FREE Preconstruction Services Agreement Template ( + an Easier Way To Streamline Preconstruction)

Written by Bridget Cooper

DateJun 26, 2024
Reading time8 min read
pre-construction agreement

These days, construction projects often kick off even before the building contracts have been finalized.

The reasons why?

Owners are racing against the clock to begin construction and beat deadlines. Contractors, on the other hand, are willing to start early to secure the project and earn revenue, even if all the final contract terms aren't yet set in stone.

While both parties are eager to get the ball rolling, things can get messy without a clear agreement. This is where a Pre-Construction Services Agreement can act as a bridge. It allows owners to engage contractors and kick-start the project without a fully executed building contract — all while maintaining basic legal protections.

If you’re curious about how a PCSA works, how you can make the most of it, and how to streamline the preconstruction process, then read on.

Note: Looking to streamline the preconstruction process even further? Consider using Downtobid. Our platform helps prevent missed scopes with AI checks across major trades, suggests suitable bid packages, matches them with qualified, local subcontractors, and creates personalized Invitation to Bids (ITBs) to get more accurate bids. Best of all, you can try out the platform for free today.

What is a Pre-Construction Services Agreement?

In many ways, a Pre-Construction Services Agreement (PCSA) is exactly what it sounds like— a contract between a project owner and a contractor outlining the services provided before the construction phase starts.

That said, if you’re looking for a plug-and-play template to create a PCSA, you can make a copy of it here.

A few key things to note about the PSCA:

  • It stands on its own as a separate agreement, distinct from the eventual construction contract.
  • It's mainly used for large construction projects to document the terms and conditions agreed upon for preconstruction services before the project goes out for bids.
  • It's often used in two-stage tendering. This allows you to get design input and cost advice from a contractor while still negotiating the full building contract with them.

Another important thing to note is that a PCSA doesn't guarantee that the contractor doing the pre-construction work will automatically be appointed as the main contractor for the final building contract. This can actually be a good thing, as it ensures that you're not locked in if things don't go as planned.

But it does mean there's a chance you might have to part ways if final terms can't be agreed upon or if your visions don't align. By then, you'll have invested a lot, which can make it difficult to switch contractors. That’s why you need to carefully iron out expectations communicate openly with your contractor – through regular preconstruction meetings – to ensure the project runs smoothly.

Pre-construction service agreement and Letters of Intent: What’s the difference?

Pre-construction service agreements and letters of intent may seem similar on the surface, but each serves distinct purposes.

Think of PCSAs as comprehensive, ‘stand-alone’ agreements designed for a specific and well-defined scope of work.

On the other hand, an LOI acts as a ‘stand-in’ – a temporary placeholder for a building contract. You’ll often use it when you have identified a preferred contractor for the project but certain critical details still need to be ironed out. These may include:

  • final design specifics
  • the total contract sum
  • other terms and conditions that will govern the formal agreement.

The LOI outlines the intent to enter into a formal contract and may include provisions for the contractor to start some initial work or preparations. Payment with an LOI is often capped at a certain amount until all the details of the real contract are settled.

In simpler terms:

  • PCSA: you want to formalize the services and terms before the main construction contract.
  • LOI: you want to indicate your intent to proceed with the project and outline general terms, but you are not ready to commit to a formal contract.

How Project Owners Benefit from a PSCA

Here are just a few ways this PSCA can help make things easier for you as a project owner:

Easier Budgetting

If you’re going to spend a significant amount of money on a construction project, you deserve full transparency into the actual, complete costs involved. While a free estimate or a construction bid can give you a rough idea, a PCSA allows for:

Leverage Contractor’s Expertise

By bringing contractors on board during the design and development stages, you tap into their expertise from the get-go. This proactive approach allows you to leverage their insights – gained from previous projects or specific industry expertise – to:

  • identify potential cost-saving opportunities.
  • maintain high-quality standards
  • ensure smooth project continuity

How Contractors Benefit from a PSCA

A few ways a well-drafted PCSA can help contractors include:

Filter Leads Effectively

Think about all the effort that goes into creating a detailed estimate: assessing the project requirements, calculating material costs, coordinating with suppliers, estimating labor costs, and more. Spending hours creating such an estimate only to discover the potential lead isn’t serious or qualified can be incredibly frustrating.

This is where a commitment upfront makes all the difference. Requiring potential clients to invest in a PCSA allows contractors to quickly weed out unqualified leads. Instead of wasting hours on dead-end estimates, they can channel that energy into developing accurate plans for clients who are ready to build.

Avoid Financial Drains

One of the biggest headaches for contractors is dealing with financial drains, often stemming from free estimates. These estimates can sometimes lead to additional tasks that weren't originally agreed upon or budgeted for.

Using PCSAs allows contractors to thoroughly plan and estimate their projects, preventing costly issues that eat into profits.

What’s Included in the Pre-Construction Services Agreement Template?

Failing to draft your pre-construction service agreement carefully means you might find yourself locked into a partnership that isn’t the right fit – or tangled in lengthy, costly disputes. To help with this, we’ve made our template as comprehensive as possible, which includes:

  • key milestones and deadlines to keep the project on track
  • compensation
  • scope of work
  • the responsibilities of both the owner and the contractor
  • processes for managing change orders
  • insurance and bonding
  • procedures for resolving conflicts without resorting to litigation.
  • the conditions under which the agreement can be ended

Remember, this template is just a starting point. It provides a solid structure for your PCSA, but you'll need to tailor it to fit your specific project. You can change, add, or remove clauses to match your project's specifics and the agreements made with your contractor.

Streamline Preconstruction with Downtobid

Preparing for a construction project involves diving into detailed plans that can span from 50 to a hefty 400 pages, depending on the project's scale. As a general contractor, you might spend between 4 to 8 hours just to:

  • understand the scope of work
  • estimate costs
  • and identify the necessary subcontractors.

This manual process is really error-prone and you’re likely to overlook crucial details. Downtobid allows you to streamline this process significantly. All you need to do is upload your set of plans, and the AI instantly highlights the required scopes of work right on the plans. No more sifting through pages and pages of blueprints. Instead, you get an annotated version where all the crucial information is called out for you. Artificial intelligence for construction plans is simply the future.

Get Access to Qualified Subs

Identifying scopes of work is just the first step. The next challenge is finding the right subcontractors for your project. GCs usually resort to one of two strategies:

  • Casting a wide net; a strategy that often results in wasted effort and low engagement.
  • Targeted outreach; a labor-intensive process that’s prone to oversights.
  • Both methods rely heavily on manual data gathering and numerous phone calls to collect contact information. And this is where Downtobid’s AI can make a huge difference.
  • The platform auto-recommends a list of subcontractors based on their expertise, experience, and your project’s specific requirements. It also drafts personalized bid invitations with attention-grabbing subject lines and clear scope summaries, which are much more likely to get noticed by potential subs.

You can also use Downtobid's subcontractor database network.

Early results from Downtobid customers are impressive. With the AI-based process, users are seeing over a 60% response rate and generating more than 80 bids for a single project. Upload your construction plans for free today to experience similar results.

Written by Bridget CooperUpdated on Jun 26, 2024

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