly caused by the principal.

3. Misaligned Payment Terms

Payment terms that do not reflect the actual cash flow needs of the project — or that are inconsistent with Security of Payment Act obligations — create friction and risk. Ensure payment schedules, progress claim procedures, and responding timeframes are clearly documented and legally compliant.

4. Unclear Risk Allocation for Site Conditions

Who bears the risk of unforeseen site conditions — contamination, rock, underground services — is often disputed. Review the contract's site risk provisions carefully. Where risk is being transferred to the contractor, ensure this is priced and that the contractor has adequate information to assess it.

5. Inadequate Dispute Resolution Clauses

Many contracts default to litigation as the only dispute resolution mechanism. Including tiered dispute resolution clauses — starting with expert determination or adjudication before escalating to litigation — can resolve disputes faster and at a fraction of the cost.

Our Construction & Infrastructure team reviews, drafts, and advises on construction contracts across Australia. Contact us before you sign — it is always easier to negotiate a better position at the outset than to resolve a dispute once it has crystallised.