Articles · November 2026

The construction contract: a project management tool before it becomes evidence in a dispute

By Eng. Salah Salem Al-Bakri — Accredited Arbitrator at the Qatar International Center for Conciliation and Arbitration (QICCA), and Ministry of Justice accredited engineering and real-estate expert

اقرأ المقال بالعربية

Introduction

In many of the engineering dispute files that come before court-appointed experts or arbitral tribunals, the same scene repeats itself: an owner and a contractor who started the project in good faith end up in court arguing over a phrase in the contract, over additional works that were never documented, or over causes of delay that nobody notified at the time.

The lesson these files confirm is that a construction contract is not a document signed to start work and then filed away. It is the framework through which the project is managed day by day. The quality of its drafting, and adherence to its procedures, largely determine whether the project ends in a smooth handover or in a long and costly dispute.

First: the contract as a management plan

A good contract answers in advance the questions that will inevitably arise during execution, most importantly:

• Scope of works: exactly what is to be executed, what is excluded, and the order of precedence between the contract, specifications, drawings and bills of quantities in case of conflict.
• Programme: the construction period, the completion milestones, the actual commencement date and how it is evidenced.
• Payments: their types, how they are calculated, who certifies them, and the periods for payment — detailed in the third section below.

When these elements are defined, the project manager can measure progress objectively, and each party knows its rights and obligations without guesswork.

Second: the clauses that create disputes — or prevent them

Most disagreements concentrate on four matters, and each needs clear wording:

1. Variation orders: who has authority to issue them, whether they must be in writing, how they are priced (at contract rates or new rates), and their effect on the time for completion.

2. Delay and extension of time: when a delay is excusable and entitles the contractor to an extension, when delay damages apply, and what their cap is. One of the most overlooked points here is notice periods: many contracts require the other party to be notified of the delaying event within a set period, and the contractor may lose his entitlement if he fails to comply.

3. Claims and correspondence: the procedure for submitting claims, the documents required to substantiate them, and the period for responding. The contract should also specify the official means and language of communication — for example, that e-mail is the approved means for correspondence, notices and claims, naming the approved e-mail addresses of each party, the persons authorised to send and receive, and the language of correspondence (Arabic or English). Instructions given by telephone, messaging apps or verbally on site are hard to prove later, whereas an e-mail system approved in the contract records the date, content and sender of each notice, and closes the door to disputes over whether a notice was received.

4. Taking-over and defects liability: the procedures for provisional and final taking-over, the snag list, the maintenance period and liability for defects. It is worth noting that the Qatari Civil Code establishes the liability of the contractor and the engineer for the soundness of buildings for ten years — a liability that is not waived merely by taking over the works.

Third: payments and their certification

Payments are the lifeblood of the project, and any flaw in their mechanism is reflected directly in progress. A late interim payment squeezes the contractor’s cash flow, work slows down, the project is delayed, and the exchange of accusations begins. The contract should therefore define this mechanism precisely.

Types of payment

• Advance payment: paid at the start of the project to enable the contractor to mobilise, usually against a bank guarantee of equal value, and recovered gradually by deducting a percentage from each interim payment.
• Interim payments (progress payments): paid monthly or on reaching defined milestones, according to the work actually executed.
• Final payment (final account): paid after taking-over and the settlement of all quantities, variation orders and claims.

Who certifies the payment?

This is one of the most important matters for the contract to settle. The usual sequence is:

1. The contractor submits the payment application: with the measurement of executed quantities and supporting documents.
2. The consultant (supervising engineer) reviews and certifies: he verifies the quantities on site and the compliance of the works with the specifications, then issues a payment certificate for the amount due, and may deduct work not executed or executed defectively.
3. The owner pays: the certified amount within the period set in the contract.

It is preferable for technical certification to rest with the consultant rather than directly with the owner, as he is a relatively neutral technical party, and his certification protects both sides: it protects the owner from paying for work not executed, and the contractor from unjustified rejection or delay in certification. Where the project has no consultant, the contract should name an owner’s representative with defined, written authority.

Time periods

The contract should set a period for reviewing and certifying the payment application, and another for payment after certification. For example, FIDIC contracts give the Engineer 28 days from receipt of the statement to issue the payment certificate, and require the employer to pay within 56 days of the same receipt date. What matters is that the periods are not left open.

Deductions from interim payments

Deductions should be stated clearly, including:

• Retention (performance security): a percentage withheld from each interim payment, usually between 5% and 10%, half of which is normally released at provisional taking-over and the balance after the end of the maintenance period.
• Recovery of the advance payment.
• Delay damages, where established.
• The value of defective or non-compliant work until it is remedied.

Two important notes

• Certifying an interim payment is not final acceptance: the consultant’s certification of quantities in an interim payment does not prevent them from being reviewed or corrected later in the final account, and is not a final acceptance of the quality of the works.
• The effect of late payment: the contract should state the consequences of the owner’s delay in paying — such as the contractor’s entitlement to an extension of time, or his right to slow down or suspend work after written notice — rather than leaving the matter open to interpretation.

Fourth: how disputes arise from gaps in the contract

In practice, most disputes do not arise from bad faith, but from:

• A scope of work written in general terms that each party interprets in its own favour.
• Additional works carried out on verbal instructions from the owner or the consultant without documentation.
• An unrealistic construction period set to speed up the award.
• No clear procedure for claims and their submission deadlines.
• Copied contract templates that do not suit the nature or size of the project.

In these cases the discussion shifts from a measurable technical question to a disagreement over the interpretation of the text, and the time and cost rise for both parties.

Fifth: day-to-day records are the evidence

The contract defines the rights, but the records prove them. When examining any dispute, the first things an expert looks at are:

• Formal correspondence and notices, and their dates.
• Minutes of regular meetings.
• Site diaries and progress reports.
• Material and drawing approval records.
• The updated programme and its successive revisions.

The party that documents its compliance with contractual procedures as it goes has a much stronger position, even where its technical case is relatively weaker.

Sixth: the dispute resolution mechanism

The dispute resolution clause is one of the most underestimated clauses at signing, even though it is the clause that determines the cost and duration of any disagreement. The contract should ideally set out a stepped process:

1. Direct negotiation between the parties within a set period.
2. Referral to an independent technical expert or a conciliator.
3. Arbitration or litigation.

If arbitration is chosen, the contract should specify the number of arbitrators, the seat and language of the arbitration, and the rules or institution under which it is administered, to avoid a new dispute over how to resolve the dispute. Qatar’s Arbitration Law No. (2) of 2017 provides a clear framework for this.

Quick checklist before signing

• Is the scope of works defined well enough for a third party to measure it?
• Is there a clear order of precedence between the contract documents?
• Is the variation order procedure written down, with defined authority?
• Are notice and claim periods clear and realistic?
• Does the contract specify e-mail as the official means of correspondence, with the approved addresses and the language of communication?
• Does the contract specify who certifies payments, the certification period, the payment period and the deductions?
• Are delay damages capped?
• Is the dispute resolution clause stepped and complete?

Conclusion

The construction contract is the first management tool of the project and the first line of defence in a dispute. Reviewing it technically and legally before signing, and complying with and documenting its procedures during execution, costs far less than dealing with a dispute after it arises.

This article is for general awareness and does not constitute legal or technical advice on any particular case.