Writing your first construction contract: the five clauses small contractors skip

There is a contract every working sub signs on day one that isn't really a contract — it's a handshake on the back of an HOA scope, with a price scribbled in the corner and a calendar entry that says 'start Monday'. Six months later the change-order pile is deeper than the original scope, the homeowner is asking why the bathroom subfloor wasn't included, and the subs are texting you at 9 p.m. asking when retainage releases. This post is the five clauses the small-GC handshake-style contract skips, the three-sentence fix for each one, and the kit we use to write it down before the drywall shows up.

Clause 1 — The schedule of values, line by line, before a single dollar moves

Most handshake contracts price the job as one number. 'Twenty-two for the addition, materials separate.' That works until the material allowance on the tile runs $1,400 over because the homeowner picked the handmade line. The fix is a schedule of values — a single line-item table that names every trade, every scope, every materials allowance, and the dollar amount that lives next to each one. Three sentences that go in:

• A column for each line item (Mobilization · Site prep · Foundation · Framing · Roofing · Rough MEP · Insulation · Drywall · Trim · Finish · Closeout).
• A materials-allowance column with a TBD next to any number the homeowner is going to choose (fixture package, tile, stone).
• A totals row at the bottom that the schedule of values sums, not a number that ends in .00 at the top of the contract.

The schedule of values is also where retainage lives — the percentage held back until substantial completion. Writing it into a line item at signing means there is no argument six months later about what 'retainage' means.

Clause 2 — Retainage, and the date it actually releases

If the contract just says '10% retainage', the release date is whatever the homeowner says it is the morning the punch list gets walked. The fix is to name a substantial-completion date, name the retainage release as that date plus 30 days, and name the mechanic that releases it (signed punch list, final invoice, lien waivers from every sub). Three sentences:

• Substantial completion: a calendar date, not a phrase — "Substantial completion shall be no later than 2026-11-15."
• Retainage release: a trigger event plus a window — "Retainage shall release within 30 days of substantial completion, conditioned on signed punch list and full lien-waiver receipt."
• Punch list carve-out: a sentence that explicitly says retainage holds until the punch list is signed, not until 'the job feels done'.

Clause 3 — Change orders in writing, signed by both parties, before the work moves

Verbal change orders are the most expensive line in any small-GC P&L. The homeowner asks for it on a Friday afternoon, the crew does it on Monday, and the invoice shows up six weeks later with 'extra $1,400' at the bottom. None of it is in writing. The fix is a change-order log the contract already calls for, with a sign-off line before work moves. The three sentences:

• No work outside the original scope shall commence without a written change order signed by both Owner and Contractor.
• The change-order log lives as an exhibit to the contract and is dated and sequentially numbered (CO-001, CO-002).
• Each change order names the cost impact, the schedule impact in calendar days, and the subcontractor(s) affected.

Clause 4 — Payment schedule tied to schedule-of-values milestones, not the calendar

Handshake contracts price the work 'net 30' or 'deposit + balance on completion'. Both fail in the same place — they ask the GC to fund the week-two drywall out of week-one's deposit. The fix is a payment schedule that ties every draw to a milestone, not a date. The three sentences:

• Draw 1: Mobilization · due at signing · 10% of contract sum.
• Draw 2: Foundation complete · due within 7 days of pour sign-off · 20% of contract sum.
• Draws 3–N: Tied to schedule-of-values milestones, due within 7 days of milestone sign-off by the Owner.

A draw schedule that lives on the same page as the schedule of values means the GC doesn't have to ask for money; the contract says when it moves.

Clause 5 — Lien waivers as a precondition of payment, not a politeness

Lien waivers are the worst-collected document on a small job. The subs sign them after they've been paid, sometimes after they've been paid twice, sometimes never. The fix is to make the lien waiver a precondition of the next draw — not a 'please send it when you can'. Three sentences:

• Each sub shall provide a conditional lien waiver concurrent with every draw request, and an unconditional lien waiver concurrent with every draw payment.
• No draw shall release until the Owner has received all conditional waivers from subs billing on the prior draw.
• Final payment shall not release until unconditional waivers are received from every sub, supplier, and material vendor on the job.

A contract a small-GC actually signs isn't shorter — it's specific. Thirty-two pages of legalese doesn't beat two pages that name the retainage release date and the change-order sign-off line. Specific beats formal.

— Gridpin founder · 20 years on a clipboard

The kit that holds the five clauses

CC-01 is the Construction Contract — the contract a working GC and a working sub actually sign on day one. It carries the five clauses above, plus the witness initials, the schedule of values on page two, and the change-order log that runs out the back. It ships in Canva (so the GC can drop in a logo), Excel (so the schedule of values sums and the change-order log totals automatically), Word (so it can be re-edited on the laptop before the signing meeting), and PDF (so the executed copies ride in the binder). US Letter and A4 layouts, one commercial-use license.