The construction contract is where a scheme's risk allocation stops being theoretical. Every assumption made during feasibility — programme, cost, quality, ground conditions — is either transferred, shared or retained by the words agreed with the contractor.
Portuguese practice supports a range of models, from traditional lump sum empreitada to negotiated two-stage arrangements. The right choice depends on design maturity and on the level of unknown in the site, not on preference.
- contract models and when each fits
- qualifying and shortlisting contractors
- tender documentation and evaluation
- payment, valuation and retention
- variations and instruction discipline
- delay, extension of time and damages
- guarantees, insurance and defects
- dispute resolution and termination
In this guide
01Match the model to the level of unknown
- **Lump sum (empreitada por preço global).** Best where design is complete and the site is understood. Clear price, limited flexibility, expensive change.
- **Measured / remeasurable.** Quantities are re-measured against agreed rates. Useful where scope is defined but quantity is not, such as groundworks.
- **Target cost with pain/gain.** Aligns incentives where risk is genuine. Requires open-book capability on both sides and real cost auditing.
- **Two-stage.** Contractor appointed early for pre-construction services, price fixed once design and surveys mature. Slower to a number, but the number holds.
- **Construction management.** Direct trade packages under a fee. Maximum control and maximum retained risk; only suitable for experienced clients.
02Running the tender
A defensible tender produces comparable bids. That requires identical documentation issued to every tenderer, a written query procedure with answers circulated to all, a clear scope split against what others provide, and an evaluation model published in advance.
WHAT THE TENDER PACK SHOULD CONTAIN
- the licensed project and technical specifications
- the pricing document in the form the evaluation expects
- the proposed contract, in full, not "to be agreed"
- the programme constraints, access, working hours and site logistics
- the health and safety plan basis and site-specific hazards
- known ground and survey information, with its status stated
- the requirements for guarantees, insurance and subcontractor approval.
Evaluate on the total of price, programme, resource and risk allocation. The lowest number attached to the worst allocation is not the cheapest bid.
03The clauses that matter later
- **Payment.** Valuation dates, certification periods, payment terms, and what may be withheld and how.
- **Retention.** Percentage, cap, release at completion and after the defects period, and whether a bond may substitute.
- **Programme.** Baseline programme, update obligations, and the process for extension of time claims with notice periods.
- **Delay damages.** A genuine pre-estimate, expressed per unit of time and capped, with the mechanism for reduction on partial handover.
- **Variations.** Who may instruct, on what evidence a price is agreed, and the rates that apply when it is not.
- **Defects.** Length of the period, response times, and the treatment of latent defects and statutory liabilities.
- **Termination and suspension.** Grounds, cure periods, and what happens to materials, subcontracts and the site on termination.
- **Disputes.** A staged route — negotiation, expert or mediation, then arbitration or courts — with a named seat and language.
04Health, safety and statutory duties
Portuguese construction carries defined duties around the safety coordination of design and of the works, the site notice, and the coordination of contractors on site. These are client obligations as well as contractor obligations, and they must be resourced in the appointment structure rather than assumed to sit with the builder.
05Record-keeping is the real protection
Contracts are won and lost on records: instructions, site diaries, progress photographs, delay notices, valuations and correspondence. Establish the record system before mobilisation, and make its maintenance a contractual obligation on both sides.
06Frequently asked questions
Common questions developers ask at this stage.
Is a lump sum contract always the safest option for a developer?
Only where the design is complete enough to price properly. Tendering an immature design as lump sum produces either a large risk premium or a low bid followed by variations. Where unknowns are material, a two-stage or target cost route usually delivers a better outcome than a nominally fixed price that does not survive first contact with the site.
What should be checked about a contractor before award?
Their licensing and permitted works classes and values, financial standing and recent accounts, current workload and the team actually available for the project, completed schemes of comparable type, insurance cover and its limits, safety record, and their payment behaviour towards subcontractors.
How are variations kept under control?
By instruction discipline: no work proceeds without a written instruction, every instruction carries a cost and time consequence agreed or notified before execution where possible, and a live variation register is reconciled at each valuation. Most variation disputes are records disputes.
What guarantees are usual on private works?
Commonly a performance bond or retention, an advance payment guarantee where money is paid ahead of work, and a retention or bond covering the defects period after completion. Levels are negotiable and should be set against the contractor's covenant strength and the value at risk.
07Official sources and further reading
Legal support through VVA
Before you commit to a site or project
Once a site or project is identified, the focus shifts from general guidance to that specific transaction: title, planning position, licensing, charges, contracts and the holding structure.
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