Most contractors sign contracts they haven't fully read.

Not because they're careless — because they're busy. The bid just got accepted, the owner wants a start date, the crew is ready to go, and the contract lands in your inbox as a 47-page PDF. You flip to the signature page, sign it, and get to work.

Then six months later, something goes sideways on the job. A scope dispute. A payment issue. A change order that gets denied. And when you finally go back to the contract to see where you stand, you find language you didn't know was there.

That's an avoidable situation. Not every contract clause requires a lawyer. Most of what matters can be found and understood in about an hour if you know where to look.

Here are the six sections that determine whether a job makes money.

1. Scope of Work

This one sounds obvious. It's also the most commonly glossed-over section on the contract.

The scope defines what you're contracted to do. But it also defines — sometimes indirectly — what you're NOT contracted to do. The difference matters enormously when something comes up mid-project that the owner assumes is included and you assume is extra work.

What to look for: How specific is the scope language? Vague scopes like "all civil work as shown on the drawings" are traps. They leave the interpretation open. Specific scopes that reference drawing sheets, specification sections, and defined exclusions are what you want.

Also look for incorporation by reference. Many contracts say something like "the scope of work shall include all work described in the plans, specifications, and any addenda issued during the bid period." That means every document from the bid phase is now part of your contract. Did you read all of them before you bid?

If the scope is vague, get a clarification in writing before you sign. A one-page scope exhibit that both parties initial is worth its weight in any dispute.

2. Payment Terms

The payment section tells you when you get paid, under what conditions, and what can delay or reduce your payment. Read it carefully. Then read it again.

Schedule of values. Many contracts require you to submit a schedule of values before the first pay application. If the format isn't specified, submit one that matches how the work actually flows — not a lump sum, not three line items for a six-month project. A poorly structured schedule of values creates payment friction every month for the life of the job.

Retainage. Standard retainage is 10%. Some owners hold it until final completion, some release it at substantial completion, and some reduce it as the job progresses. Know exactly what percentage is being held, when it's released, and what conditions have to be met. Retainage on a $2M job is $200,000 sitting in someone else's pocket for the duration of the project.

Pay-when-paid vs. pay-if-paid. If you're a sub working under a GC, this is the most important clause in the contract. Pay-when-paid means the GC has a reasonable time to pay you after they get paid by the owner. Pay-if-paid means if the owner never pays the GC, the GC has no obligation to pay you. Pennsylvania has specific laws around pay-if-paid enforceability — this is one area where a construction attorney is worth the call if the clause exists.

Application for payment deadlines. Many contracts specify that pay apps must be submitted by a certain date each month. Miss it and your payment gets pushed to the next cycle. On a monthly billing schedule, that's a 30-day delay on cash that you've already earned.

3. Change Order Process

You already know change orders are where margin is made or lost. The contract tells you the rules of the game before it starts.

Look for the notice requirements. Most contracts require written notice of a changed condition or additional scope within a specific timeframe — commonly 7, 10, or 14 days from the date you first encounter the change. Miss that window and you may have contractually waived your right to additional compensation, regardless of how clear the extra work was.

This is not a technicality that reasonable people ignore. Owners and GCs with contract administrators enforce notice provisions. If your project manager doesn't know the notice deadline on your active contracts, find out today.

Also look for how pricing is handled. Time-and-materials, unit prices, or negotiated lump sum? Some contracts require you to get written approval of the price before starting the change work. Others allow you to proceed and negotiate after. The contract spells this out — know it before a change order situation develops, not during one.

4. Delays and Liquidated Damages

This section is where contractors get hurt most unexpectedly. Liquidated damages (LDs) are a pre-set penalty per day for late project completion. They are not uncommon on civil contracts. They are also frequently significant.

$1,000 per day is typical on smaller civil projects. $5,000 per day is not unusual on larger ones. Road projects and DOT work can go higher. If you're 30 days late on a project with $2,500-per-day LDs, that's $75,000 coming off your final payment before the dispute even starts.

What to look for: the LD rate, what triggers it (substantial completion? final completion? owner occupancy?), and what constitutes an excusable delay. Most contracts have a list of excusable delay events — weather, owner-caused delays, acts of God, material supply disruptions. Know what's on that list and how to document and claim those delays when they occur.

Also look for whether the contract has a no-damage-for-delay clause. These clauses say that even if the owner causes a delay, your only remedy is additional time, not additional money. They're more common than most contractors realize and they're generally enforceable in Pennsylvania.

5. Indemnification and Insurance

The indemnification clause defines who is responsible for what when something goes wrong on the job. It's usually buried deep in the general conditions and written in dense legal language. Read it anyway.

Broad-form indemnification requires you to indemnify the owner even for the owner's own negligence. Pennsylvania limits the enforceability of these clauses in construction contracts, but the language still shows up and still creates risk.

On the insurance side, make sure you understand what you're required to carry, at what limits, and who needs to be named as an additional insured. Additional insured requirements that don't match your actual policy create coverage gaps. Your insurance broker should review this section on any significant contract before you sign.

6. Termination Clauses

There are two kinds of termination in a construction contract. Termination for cause means the owner or GC is ending the contract because you failed to perform — missed a schedule milestone, defective work, safety violations, something attributable to you. That's performance-based termination, and it's what most contractors think of when they see a termination clause.

Termination for convenience is different. And for a subcontractor, it's one of the most one-sided provisions in the industry.

Termination for convenience means the owner or GC can end your contract at any time, for any reason — or no reason at all. Not because you did anything wrong. Not because your work was deficient. Because the project's financing fell through, because the GC lost the prime contract, because the owner changed their mind about the scope, because the project no longer fits their strategic plans, because they found someone cheaper. You show up Monday morning and the job is gone.

This happens more than most contractors realize, and it disproportionately hits subs.

What to look for: does the contract have both a termination for cause provision and a termination for convenience provision? Many contracts have both. Read what compensation you're entitled to in a convenience termination. Standard termination for convenience language typically allows recovery of costs incurred to the termination date plus a reasonable profit on work performed. Some contracts cap that recovery. Some exclude lost profit on the remaining work entirely — meaning if you're terminated halfway through a $400,000 scope, you may only recover costs, not the margin you would have earned on the second half.

Also look at the notice period. How many days notice is the GC or owner required to give before terminating for convenience? Seven days is common. Some contracts allow immediate termination. If you've mobilized equipment, ordered materials, or staffed up for a project, the notice period determines how much of that exposure you can recover or mitigate.

This is one of the provisions worth pushing back on before you sign. Requesting a minimum recovery of costs plus overhead and profit on the terminated portion is a reasonable ask. Not every owner or GC will agree to it, but the negotiation is worth having — especially on larger scopes where the financial exposure of a convenience termination is significant.

What This Looks Like in Practice

A practical contract review on a civil project doesn't require a law degree. It requires about an hour, a copy of the contract in front of you, and a list of what to look for — which you now have.

The goal isn't to find reasons not to sign. It's to know what you're signing so you can manage the job accordingly. If you find language that concerns you, you have two options: negotiate it before you sign, or price the risk into your bid. What you don't want to do is discover it six months in when the leverage is gone.

PCC's Bid Advisory service includes a contract review pass as part of the pre-bid process. If you've got a contract in front of you that you want a second set of eyes on before it goes back signed, reach out. That's exactly what it's for.

The Bottom Line

The six sections that determine whether a job makes money: scope of work, payment terms, change order process, delays and liquidated damages, indemnification, and termination clauses. You can work through all six in an hour. The contractors who do this consistently have fewer disputes, better cash flow, and more predictable project margins than those who don't.

Sign the contract. Just read it first.

Disclaimer: Nothing in this article constitutes legal advice. Tyler Pearson and Pearson Construction Consulting are not licensed attorneys, and no one at PCC practices law. The contract provisions discussed here are based on field experience with situations that have created real problems on real projects. They are worth understanding — and worth discussing with a licensed construction attorney before you sign any significant contract.

Tyler Pearson is the founder of Pearson Construction Consulting. PCC provides Bid Advisory and contract review services to civil contractors who want to know what they're getting into before the work starts. Pittsburgh-based, serving contractors nationwide.