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Pre-Construction Agreement

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PRE-CONSTRUCTION AGREEMENT

This Pre-Construction Agreement (the "Agreement") is entered into as of the date set forth in the signature block below by and between:

RECITALS

WHEREAS, Owner intends to undertake the Project described above and requires pre-construction planning, consulting, and preliminary services; and

WHEREAS, Contractor provides pre-construction services, including feasibility analysis, preliminary cost estimating, schedule development, value engineering, and procurement planning; and

WHEREAS, the parties wish to set forth the scope, payment terms, and other material terms governing Contractor's pre-construction services prior to the commencement of construction-phase obligations.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the parties agree as follows:

1. SCOPE OF WORK

Contractor shall perform pre-construction services for the Project, which may include site review, constructability review, preliminary scheduling, cost estimating, value engineering, identification of long-lead items, permit coordination, and preparation of a pre-construction report. Specific tasks and deliverables are described below and form an integral part of this Agreement.

2. PAYMENT TERMS

Owner shall pay Contractor for the pre-construction services in accordance with the terms set forth below. All sums are payable in United States currency unless otherwise agreed in writing.

Payment Schedule (select applicable):

Invoices are due and payable within days of Owner's receipt. Overdue amounts shall bear interest at % per month (or the maximum permitted by law) after a grace period of days.

3. TERM AND TERMINATION

This Agreement shall commence on the date executed by the parties and shall continue until completion of the pre-construction services or until terminated as provided below.

Anticipated Start Date: . Anticipated Completion Date: .

Either party may terminate this Agreement for cause if the other party materially breaches and fails to cure such breach within days after written notice. Owner may terminate for convenience upon days' written notice, in which event Contractor will be paid for services performed through the effective date of termination and reimbursed for reasonable, non-cancellable commitments.

4. CONFIDENTIALITY

Each party shall treat as confidential all non-public information disclosed by the other party in connection with the Project ("Confidential Information"). Confidential Information shall not include information that: (a) is or becomes publicly available through no wrongful act of the receiving party; (b) was lawfully in the receiving party's possession prior to disclosure; or (c) is independently developed by the receiving party without use of the disclosing party's Confidential Information. The receiving party shall not disclose Confidential Information to third parties except to employees, consultants, or subcontractors who have a need to know and are bound to confidentiality obligations no less protective than those herein. The confidentiality obligation shall survive termination for a period of three (3) years.

5. CHANGE ORDERS

Any change to the Scope of Work, schedule or Contract Amount shall be documented in a written change order executed by both parties prior to performance of the changed work. Change orders shall set forth the scope, price adjustment, and any impact on schedule.

6. INSURANCE AND PERMITS

Contractor shall maintain commercial general liability, professional liability (if applicable), workers' compensation, and automobile insurance in amounts customary for the type of work and shall provide certificates of insurance upon request. Contractor shall obtain and pay for all permits and approvals necessary for the pre-construction services unless otherwise agreed in writing.

7. INDEMNIFICATION AND LIMITATION OF LIABILITY

Contractor shall indemnify and hold harmless Owner from claims, damages, losses and expenses, including reasonable attorneys' fees, to the extent caused by Contractor's negligent acts or omissions in the performance of pre-construction services. Except for liability arising from gross negligence or willful misconduct, neither party shall be liable to the other for consequential, incidental, or punitive damages.

8. DISPUTE RESOLUTION

The parties shall first attempt in good faith to resolve disputes through negotiation between senior representatives. If unresolved within thirty (30) days, disputes shall be submitted to non-binding mediation. If mediation fails, disputes shall be resolved by binding arbitration conducted in the State of in accordance with the rules agreed by the parties. Judgment upon the award may be entered in any court of competent jurisdiction.

9. GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State of without regard to its conflict of laws principles.

10. ENTIRE AGREEMENT

This Agreement, together with any exhibits or written amendments executed by the parties, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, proposals, and communications, whether oral or written. No modification of this Agreement shall be effective unless in writing and signed by both parties.

11. MISCELLANEOUS

If any provision of this Agreement is found to be invalid or unenforceable, the remaining provisions shall remain in full force and effect. Neither party may assign this Agreement without the prior written consent of the other, except that Contractor may assign to an affiliated company.

Owner Name:

By:

Date:

Contractor Name:

By:

Date:

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What a Pre-Construction Agreement Is and When It Applies

A Pre-Construction Agreement is a written contract that defines work to be completed before construction begins, including scope development, design coordination, cost estimating, scheduling, and permitting. It establishes responsibilities between owner and contractor, payment terms for pre-construction services, deliverables (drawings, estimates, schedules), and procedures for transitioning into a construction contract or GMP. The agreement reduces ambiguity before mobilization by documenting assumptions, contingency allowances, and approval steps required to move from planning to active construction.

Why a Clear Pre-Construction Agreement Matters

A well-crafted pre-construction agreement allocates risk, fixes expectations for scope and cost estimation, and preserves options for negotiating construction phase terms. It reduces disputes during design and permitting and documents who pays for early work, third-party consultants, and permit applications.

Why a Clear Pre-Construction Agreement Matters

Who Typically Prepares and Signs This Agreement

Owners, general contractors, construction managers, architects, and specialty consultants commonly use pre-construction agreements to set terms for preliminary services before construction starts.

  • Owner representatives and developers who need clear estimates and approval thresholds before committing to full construction
  • General contractors or construction managers providing estimating, value engineering, and procurement planning before mobilization
  • Design firms and specialty consultants supplying preliminary design, code analysis, and permit coordination as paid services

The agreement clarifies obligations and payments for preliminary work and protects all parties by recording scope, limits, and deliverable acceptance criteria before the main contract is executed.

Typical Signers and Their Roles

Owner / Director

Project owners or development directors authorize pre-construction work, approve budgets and milestone deliverables, and hold authority to accept cost estimates or require additional studies before awarding the construction contract.

Contractor / PM

General contractors or construction managers perform estimating, procurement planning, and constructability reviews, document assumptions, and sign to commit staff time and fees for pre-construction services under the agreed terms.

Essential Fields to Include in the Agreement

Project Name: Exact project identifier
Parties: Legal names of owner and contractor
Scope Summary: Concise pre-construction tasks
Estimated Cost: Not-to-exceed or allowance
Key Dates: Effective and target dates
Signature Blocks: Authorized signer and date

Common Consequences of an Incorrect Agreement

Unenforceable Terms: Ambiguous language risks invalidation
Cost Overruns: Missing contingencies increase disputes
Delay Claims: Undefined milestones cause scheduling claims
Liability Gaps: Absent insurance clauses shift risk
Lien Exposure: Payment ambiguity invites mechanic's liens
Regulatory Noncompliance: Missing permits trigger stop-work orders

Frequent Preparation Errors to Avoid

  • Vague scope descriptions that leave out deliverables, acceptance criteria, and whether cost estimates are preliminary or guaranteed, which leads to differing expectations during negotiation and execution.
  • Failing to document assumptions and exclusions (site conditions, utilities, owner-furnished items), which commonly causes change-order disputes and cost allocation arguments mid-project.
  • Omitting a clear change-order process, approval thresholds, or authority levels for budget increases, resulting in unapproved work or halted progress while parties negotiate.
  • Using incorrect signer names or lacking corporate authorization language; mismatched or unsigned agreements can be unenforceable and delay contract formation.

Real-World Examples of Pre-Construction Use

Two brief examples show how organizations used pre-construction agreements to streamline planning, control costs, and speed project starts.

Optica Ventures — COO

Optica used a short pre-construction agreement to align contractor responsibilities and estimate timelines before bidding.

  • The agreement fixed scope and deliverables.
  • As Brian Fitzgibbons noted, a clear interface for deliverables made it easier to coordinate clients and contractors and reduced back-and-forth during the transition to construction.

Martin Properties — Founder

Martin Properties used a standardized pre-construction template for repetitive retrofit projects.

  • The template documented assumptions and approvals.
  • Tim Martin reported that executing documents online with compliance and security allowed his team to complete approvals remotely and begin mobilization faster while preserving audit trails for owner signoffs.

Step-by-Step: Completing a Pre-Construction Agreement

Follow these steps to prepare, review, and execute a clear pre-construction agreement that reduces risk and documents expectations.

  • 01
    Gather information: Collect project plans, permits, and owner requirements
  • 02
    Draft terms: Define scope, fees, schedule, and deliverables
  • 03
    Review and negotiate: Circulate to parties and resolve open items
  • 04
    Execute: Obtain authorized signatures and distribute copies

How the Document Moves From Draft to Signed

A standard workflow takes the agreement from drafting through execution, creating an auditable record at each stage.

  • Prepare draft: Author uploads and places fields for review
  • Request signatures: Send to signers with specified order or role
  • Sign and authenticate: Signers verify identity and apply signatures
  • Archive and share: Store signed copy and distribute to stakeholders

Core Provisions Every Pre-Construction Agreement Should Include

These provisions form the backbone of the agreement and clarify expectations for services performed before construction commences.

Scope of Work

Describe pre-construction tasks in detail, list deliverables such as schematic estimates, permit submittals, procurement plans, and identify who provides design inputs to prevent scope creep and disputes.

Payment Terms

Specify fees, whether lump-sum, time-and-materials, or reimbursable expenses, include invoicing schedule, retainage or deposit requirements, and late-payment remedies to protect cash flow.

Schedule and Milestones

Include target dates for estimates, permit submissions, and notice-to-proceed conditions; tie payment or release of deliverables to milestone acceptance to align incentives.

Transition Terms

State how pre-construction work will convert to the construction contract, whether a GMP will be negotiated, and how pre-construction costs apply to the final contract price.

Practical Tips for Clear and Accurate Agreements

Apply these best practices to reduce ambiguity and speed project approvals.

Use precise scope and deliverable language
Define each deliverable, acceptance criteria, and who reviews and approves work to prevent differing expectations that commonly lead to disputes.
Include a defined change-order process
Set thresholds for written change orders, approval authority, and timeframes so work proceeds only after agreed adjustments are documented.
Document assumptions and exclusions
Record site conditions, owner responsibilities, and excluded tasks so cost estimates remain comparable and defensible during negotiation.
Maintain an auditable signing trail
Use electronic signature solutions that capture timestamps, IP, and signer attribution to create admissible proof of agreement execution.

Typical Deadlines and Timing to Track

Identify critical dates in the agreement to avoid delays and contract disputes during pre-construction activities.

Effective Date:

Date the agreement takes effect and triggers obligations

Notice to Proceed:

Date when pre-construction tasks must begin

Permit Approval Target:

Deadline for primary permit submission and approval

Estimate Delivery:

Target date for completion of cost estimates

Mobilization Window:

Projected start of on-site activity after approvals

Detailed Contract Elements to Review Carefully

Review these six elements with counsel and project stakeholders before finalizing the agreement.

Parties

Specify legal entity names, roles, and authorized signatories so corporate authorization is explicit and the correct entities assume obligations.

Scope

List all pre-construction tasks, deliverables, and acceptance criteria, attaching exhibits and plans to remove uncertainty about what is included.

Budget

State fee structure, allowances, contingency, whether estimates are preliminary or guaranteed, and how pre-construction costs apply to final contract pricing.

Schedule

Include milestone dates, critical-path dependencies, owner responsibilities, and remedies for missed milestones to manage expectations.

Insurance & Bonds

Identify required insurance limits, additional insured needs, and any bond obligations for pre-construction services to allocate risk appropriately.

Change Orders

Define a written change-order procedure including approval authority, pricing method, and time impact assessment to control scope changes.

Recommended Digital Workflow Settings for the Agreement

Configure signing and authentication fields to match project security needs and the expected signer population.

Setting Recommended value | Notes
Authentication Email link | Optional SMS or stronger ID checks
Signer Order Sequential | Owner then contractor then consultant
Field Types Signatures, initials, dates | Conditional fields for options
Document Retention Secure archive | Retain signed PDF and audit trail

Digital Signing and File Compatibility Considerations

Choose a platform that supports common file formats, secure authentication, and detailed audit trails for admissible electronic records.

  • File Formats: PDF, DOCX supported
  • Integrations: Salesforce, NetSuite, Procore
  • Authentication: Email/SMS/KBA options

Ensure the chosen solution provides tamper-evident signed PDFs, exportable audit trails, and configurable signer authentication to align with the project's legal and security needs.

eSignature Pricing and Feature Comparison for Executing Agreements

Comparing typical starting prices and feature availability across popular eSignature vendors, with signNow listed first for reference.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial Yes, 7-day trial Varies by plan Varies by plan Varies by plan Varies by plan
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
Envelope Cap No cap 100 envelopes/user/year Varies Varies Varies

Frequently Asked Questions About Pre-Construction Agreements

Answers to common legal, operational, and digital signing questions to help you finalize pre-construction agreements accurately and compliantly.


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