The Construction Agreement is a fundamental document used in the Indonesian construction industry to formalize the relationship between project owners and contractors. It is essential for any construction project in Indonesia, whether commercial, residential, or infrastructure-related. The agreement must comply with Law No. 2 of 2017 on Construction Services and related regulations, including Government Regulation No. 22 of 2020. It typically includes comprehensive provisions covering project scope, pricing, timeline, quality requirements, safety standards, and risk allocation. The document is crucial for protecting parties' interests, ensuring project delivery according to specifications, and providing clear mechanisms for project management and dispute resolution. It should be tailored to specific project requirements while maintaining compliance with Indonesian regulatory requirements.
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1. Parties: Identification of the Owner/Employer and the Contractor, including their complete legal details and authority to enter into the agreement
2. Background: Context of the construction project, including brief project description and basis for the agreement
3. Definitions: Definitions of key terms used throughout the agreement
4. Scope of Work: Detailed description of the construction works to be performed, including specifications and standards
5. Contract Price: Amount payable for the works, including payment terms, method of payment, and payment milestones
6. Project Timeline: Construction schedule, completion date, and key milestone dates
7. Contractor Obligations: Key responsibilities and obligations of the contractor, including quality standards and compliance requirements
8. Owner Obligations: Key responsibilities and obligations of the owner, including site access and permits
9. Materials and Equipment: Requirements for construction materials and equipment, including quality standards and approval processes
10. Quality Control: Quality assurance and control procedures, including inspection and testing requirements
11. Health, Safety and Environment: HSE requirements and compliance with relevant regulations
12. Changes and Variations: Procedures for handling changes to scope, schedule, or price
13. Force Majeure: Events constituting force majeure and consequent rights and obligations
14. Default and Termination: Events of default, remedies, and termination procedures
15. Dispute Resolution: Procedures for resolving disputes, including mediation and arbitration provisions
16. Governing Law: Confirmation of Indonesian law as governing law and jurisdiction
1. Performance Security: Requirements for performance bonds or guarantees - include for larger projects or when required by regulations
2. Insurance: Specific insurance requirements - include when not covered in a separate schedule
3. Intellectual Property: IP rights and obligations - include when design or proprietary technology is involved
4. Confidentiality: Confidentiality obligations - include for projects with sensitive information
5. Environmental Protection: Specific environmental requirements - include for projects with significant environmental impact
6. Local Content Requirements: Local content and employment requirements - include when required by regulations or project specifics
7. Advance Payment: Terms for advance payment - include when advance payment is contemplated
8. Defects Liability: Extended defects liability provisions - include when warranty period is specially negotiated
9. Step-in Rights: Owner's right to step in and complete works - include for critical infrastructure projects
1. Schedule 1 - Scope of Works: Detailed technical specifications and drawings
2. Schedule 2 - Project Schedule: Detailed construction schedule with milestones
3. Schedule 3 - Price Schedule: Detailed breakdown of contract price and bill of quantities
4. Schedule 4 - Payment Schedule: Payment terms, milestones, and procedures
5. Schedule 5 - Site Information: Site details, access points, and existing conditions
6. Schedule 6 - Key Personnel: List of key personnel from both parties
7. Schedule 7 - Forms and Certificates: Template forms for various certificates and notices
8. Schedule 8 - Insurance Requirements: Detailed insurance requirements and coverage levels
9. Schedule 9 - Performance Security Forms: Forms for bank guarantees or performance bonds
10. Schedule 10 - HSE Requirements: Detailed health, safety, and environmental requirements
Authors
Relevant legal definitions
Clauses
Relevant Industries
Real Estate Development
Infrastructure
Industrial Construction
Commercial Construction
Residential Construction
Energy and Resources
Transportation
Healthcare
Education
Hospitality
Manufacturing
Telecommunications
Retail
Warehousing and Logistics
Relevant Teams
Legal
Procurement
Operations
Finance
Risk Management
Technical
Project Management
Quality Assurance
Health and Safety
Commercial
Construction
Contract Administration
Relevant Roles
Project Manager
Construction Manager
Legal Counsel
Contract Administrator
Procurement Manager
Chief Financial Officer
Risk Manager
Technical Director
Operations Director
Site Manager
Quality Control Manager
HSE Manager
Commercial Manager
Cost Controller
Chief Executive Officer
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