Construction Contract Review Checklist: 30 Points Before You Sign
Every construction contract review runs against a deadline. Tender deadlines, letter of intent timelines, subcontract negotiations under pressure from the main contract programme. The risk is not that commercial managers do not know what to look for. It is that time pressure forces trade-offs about where to direct attention, and the highest-risk provisions are sometimes the ones that get skimmed.
This checklist is for QSs and commercial managers working under that pressure. It covers the five categories that carry the most commercial consequence across FIDIC, NEC, JCT, and AIA contracts: payment, notice and claims, liability and insurance, programme and delay, and dispute resolution. For each item, the question is not just whether the provision exists, but how it has been modified from the standard form position and what the commercial consequence of that modification is.
Use this alongside AI review output, not as a replacement for it. AI handles the clause-by-clause comparison against the standard form baseline. This checklist provides the judgment framework for assessing what the AI has identified.
For a deeper treatment of the nine-step manual review process and how each provision should be approached in sequence, see the guide on how to review a construction contract.
Payment Provisions Checklist
Payment is where the most consistent, compounding commercial risk lives. A modification to the payment timeline affects every payment cycle for the life of the project.
IPC certification period. What period does the Engineer or A/CA have to issue the Interim Payment Certificate after the Contractor's Statement? The standard FIDIC position is 28 days under Sub-Clause 14.6. JCT and NEC have different mechanisms. Has the Particular Conditions or Schedule of Amendments extended this period? An extension from 28 to 60 days on a monthly valuation cycle adds 32 days of financing per payment.
Employer payment period. How long does the Employer have to pay after the Statement or IPC? Standard FIDIC Red Book is 56 days from the Statement under Sub-Clause 14.7 (2017 edition: 56 days from the IPC). JCT provides a Final Date for Payment under Section 4. NEC uses an assessment interval and payment period under the applicable main Option. Has the payment period been extended in the Particular Conditions or Z clauses? Calculate the financing cost of the extended cycle before accepting it.
Documentation requirements that reset the clock. Have Particular Conditions introduced requirements that the Contractor's Statement must be accompanied by specific supporting documentation before the certification or payment period begins? If so, who determines whether the documentation is adequate, and what happens if the Engineer or Employer's Agent rejects it on minor grounds?
Retention rate and limit. What percentage is being deducted, and what is the maximum cap? The standard FIDIC position is 5 percent up to a limit of 5 percent of the Contract Price. Has either figure been increased?
First tranche retention release. What conditions must be met before the first half of retention is released? The standard FIDIC position is Taking-Over. JCT uses practical completion. NEC releases retention under Option X16 on Completion. Have additional conditions been introduced, such as documentation submission, that are not within the Contractor's control?
Second tranche retention release. What conditions attach to the release of the remaining retention? Has the standard form position (expiry of the DNP or Rectification Period, issue of Performance Certificate or Certificate of Making Good) been modified to add claim resolution, account agreement, or open-ended documentation conditions?
Late payment interest. What is the interest rate for late payment, and does it accrue automatically or require a claim? Under FIDIC Sub-Clause 14.8, financing charges apply at the rate stated in the Appendix to Tender. Confirm the rate is stated, not left blank.
Notice and Claims Checklist
Notice conditions precedent are the provisions that extinguish valid claims when procedural deadlines are missed. They represent the highest-consequence risk category in most construction contracts because the effect of non-compliance is the loss of entitlement, regardless of the merits of the underlying claim.
Clause 20 notice period (FIDIC). What is the notice period for contractor claims under FIDIC? The standard form is 28 days from awareness of the event. Has it been reduced in the Particular Conditions to 14 or 7 days? Is the period measured from awareness of the event or from awareness of the loss, which are different triggers?
Compensation event notification (NEC). Under NEC Clause 61.3, the Contractor must notify a compensation event within eight weeks of becoming aware of it. Has this been shortened by a Z clause? Have any events been removed from the Clause 60.1 list that would otherwise trigger the notification obligation?
Loss and expense application (JCT). Under JCT, loss and expense applications must be made as soon as it becomes reasonably apparent that regular progress is likely to be affected. Have the application requirements been modified by a Schedule of Amendments to impose additional formality or a shorter window?
Is the notice a condition precedent? Confirm whether each notice obligation operates as a condition precedent, where failure extinguishes entitlement entirely, or as a procedural requirement, where failure may reduce or delay payment but does not automatically bar the claim. This distinction is not always apparent from the clause wording.
Form and delivery requirements. Have additional notice requirements been introduced: specific addressees, registered post requirements, particular formats or forms, or electronic notice restrictions? Each additional requirement creates an additional way to fail the condition precedent even if a notice is given within the time limit.
Engineer's or Project Manager's determinations. How is a disputed determination challenged? What is the timeline for challenge, and is the right to challenge lost if it is not exercised within a stated period?
Liability and Insurance Checklist
Liability provisions determine the financial ceiling on both parties' exposure and the insurance requirements that underpin it. The two must be reviewed together.
Liability cap level. What is the total liability cap under FIDIC Sub-Clause 17.6 or its equivalent? Is it at the full Contract Price or reduced to a percentage? A cap of 25 percent of the Contract Price on a design-and-build project represents a fundamentally different risk profile from the standard form position.
Symmetry of the cap. Does the cap apply to both parties equally, or does it cap the Contractor's liability while leaving the Employer's claims uncapped? Asymmetric caps are a common Particular Conditions modification and are not always obvious on a quick read.
Exceptions from the cap. What categories fall outside the cap? The standard FIDIC exceptions are fraud, deliberate default, and death or personal injury. Have additional exceptions been introduced, such as design defects, statutory breaches, or delay-related losses?
Consequential loss exclusion. Does the contract exclude indirect and consequential losses for both parties? If the exclusion has been modified to allow the Employer to claim categories of loss that the Contractor cannot, the effective protection of the exclusion is asymmetric. Identify what the modification covers and quantify the maximum exposure.
PI insurance requirement. What professional indemnity insurance is required, at what level, and for what period after project completion? Does the required PI coverage align with the Contractor's design liability under the contract? Where the contract imposes a fitness for purpose standard but PI insurance is written on a reasonable skill and care basis, there is a gap between contractual liability and insurance coverage.
All-risks and public liability. What are the construction all-risks and public liability requirements? Are the required coverage terms commercially available? Does the subcontract mirror the main contract insurance obligations, and has the premium cost been priced into the subcontract sum?
Programme and Delay Checklist
The programme provisions determine the Contractor's time obligations, the financial consequences of failing to meet them, and the entitlement to relief when delays are caused by the Employer.
Liquidated damages rate. What is the LAD rate per day or week? Does it represent a genuine pre-estimate of the Employer's anticipated loss, or is it disproportionate to the actual loss the Employer would suffer from a delay? An inflated LAD rate that is not a genuine pre-estimate may be challenged as a penalty in some jurisdictions, but the outcome of that challenge is uncertain and litigation-dependent.
Total LAD exposure. Where the contract includes sectional completion or Key Dates with separate LAD rates, calculate the total daily exposure across all milestones simultaneously. The combined exposure can significantly exceed what a single completion date and single LAD rate would generate.
Extension of time triggers. What events entitle the Contractor to an extension of time? Have any standard form entitlements been removed? Under FIDIC, the extension of time provisions under Clause 8 cover a defined list of causes. Under NEC, the Clause 60.1 compensation event list is exhaustive. Removal of specific events transfers the risk of those events entirely to the Contractor.
Programme acceptance. Under NEC, the Accepted Programme is the reference document for compensation event assessment. Has the programme acceptance procedure been modified? What happens if the Project Manager refuses to accept the programme, and does the contract specify the consequences of that refusal?
Acceleration. Does the Employer have a right to instruct acceleration? On what terms? If the Employer can instruct acceleration without prior agreement on the cost, the Contractor is at risk of proceeding and then disputing the value, which creates a different and harder commercial position than agreeing the cost before accelerating.
Sectional completion. Are sections clearly defined with sufficient specificity that practical or substantial completion of each section can be objectively determined? Ambiguity in the definition of a section creates scope for dispute about whether the milestone has been met.
Dispute Resolution Checklist
The dispute resolution provisions determine how quickly and at what cost a dispute can be resolved. Reviewing them before a dispute arises is significantly more useful than reviewing them after.
Tiered procedure. What is the tiered dispute resolution procedure? FIDIC 2017 uses a DAAB (Dispute Avoidance and Adjudication Board). FIDIC 1999 uses a DAB. NEC4 uses a Senior Representative tier before adjudication. JCT goes to adjudication directly. Confirm which tier applies to what categories of dispute and whether the tiers are conditions precedent to arbitration.
Adjudication notice requirements. Are there specific notice or referral requirements for adjudication, beyond the standard statutory requirements under the Housing Grants, Construction and Regeneration Act 1996 (for UK contracts)? Any bespoke requirements must be followed precisely.
Governing law. What law governs the contract? Governing law determines how ambiguous provisions are interpreted, which remedies are available, and how courts or arbitrators in that jurisdiction apply the contract terms. For FIDIC contracts on international projects, the governing law choice is often UAE law, Saudi law, or English law, each of which has its own body of construction-specific case law.
Seat of arbitration. If the dispute resolution procedure ends in arbitration, where is the seat? The seat determines which national courts supervise the arbitration and whether the award is enforceable in the project's jurisdiction. For GCC projects, DIAC (Dubai) and ICC arbitration seated in London or Singapore are common choices with different enforcement profiles.
Limitation periods. How long does each party have to bring a claim after a breach occurs or is discovered? Limitation periods vary by governing law and by the type of claim. Confirm the applicable limitation period for the most likely categories of claim under the specific contract.
How AI Runs This Checklist Automatically
The checklist above describes what an experienced commercial manager checks manually. AI handles the same review automatically, at full attention, across every clause, in under 2 minutes.
The specific value of AI in checklist-driven review is in the Particular Conditions comparison. Most of the items on this checklist are not answered by reading the General Conditions alone. They require reading the Particular Conditions or Schedule of Amendments alongside the General Conditions and identifying every deviation. That cross-reference task is the most time-consuming and error-prone element of manual review. AI does it instantly and consistently.
The output maps directly onto the checklist structure: payment mechanism deviations, notice conditions precedent modifications, liability cap level and exceptions, programme and delay risk flags, and dispute resolution procedure confirmation. Each item is explained in commercial terms, not legal terms, so a QS can act on the output without needing legal interpretation.
For the complete framework of how AI handles FIDIC, NEC, JCT, and AIA contract review from initial upload to structured risk report, see the complete guide to AI construction contract review.
Frequently Asked Questions
What should be on a construction contract review checklist?
A construction contract review checklist should cover five categories: payment provisions (certification period, payment period, retention rate and release conditions), notice and claims (condition precedent deadlines, form requirements, extension of time triggers), liability and insurance (cap level, symmetry, exceptions, PI coverage alignment), programme and delay (LAD rate, sectional completion, acceleration rights), and dispute resolution (governing law, seat of arbitration, tiered procedure). Each item should be checked against both the General Conditions and the Particular Conditions or Schedule of Amendments, because the most commercially significant modifications are almost always in the amendments rather than the standard form.
How long does a construction contract review take?
A thorough manual review of a FIDIC subcontract with Particular Conditions, using a systematic checklist approach, takes an experienced commercial manager 3 to 5 hours. A full main contract with Employer's Requirements and a substantial BoQ can take a full working day. AI review of the same contract takes under 2 minutes for the initial clause comparison and deviation identification. The commercial manager then spends 30 to 60 minutes reviewing the flagged provisions and building the risk register. The total time from upload to completed risk register is significantly shorter than manual review alone, and the coverage is more consistent.
What are the most important clauses to check in a FIDIC contract?
The highest-priority items in a FIDIC contract review are, in order of commercial consequence: the Clause 20 notice period and whether it has been shortened in the Particular Conditions, the payment timeline under Sub-Clauses 14.6 and 14.7 and whether either has been extended, the retention release conditions under Sub-Clause 14.9 and whether additional conditions have been introduced, the liability cap under Sub-Clause 17.6 and whether it has been reduced below Contract Price, and the variation variation mechanism under Clause 13 and whether daywork has been removed. All five are areas where Particular Conditions modifications are common and where the commercial consequence of a missed modification is significant.
Does the checklist apply to NEC and JCT contracts as well as FIDIC?
The five categories on the checklist apply across all major contract standards: payment, notice and claims, liability, programme and delay, and dispute resolution. The specific clause references and the baseline standard form position differ for each standard. Under NEC, the notice and claims checklist focuses on the Clause 60.1 compensation event scope and the Clause 61.3 eight-week notification condition precedent. Under JCT, it focuses on the loss and expense application procedure and the practical completion certification conditions. The underlying question for each item is the same: has the standard form position been modified, and if so, what is the commercial consequence?
Should a lawyer review a construction contract or is a QS sufficient?
For the commercial elements of a contract review, which is the majority of what the checklist covers, a QS or commercial manager is the appropriate reviewer. A construction lawyer is required for specific questions: condition precedent compliance on a disputed notice, governing law interpretation, and the conduct of formal dispute proceedings. The most effective approach is AI for the initial clause comparison and deviation identification, QS for the commercial risk assessment and negotiation strategy, and lawyer for the specific legal questions that arise from the review. This division of labour produces better outcomes than having a lawyer review the entire contract at legal billing rates.
Lexilio is the construction commercial intelligence platform for FIDIC, NEC, JCT, and AIA contracts.
