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American Bar Association

Forum on the Construction Industry

CONTRACT PROVISIONS – WHO READS THEM ANYWAY ?

Workshop D

Melissa A. Beutler, Esq. LEED AP Holland & Hart LLP

9555 Hillwood Drive, Suite 200 Las Vegas, Nevada 89134

Patrick A. Genzler

Vandeventer Black LLP 101 West Main St.

500 World Trade Center Norfolk, VA 23510

Robert J. MacPherson

Gibbons P.C. One Gateway Center

Newark, New Jersey 07102-5310

Presented at the 2012 Annual Meeting Advanced Project Delivery:

Improving the Odds of Success

April 26-28, 2012 Bellagio Hotel, Las Vegas, NV

©2012 American Bar Association

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The parameters of the project have been established and a Project Delivery System

chosen. While the business people tend to the commercial aspects of the deal, lawyers will be

tasked with creating the documents to govern the legal relationships among the various parties.

Whether the lawyers involved represent the Owner, the Design Professionals, the Contractor or

some combination of them, the contracting decisions will reverberate up and down the

contractual chain. This paper explores the factors that influence selecting the type of contract

documents to advance the projects goals and the often competing interests of the various

stakeholders.

Well before pen is put to paper, the construction lawyer needs to have a clear

understanding of the client’s goals and objectives. Some of the topics the lawyer should discuss

with the client very early in the engagement are set forth below.

PROJECT DELIVERY SYSTEMS

It seems like new ways to deliver projects are being developed on a regular basis, but

many packages are a variation on a few well known methods. While a detailed discussion of the

various project delivery systems is beyond the scope of this paper, the basic outlines below

provide a context for the discussion that follows. Most projects get conceived, planned and built

using one of the following systems:

Design Bid Build, where the Owner retains a Design Professional to prepare a full set of

plans and specifications that will be given to one or more Contractors who will be asked to bid a

lump sum price for building what is shown on the plans and specifications.

Design Build, where the Owner retains a single firm, which could be Design Professional

or Contractor-led, to both design and construct a project that meets the Owner’s objectives or

“Program.” The pricing is typically on a cost-plus basis, perhaps with an agreed or “guaranteed

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maximum price” or GMP.

CM At Risk, where the Owner retains a construction management (“CM”) firm to assist

in the development of the Owner’s Program, perhaps including the selection of Design

Professionals to be retained by the Owner, and overall administration of the development and

construction of the project on behalf of the Owner. The CM will be “At Risk” for the

performance of the work and will subcontract with all trades to actually build the project. The

CM will also typically be responsible to deliver the project within an agreed GMP.

CM As Agent, where the Owner retains a CM on a fee basis to perform the same

services that CM At Risk would perform. The difference being that the CM will enter into any

trade contracts as the Owner’s agent, with the Owner being responsible for paying the Trade

Contractors. The CM, with limited exceptions, has no liability for the failure of a Trade

Contractor to perform its contract.

Integrated Project Delivery/Collaborative Contracting/Alliancing, where the

contractual relationships between Owner, Design Professional and Contractor do not follow

traditional patterns, with risks and rewards of performance or “pain or gain” being shared by all

parties, not necessarily based on contractual rights and responsibilities.

The skilled practitioner knows that a careful matching of contract documents to delivery

system will save both time and money and lessen the potential for disputes based upon unclear or

conflicting contract language. The construction lawyer who understands the interplay between

contract language and project delivery will be in the best position to add value to the project.

COMPARING CONTRACT DOCUMENTS

Each set of contract documents has its own strengths and weaknesses and does not

necessarily lend itself to an apples-to-apples comparison since each set was designed to address

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project needs as perceived by the creators. Each set also reflects some professional or

organizational bias of the sponsoring organization. It is possible, however, to examine each set

based upon certain criteria and needs common to all projects.

Project Size

It would be simplistic and wrong to assume that the larger the project, the greater the

need for very sophisticated contract documents. Not unlike construction disputes, the cost of the

project may have little to do with the complexity of the issues to be addressed by the contract

documents. A very large, single-family housing project constructed on undeveloped land by an

Owner and Contractor who have previously worked together on similar projects may only need a

simple contract. In contrast, a pharmaceutical company looking both to consolidate its

operations from several locations to a single campus and to coordinate completion of the new

construction with vacating its old facilities and relocating its employees will have very different

needs.

The expansion and renovation of existing structures, especially occupied structures, may

require phased construction with detailed scheduling requirements and multiple partial

completion dates. Contracts for large civil works projects must contemplate issues such as

acquiring interests in private property, either permanently or temporarily, to facilitate

construction.

Project Team

The parties involved in building the project is as important as what they are building.

Unlike the manufacturing process where a facility produced the same product repeatedly in the

same location by the same work force, each construction project is unique. No other project has

been built at the same time, in the same location, by the same people. Managing the risk of

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adverse weather and site issues, such as access and underground conditions, can be challenging.

Most challenging is managing the conflicting interests of all project participants, from the Owner

down to the port-o-john supplier.

At one time, many large companies had full-time facility staff to manage improvement

projects. The same was true of many institutions like colleges and hospitals. Today, these in-

house management functions are frequently outsourced to architecture and engineering firms or

construction managers that an Owner can hire on an as-needed basis. When considering what

type of contract document is most appropriate, the construction lawyer needs to consider the

relative sophistication of the client and, just as importantly, the staff resources the client can

devote to the project. The client representative may be very knowledgeable about design and

construction but, if he has other full-time operational duties, he may unable to devote significant

time to the project. In that case, the documents must address who will provide the oversight and

direction to the project that would normally be expected of the Owner.

In addition to knowing what management resources the Owner can devote to the project,

the construction lawyer will need to understand the hierarchy among the design and construction

team. If the Owner has indicated a preference for the Design Professional to have a lead role in

both design and contact administration, the contract documents must reflect this. On a design-

build project where the Design Builder is a Contractor-led outfit, the Owner should retain a

contractual right to communicate directly with the Design Professional.

A good construction lawyer must match the contract documents to the project team. For

example, Design Professionals and Contractors that have spent their entire careers doing design-

bid-build work under AIA forms will likely be less comfortable using the ConsensusDOCS 300

“Collaborative Project Delivery” model.

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Ancillary Forms

The plethora of ancillary forms used on construction projects is perhaps best

demonstrated by the ABA Forum on the Construction Industry’s Forms and Substance-

Specialized Agreements For The Construction Project-a book that covers everything from pre-

bid forms through dispute resolution forms in over 600 pages. When determining what contract

documents will be necessary, the construction lawyer should know if the selected documents are

flexible enough to accommodate all project needs. These needs may be created by internal or

external forces.

Government regulations will often dictate terms that must be included in construction

contracts, even for private projects. These may take the form of prevailing wage requirements

for projects receiving tax credits or requirements that the project meet certain environmental or

“Green” standards such as achieving a LEED or other sustainable certification. Some states have

regulations specifying terms that must be included in design-build contracts when the Design

Professional is not in privity with the Owner.1 Standard form contracts must be modified to

address these issues.

An area where the form contracts do address emerging trends is in Building Information

Modeling (“BIM”) and electronic documents, in general. As discussed below, some of the form

families are more comprehensive than others, so it will be up to the construction lawyer to select

the forms that best suit all project needs.

Level of Modification Required

While forms are a helpful starting place, using a form contract off-the-shelf invites a

malpractice claim. Intended to be used nationally, no form can or does address individual state

or local laws and regulations. Each requires the inclusion of project specific information such as

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price, scope and schedule. This may be accomplished by the use of a “fill in the blank” format,

the use of exhibits or riders, or some combination. There should rarely be a need for extensive

rewriting of the basic terms of the form documents. Such a need is likely a sign the wrong

documents were selected in the first place.

Extensive modification defeats the purpose of using a form document. It also creates the

possibility of conflicting terms and conditions that could lead to disputes. It is important the

construction lawyer carefully study the proposed documents very early in the process so that the

selection of forms is well informed.

Bias/Critical Risk

One school of thought on risk allocation is that risk should be contractually placed with

the party best able to control that risk. Under that theory, an Owner is considered to be in the

best position to investigate the underground conditions of its property during the design process

and should bear the risk of increased costs if the conditions encountered are not as shown in the

contract documents. An additional reason for allocating this risk to the Owner is that, had the

actual conditions been disclosed, the bid price would have reflected the cost of addressing the

actual conditions. Contractors, considered to be knowledgeable of market forces and estimating,

are typically allocated the risk of increases in the price of labor and material during the

anticipated duration of the project.

Another school of thought is that the party in the strongest negotiating position should

allocate all risk to the other party. The City of New York has allocated almost all risk of project

delay, including that caused by the City, to its contractors in its public works contracts.2 While

many industry groups have argued that the City’s “no damage for delay” clause increases the

cost of public construction in the City, the fact is there is no shortage of contractors bidding City

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work and no hard evidence its costs are higher due to the clause.

The various industry forms discussed below all, for the most part, allocate risk based on

the “ability to control” philosophy. Policy questions aside, the construction lawyer needs to

know his client’s views on risk allocation and how that should be reflected in the construction

documents. For example, while some Owners regularly request abrasive indemnity provisions,

other Owners prefer more even-handed provisions. Of course that discussion will include the

benefits and costs of whatever approach is selected upon so that the client can make an informed

decision.

In addition to risk allocation, the various forms treat the roles of the project participants

very differently. It should be no surprise that the American Institute of Architect documents

place the Design Professional in a paramount role with regard to project administration, dispute

resolution, and other critical tasks. The Design Professional also enjoys certain contractual

protections under AIA documents that are not available under other contract forms. Similarly,

while claiming to represent the interests of all industry segments, the ConsensusDOCS form

have a decided, if slight, Contractor bias.

CHOOSING THE RIGHT DOCUMENTS

While many prefer to use manuscript forms, and at least one commentator has argued

forcefully that form contracts are “never” acceptable from the owner’s perspective,3 the authors

believe the various standard industry forms represent a depth of experience and knowledge far

exceeding that found in any manuscript form. Given today’s economy, with money tight and

projects proceeding on increasingly slim margins, it is very likely the legal fee budget will not

support the creation of a unique set of documents, no matter how large the project. For those

reasons making use of the wide selection of available industry forms seems to be the best starting

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place.

There are four organizations that publish the majority of the form design and construction

contracts in use today. It was a much more unified industry in 1888 when the American Institute

of Architects (“AIA”) and the predecessor to the Associated General Contractors of America

(“AGC”) jointly published a “Uniform Contract.” Thereafter, from 1911 until 2007, the AIA

published its standard forms with the endorsement of the AGC.4

The Engineers Joint Contract Documents Committee (“EJCDC”) has been publishing its

forms since 19755 and the Design Build Institute of America (“DBIA”) introduced its documents

in 1998.6

In 2007, for the first time since 1911, the AGC declined to endorse the 2007 editions of

the AIA forms. At the same time AGC spearheaded the formation of an organization known as

ConsensusDOCS, described as “a diverse coalition of 35 leading construction industry

associations with members from all stakeholders in the design and the construction industry.”7

With the publication of the ConsensusDOCS forms in 2007, the AGC ceased publication of form

contracts under its own name. The ConsensusDOCS forms were most recently updated in 2011.

As the oldest and most well known, the AIA forms may also be the most widely used. As

far as the depth of the various libraries, the AIA and ConsensusDOCS are the largest, followed

by EJCDC. Being focused, as its name implies, on the design-build method, the DBIA library is

much smaller.8 The AIA forms do have the benefit of having been extensively litigated over the

years and there is a considerable body of case law interpreting the AIA forms.9

While it is possible to assemble a set of contract documents for a project mixing and

matching the best of each family of forms, should an endeavor should involve extreme caution.

A practical reason is that most families, such as AIA, are built upon a core set of general

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conditions. The amount of redrafting that would be necessary to coordinate ancillary forms to

the AIA A201 is simply not worth the effort.10 The ConsensusDOCS, however, can be more

easily mixed and matched, but still require a significant level of coordination and editing to

confirm consistency is preserved and to avoid gaps.

While nothing will substitute for a detailed study of each form family, what follows is a

graphical description of the forms available for each delivery method and a comparative

summary of those forms. This is intended as a primer for selecting forms.

FORM “FAMILIES”

For the reasons outlined above, it is helpful to the practitioner to understand both the

interplay among various forms available within the same “family” as well as the breadth of the

forms, including ancillary forms, available for the selected project delivery system. Available

forms will often dictate how many ‘manuscript’ or custom forms need to be developed for the

project, as well as ensure the consistency of the contracts between the various participants in the

project. The authors offer the following graphical representations of various form “families” to

help the practitioner quickly assess the offerings from the various organizations for each project

delivery system. Note that not all organizations offer documents for all delivery systems:

DBIA, for obvious reasons, does not offer design-bid-build forms.

FACTORS IN ASSESSING FORM FAMILIES.

As discussed in the introductory comments to this paper, a practitioner should consider

various ‘factors’ that the practitioner in addition to the breadth of the form offerings from each

organization. While a complete discussion of all factors would be voluminous and beyond the

scope of this paper, the following tables offer a summary view the critical factors and an –

admittedly subjective – evaluation of each organizations offerings for each project delivery

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method.

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DESIGN-BID-BUILD CONTRACT DOCUMENTS.

The primary industry forms for a design-bid-build project delivery method include form

families published by the following:

• American Institute of Architects (AIA)

• ConsensusDOCS

• Engineer’s Joint Contract Document Committee (EJCDC)

The forms published by each of these entities are explained further below. First, the diagram

depicts the forms that are available. Second, text chart identifies some key elements of the forms

that a party should consider when evaluating those forms.

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A101 Standard Form of Agreement Between Owner and Contractor where the basis of payment is a Stipulated Sum

A102 Standard Form of Agreement Between Owner and Contractor where the basis of payment is the Cost of the Work Plus a Fee, With a Guaranteed Maximum Price

A103 Standard Form of Agreement Between Owner and Contractor where the basis of payment is the Cost of the Work Plus a Fee without a Guaranteed Maximum Price

A107 Standard Form of Agreement Between Owner and Contractor for a Project of Limited Scope

A201 General Conditions of the Contract for Construction A401 Standard Form of Agreement Between Contractor and Subcontractor A310 Bid Bond A312 Performance Bond and Payment Bond B101 Standard Form of Agreement Between Owner and Architect B103 Standard Form of Agreement Between Owner and Architect for a Large or Complex

Project B104 Standard Form of Agreement Between Owner and Architect for a Project of Limited

Scope C401 Standard Form of Agreement Between Architect and Consultant

PROJECT TYPE: DESIGN-BID-BUILD ORGANIZATION AIA

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Delivery Method: Design-Bid-Build Organization: AIA 1 Project Type More tailored toward vertical (architect/not engineer)

2 Project Size • Works better for large projects than smaller projects because general conditions are long and robust

3 Project Team • Project where architect is substantially involved in construction administration

• Initial Decision Maker—Is there one?11 4 Ancillary Forms • See chart for D/B family of forms12

• Electronic Service Addendum13 • No green addendum—but sustainable guide with draft

language edits (B214 is services schedule, does not address risk)

5 Level of Modification Required

• Initial Decision Maker—make sure the process works for the team

• A201 requires modifications if: architect is not involved, engineer instead of architect, owner wants more control

• Two-form system puts commercial terms in shorter commercial term document

6 Bias/Critical Risk • Ownership of documents: Owner has non-exclusive license.14

• Owner financial information: Limited access15 • Consequential Damages (CD): Full waiver of CDs,

including CDs arising from termination for convenience.16

• Dispute Resolution: Option for arbitration v. litigation. Consolidation contemplated for arbitration.17

• Owner-Directed Means & Methods: Contractor responsible even if contract documents specify method (shift from old rule)18

• Hazardous Materials: Each responsible for own fault (shift in sole responsibility for party bringing hazardous materials).19

• Payment: right to joint check for Owner on withholding to Contractor and Owner can require proof of payment to subs or have right to contact them directly.

7 Misc. Notes • Cumbersome two-part form • Tested in court/ recognized in industry

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200 Agreement and General Conditions Between Owner and Contractor (Lump Sum) 200.1 Time and Price Impacted Materials 200.2 Electronic Communications Protocol Addendum 202 Change Order 203 Interim Directed Change 204 Request for Information 205 Short Form Agreement Between Owner and Contractor (Lump Sum) 222 Architect-Engineer’s Statement of Qualifications 235 Short Form Agreement Between Owner and Contractor (Cost of Work) 240 Agreement Between Owner and Architect-Engineer 245 Short Form Agreement Between Owner and Architect-Engineer 260 Performance Bond 261 Payment Bond

PROJECT TYPE: DESIGN-BID-BUILD ORGANIZATION: CONSENSUSDOCS

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262 Bid Bond 263 Warranty Bond 703 Purchase Agreement for Noncommodity Goods 725 Agreement Between Subcontractor and Subsubcontractor Exhibit E Insurance Requirements to 725 Standard Subsubcontract Agreement 750 Agreement Between Contractor and Subcontractor 750.1 Rider Between Contractor and Subcontractor for Material Storage at Subcontractor’s Site 751 Short Form Agreement Between Contractor and Subcontractor 752 Subcontract for Use on Federal Construction 810 Agreement Between Owner an Owner’s Representative Delivery Method No. 1: Design-Bid-Build Form: ConsensusDOCS 1 Project Type • Works well for both civil and vertical projects

• Not immediately set up for multiple phases or phased occupancy • Family has a subcontract specific for federal projects20

2 Project Size • Design forms are one-size and one-phase: See CD 240 • Family has series of “short-form” agreements.21 • Overview of family structure.22

3 Project Team • Places Owner in more active role than AIA documents: less communication through the architects23

• Works well for sophisticated Owners with seasoned project and facilities teams24

• Defined term is “Design Professional” not “Architect”: See CD 240

4 Ancillary Forms

• Forms don’t depend on standard general conditions (like AIA) and can be used with or without other forms in the family.25

• Separate addendums for Green,26 BIM27, and Insurance28 • Forms are standard with respect to treatment—all forms treat same

issue same way: (e.g., indemnity, additional insured endorsements, retention withholding, warranty)

• Number of new forms: geotech, teaming agreement, joint venture agreement

5 Level of Modification Required

• Project-specific fields that need to be negotiated/discussed—cannot be used “off-the-shelf” without preparation (footnote references to specific CD200 fields that need to be negotiated).

• Old software difficult to use; new software is Word-based and easier

• Roadmap for Contract Documents to populate29 6 Bias/Critical

Risk • Insurance: Additional insured endorsements are not required30 • Payment: Contains pay-when-paid clause but not pay-if-paid

clause • Retainage reduced at 50 %31 • Fifty percent payment required on constructive change directives32

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Delivery Method No. 1: Design-Bid-Build Form: ConsensusDOCS

• Warranty: Contractor-friendly warranty language33 • Damages: Mutual waiver of consequential damages is not

blanket—requires project-specific discussion and negotiation34 • Liquidated damages clause is standard in form35 • Indemnity: Robust indemnity provisions (AIA doesn’t have one) • Changes: Cost of the Work definition for change orders when

price not agreed36 7 Misc. Notes • Plain English approach—easy to read and understand

• Shorter in length than AIA • Uses 1-form contracts rather than 2 form contracts • Updated more regularly than AIA: 5 years v. 10 years plus rolling

revisions

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C700 Standard General Conditions of the Construction Contract C-430 Bid Bond, Penal Sum Form C-435 Bid Bond, Damages Form C-520 Suggested Form of Agreement Between owner & Contractor, Stipulated Price C-525 Standard Form of Agreement Between Owner & Contractor, Cost-Plus C-550 Notice to Proceed C-610 Construction Performance Bond C-615 Construction Payment Bond C-940 Work Change Directive C-941 Change Order C-942 Field Order E-500 Standard Form of Agreement Between owner & Engineer for Professional Services

PROJECT TYPE: DESIGN-BID-BUILD ORGANIZATION EJCDC

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E-520 Short Form of Agreement Between Owner & Engineer for Professional Services E-530 Standard Form of Agreement Between owner & Geotechnical Engineer E-525 Standard Form of Agreement Between Owner & Engineer for Study & Report Phase

Professional Services E-505 Standard Form of Agreement between Owner & Engineer for Professional Services;

Task Order Edition E-582 Form of Agreement Between Owner & Program Manager E-991 Engineer - Subconsultant Documents E-568 Standard Form of Agreement Between Engineer & Architect for Professional

Services E-570 Standard Form of Agreement Between Engineer & Consultant for Professional

Services E-564 Standard Form of Agreement Between Engineer & Geotechnical Engineer for

Professional Services E-560 Standard Form of Agreement Between Engineer & Land Surveyor for Professional

Services E562 Agreement Between Engineer and Engineer’s Subcontractor Delivery Method No. 1: Design-Bid-Build Form: EJCDC (www.ejecdc.org) Principal

Documents • C-520 – Owner-Contractor Agreement for Construction –

Stipulated Price • C-525 – Owner-Contractor Agreement for Construction – Cost Plus • C-700 – Standard General Conditions • E-500 – Standard Form of Agreement Between Owner & Engineer • E-520 – Short Form of Agreement Between Owner & Engineer • E-505 – Agreement between Owner & Engineer (Task Order Ed.) • E-582 – Agreement between Owner, Engineer, and Peer Reviewer

1 Project Type • Suitable for vertical and infrastructure projects; Includes provisions for unit-priced work.

• Not suitable for Owners with in-house project inspection and management capabilities; contemplates an independent “Engineer”;

2 Project Size • Single Phase construction

• No “short form” construction contract; but there is a “short form” Owner-Engineer agreement (E-520)

3 Project Team • Engineer serves in prominent role directing work and is conduit for

all communications between Owner and Contractor, similar to architect in AIA documents (e.g. see C-700 para 4.03.B, 4.04, 9.0) with protection from liability;

4 Ancillary • Construction contracts use standard general conditions C-700 (like

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Delivery Method No. 1: Design-Bid-Build Form: EJCDC (www.ejecdc.org)

Forms AIA) • Family has specific contracts for several types of

engineering/professional services including Geotechnical engineering, Peer review, joint ventures for engineering teams & Independent Project Review

5 Level of

Modification Required

• Minor modification required to conform to project specific details and business agreement between Owner and Contractor

• Narrative guide to Contract Documents available for purchase.

6 Bias/Critical Risk

• Engineer serves initial arbiter of all Claims by Contractor or Owner;

• Contains both Owner-Contractor, and Owner-Engineer mutual indemnification obligations for negligent acts and omissions of party, with “comparative negligence” principle; no indemnification of Contractor by Engineer;

• No attorney’s fees provision in disputes. • Owner may suspend performance for up to 90 days, but must pay

costs. • Contractor may terminate if not paid within 30 days of due date

(with 7 days notice and cure period). • Retainage held until Substantial Completion • Contractor represents that no further investigations, studies, or

engineering reports are necessary for performance of the work. • Separate Liquidated damages for both delayed Substantial

Completion and Final Completion.

7 Misc. Notes • Engineering reports (geotech, environmental, etc.) are not “contract documents” on which Contractor can rely and for which contractor can make a claim if inaccurate. (See C-700 para. 4.04)

• Documents downloaded in MS Word format; easy to edit.

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DESIGN-BUILD CONTRACT DOCUMENTS

The primary industry forms for a design -build project delivery method include form families

published for the following:

• American Institute of Architects (AIA)

• ConsensusDOCS

• Design-Build Institute of America (DBIA)

• Engineer’s Joint Contract Documents Committee (EJCDC)

The forms published by each of these entities are explained further below. First, the diagram

depicts the forms that are available. Second, text chart identifies some key elements of the forms

that a party should consider when selecting those forms.

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A142 Standard Form of Agreement Between Owner and Design-Builder A142 Standard Form of Agreement Between Design-Builder and Contractor A441 Standard Form of Agreement Between Contractor and Subcontractor for a Design-

Build Project B142 Standard Form of Agreement Between Owner and Consultant where the Owner

contemplates using the design-build method of project delivery B143 Standard Form of Agreement Between Design-Builder and Architect C441 Standard Form of Agreement Between Architect and Consultant for a Design-Build

Project

PROJECT TYPE: DESIGN-BUILD ORGANIZATION AIA

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Delivery Method No. 2: Design-Build Form: AIA 1 Project Type • More tailored toward vertical (architect/not engineer)

• Flexible for whether project criteria/ schematic docs exist at the time of contracting

2 Project Size • Works better for large projects than smaller projects because general conditions are long and robust

3 Project Team • Flexible for which portion of the D/B entity is in privity with the Owner

• If contractor, then contractor contracts with architect entity and trade contractors directly

• If architect, then architect contracts with general contractor and design consultants directly

4 Ancillary Forms

• Commercial terms document is contract with general conditions (Exhibit A), cost of the work (Exhibit B) and insurance and bonds (Exhibit C) as the exhibits.

• Green: AIA D503 does not address D/B projects • Forms to address variations of D/B entity that is in privity

5 Level of Modification Required

• Significant number of blanks allows for substantial flexibility but requires significant completion—blanks seem cumbersome and are not user friendly

• Project criteria—does not assume level of completeness in criteria and offers Owner protection that design submittals will be consistent with Project criteria unless noted37

6 Bias/Critical Risk

Ownership of documents: • Provides that Arch38 or the DB39 owns design docs. • Nonexclusive license is provided to the Owner if complies with

agreement and makes payments.40 • If DB terminates the Arch for cause, arch assigns rights to

documents to DB.41 • Owner financial information: Limited access42 • Consequential Damages: Full waiver of CDs, including CDs

arising from termination for convenience.43 Dispute Resolution: • Check the box dispute res44, mandatory mediation45 • Parties can design a “project neutral” to be the initial advisor on

disputed issues.46 • Neutral’s decision can be appealed to mediation or dispute res.47 • If no project neutral appointed, the Owner files the role of the

initial decision maker48 7 Misc. Notes Cumbersome exhibit and fill-in-blank format

Tested in court/ recognized in industry

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400 Preliminary Agreement Between Owner and Design-Builder 410 Agreement and General Conditions Between Owner and Design-Builder (Cost of Work

Plus Fee with GMP) 415 Agreement and General Conditions Between owner and Design-Builder (Lump Sum

Bsed on the Owner’s Program Including Schematic Design Documents) 420 Agreement Between Design-Builder and Architect-Engineer 421 Statement of Qualifications 450 Agreement Between Design-Builder and Subcontractor 460 Agreement Between Design-Builder and Design-Build Subcontractor (Subcontractor

Provides a GMP) 470 Performance Bond (Surety is Liable for Design Costs of Work 471 Performance Bond (Surety is Not Liable for Design Services) 472 Payment Bond (Surety is Liable for Design Costs of Work) 473 Payment bond (Surety is Not Liable for Design Services)

PROJECT TYPE: DESIGN-BUILD ORGANIZATION: CONSENSUSDOCS

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Delivery Method No. 2: Design-Build Form: ConsensusDOCS 1 Project Type • Works well for both civil and vertical projects

• Does not contain sophisticated methods for: (a) phased construction (b) rolling approvals, phases

2 Project Size • Separate forms for lump sum49 and GMP50 • Requires modification for phased projects or phased occupancy

3 Project Team Contemplates Owner and Design-Builder/ not third-party CM 4 Ancillary

Forms • See chart:51 • Works with green, BIM, insurance, other forms

5 Level of Modification Required

• Need to carefully craft definition of contract documents to reflect the phase in which project is starting and design goals52

• Make sure that exhibits define expectation • Need to fold in requirements for green or sustainable goal

(consider carefully whether additional or basic services) • Need to address phasing or rolling starts • Need to address other parties or multiple-prime

6 Bias/Critical Risk

• Similar risk issues as Delivery Method No. 1 • Design-phase approvals (30/60/90 submittals) become contract

documents 7 Misc. Notes A preferred form for standard vertical design-build project

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501 Contract for Design-Build Consultant Services 520 Standard Form of Preliminary Agreement Between Owner and Design-Builder 525 Standard Form of Agreement Between Owner & Design-Builder - Lump Sum 530 Standard Form of Agreement Between Owner & Design-Builder-Cost+Fee with

Option for GMP-530 535 Standard Form of General Conditions of Contract Between Owner & Design-Builder 540 Standard Form of Agreement Between Design-Builder and Design Consultant 550 Standard Form of Agreement Between Design-Builder and General Contractor – Cost

+ Fee w/Guaranteed Maximum Price 555 Standard Form of Agreement Between Design-Builder and General Contractor –

Lump Sum

PROJECT TYPE: DESIGN-BUILD ORGANIZATION DBIA

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560 Standard Form of Agreement Between Design-Builder & Design-Build Subcontractor – Cost + Fee w/GMP

565 Standard Form of Agreement Between Design-Builder and Design-Build Subcontractor – Lump Sum

570 Standard Form of Agreement Between Design-Builder and Subcontractor DBIA Ancillary Forms Building Information Modeling (BIM) Exhibit Insurance Exhibit – Complete Set Design-Builder’s Insurance Requirements Owner’s Insurance Requirements Design Consultant’s Insurance Requirements Design-Build Subcontractor’s Insurance Requirements General Contractor’s and Subcontractor’s Insurance Requirements Sustainable Projects Goal Exhibit (with Provisions on LEED Certification) Project Schedule of Values & Design-Builder’s Application for Payment Form Design-Build Change Order Form Design-Builder’s Affidavit of Final Release Certificate of Substantial Completion Design-Build Work Change Directive

Delivery Method No. 2: Design-Build Form: DBIA 1 Project Type • Vertical, industrial, and renewable projects 2 Project Size • Works well for large and phased projects (with some

modifications) • General conditions are thorough and robust

3 Project Team • Contemplates Owner working directly with the Owner • Design-Builder is set as a single entity and not separated out

design.53 • Very simple explanation of project delivery.54

4 Ancillary Forms

Many. See list above.

5 Level of Modification Required

• Clear, well organized, easy to follow and understand55 • Better than pre-2007 form versions • Scope of Work: New language ensures framework for scope

agreement: basis of design docs/resolution of conflicts • Commercial Issues Require Negotiation/Modification: Contract

price, schedule and LDs, Confidentiality, Insurance, Dispute Resolution

• Performance Incentive • Menu of Options for delay damages • Requires extensive choices and fill-in-the blank (maybe too many

choices) 6 Bias/Critical • Reasonably balanced by favors D-B slightly

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Delivery Method No. 2: Design-Build Form: DBIA

Risk • Instruments of Service: D-B owns work product/ Owner has a limited license. Owner pays for license and indemnifies D/B for use of license.

• Constructive change directives: Owner is required to pay 50% pending dispute

• Standard of care: standards are not different for design and construction portions of work; warrants design as well as work?

• Indemnity: require D-B to defend from claims • Stop Work: right to financial assurances, make payments, 7 day

notice required. • Dispute Resolution: five-step process: (1) claim, (2) discussion at

“field level”, (3) senior rep level, (4) mediation, (5) arbitration/litigation

• Design-Responsibility: D-B entitled to rely on Owner project criteria

• Termination: Owner is given limited license to use work product to complete project; indemnity and payment for use (same remedy if D-B terminates for Owner default)

• Payment: Release at completion (1998 ver. was 50% of the Work being complete), Owner consider releasing for early subcontractors

• Damages: Correlate LDs with corresponding incentive bonus (may not be appropriate)

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D-700 Standard General Conditions of the Contract Between Owner & Design/Builder D-750 Standard General Conditions of the Subcontract Between Design/builder &

Subcontractor D-500 Standard Form of Agreement Between Owner & owner’s Consultant for Design

Professional Services on Design/build Projects D-505 Standard Form of Subagreement Between Design/Builder & Engineer for Design

Professional Services D-510 Standard Form of Agreement Between Owner & Design/Builder for Preliminary

Services D-520 Standard Form of Agreement Between Owner & Design/Builder, Stipulated Price D-521 Suggested Form of Subagreement Between Design/Builder & Subcontractor,

Stipulated Price D-525 Suggested Form of Agreement Between owner & Design/Builder on the Basis of

Cost-Plus D-526 Suggested Form of Subagreement Between Design/Builder & Subconstrctor, Cost

Plus D-610 Design/Build Contract Performance Bond D-615 Design/Build Contract Payment Bond

PROJECT TYPE: DESIGN-BUILD ORGANIZATION EJCDC

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Delivery Method No. 2: Design-Build Form: EJCDC (www.ejcdc.org) Principal

Documents • D-001 – Guide to EJCDC Design-Build Documents • D-500 – Owner – Owner’s Consultant Agreement • D-700 – Standard General Conditions –Owner-Design/Builder • D-505 – Design-Builder – Design Subconsultant Agreement • D-510 – Owner – Design/Builder Agreement for Preliminary

Services • D-520 – Owner – Design/Builder Agreement – Stipulated Price • D-525 – Owner-Design/Builder Agreement – Cost Plus Basis • D-750 – Standard General Conditions – Design/Builder -

Subcontractor • D-521 – Design/Builder – Subcontractor Agreement – Stipulated

Price • D-526 – Design/Builder – Subcontractor Agreement – Cost-Plus

Basis 1 Project Type • Applicable to civil and vertical projects.

• Does not contain sophisticated methods for: (a) phased construction (b) rolling approvals, phases

2 Project Size • Separate forms for lump sum and cost-plus fee with GMP 3 Project Team • Contemplates Owner and Design-Builder/ not third-party CM 4 Ancillary

Forms • D-610 – Design-Build Performance Bond • D-615 – Design-Build Payment Bond

5 Level of Modification Required

• Design/Builder obligated to assist with commissioning and training of Owner’s staff.

• Standard contract calls for cash flow projection for each month of project, Schedule of Values and cost data within 10 days of commencement of Contract Time; potentially unrealistic requirement.

• Need to fold in requirements for green or sustainable goal (consider carefully whether additional or basic services)

• Need to address phasing or rolling starts 6 Bias/Critical

Risk • Design/Builder does not assume risk of subsurface or hazardous

environmental site conditions. • Design/Builder retains ownership of all drawings and

specifications; Owner may only use for the contracted Project. • Standard provisions allow for Owner “approval” of Preliminary

Design documents but no other participation in design process. • Default is that Owner purchases Builder’s Risk policy covering

Design/Builder’s work. • Design/Builder’s warranty is only for compliance with Contract

Documents.

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Delivery Method No. 2: Design-Build Form: EJCDC (www.ejcdc.org)

• Separate Liquidated damages for both delayed Substantial Completion and Final Completion.

• Option for no retainage after 50% of work completed. • Owner’s Conceptual Design Documents from RFP are Contract

Documents 7 Misc. Notes • D-510 Agreement for Design/Builder’s Preliminary Services

contemplates Phases of work including: (1) Study and Report Phase, (2) Technical Exhibit Phase, and (3) Proposal Phase.

• Design/Builder does not assume risk of subsurface or hazardous environmental site conditions.

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CONSTRUCTION MANAGER – ADVISOR CONTRACT DOCUMENTS

Each the AIA and the ConsensusDOCS offer forms tailored to a situation where the

Owner contracts with one or more Contractors directly and then retains a CM to supervise the

project and act as the Owner’s agent. The risk allocation between the Owner and the Contractor

(s) is consistent within each family with the manner in which the design-bid-build forms are

tailored. Yet, the additional of an additional party—the CM—and the possibility of multiple

prime trade Contractors working on the project add a few noteworthy twists necessary to

consider.

The diagrams below depict the forms available for Construction Manager-Advisor

projects. Below each diagram is a brief explanation of items to consider in these forms, focusing

on issues that differ for the risk allocation highlighted in Project Delivery Method No. 1 (Design-

Bid-Build) above.

AIA CMa Documents

AIA’s suite of Construction Manager Agency agreements functions as outlined in the

chart above. These forms were updated in 2009—superseding the 1992 versions of the CM

agency forms and incorporating the changes made to the AIA A201 General Conditions

document in the 2007 edits.

Owner/Contractor Agreement. The commercial terms document between the Owner

and Contractor(s), the AIA 132-2009, attempts to combine too many pricing alternatives into a

single document. The A132 provides a series of boxes to select for pricing mechanism: (1) lump

sum, (2) cost plus a fee (no GMP), and (3) cost-plus with a GMP. While the attempt to create a

single form is understandable for simplicity purposes, the effect is a cumbersome document that

contains a series of extraneous provisions that will not apply depending on the pricing

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mechanism selected. To avoid confusing the project team, a construction lawyer should consider

deleting provisions that will not apply to the selected pricing method.

Construction Manager/Construction Relationship. The general conditions, the A232,

outline the interaction between the Contractor(s), the Design Professional, and the CM. As

between the Owner and the Contractor, the risk allocation is consistent between the A232 and

A201. The addition of the fourth party—the CM—to the equation, however, appears to create

duplication and overlap in responsibilities. Sometimes the CM acts as an intermediary between

the Contractor(s) and the Owner. Yet, other times, the CM seems to act as a second set of eyes

on the Design Professional decisions.

Particularly cumbersome is the payment application approval process: the Contractor(s)

submits a payment application for review,56 the CM has 7 days to issue a certification and then

passes the payment application to the Design Professional, who also has 7 days to approve. The

document is silent on what happens if the CM and the Design Professional disagree on amount of

payment due. This cumbersome payment application process raises interesting issues, especially

in states with strict and streamlined prompt payment statutes. A construction lawyer must

consider which tasks are actually going to be performed by each party and mirror the A232

provisions to the applicable scope.

In 2007, the AIA introduced the concept of an Initial Decision Maker who will adjudicate

disputes between the parties. While the IDM concept appears to make little practical sense in

projects without a CM, the IDM process is much more viable in a situation where an agency CM

is involved in the project and makes an ideal candidate to serve in that role (and lacks the

inherent pro-design bias that Design Professional would brings to a project neutral role).

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35

PROJECT TYPE: CONSTRUCTION MANAGER - ADVISOR ORGANIZATION: AIA

A132 Standard Form of Agreement Between Owner and Contractor, Construction Manager as Advisor

A232 General Conditions of the Contract for Construction, Construction Manager as Advisor Edition

A401 Standard Form of Agreement Between Contractor and Subcontractor B132 Standard Form of Agreement Between Owner and Architect, Construction Manager as

Advisor Edition C132 Standard Form of Agreement Between Owner and Construction Manager as Advisor C401 Standard Form of Agreement Between Architect and Consultant G732 Application and Certificate for Payment, Construction Manager as Advisor Edition G736 Project Application and Project Certificate for Payment, Construction Manager as

Advisor Edition G737 Summary of Contractors' Applications for Payment, Construction Manager as Advisor

Edition

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ConsensusDOCS Program Manager Documents.

The Owner’s Agent documents in the ConsensusDOCS family preserve the risk

allocation and language established in the Owner/Contractor agreements within the context of a

CM added to the mix and with potentially multiple prime Trade Contractors. In addition,

ConsensusDOCS offers additional forms to a program manager and an Owner’s representative.

An overview of these forms is as follows:

ConsensusDOCS 800 (Owner and Program Manager). The ConsensusDOCS 800 is a

form whereby the Owner can retain a Program Manager on an agency basis. The Program

Manager essentially is designed to replace any need for Owner’s facilities staff. The Program

Manager can oversee construction under either (i) a design-bid-build or a (ii) design-build

project delivery method. A matrix sets for a scope of services to be used as a menu for the

parties to assign. Because each Owner may have its Program Manager involved at a slightly

different stage of the Project or have a unique interplay between Program Manager and Owner’s

staff, this form should be used carefully.

ConsensusDOCS 801 (Owner and Construction Manager). This agreement is a form

for when the Owner awards all of the Trade contracts directly to the Trade Contractor and the

CM serves as an advisor role. Construction administration responsibilities are primarily

performed by the CM but the CM and the Design Professional must each cooperate with the

other.57 The form contains the option for the CM to provide general conditions items.58 There is

overlap or ambiguity between items that are classified as reimbursable expenses59 that the Owner

may expect to provide as general condition items.60 While the Owner is responsible to pay for

both general conditions items and reimbursable items, the vague provisions do not clearly

identify which item falls into which bucket—giving rise to a risk of double-billing or scope

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disputes.61

ConsensusDOCS 802 (Owner and Trade Contractor). This agreement provides for

the Owner to directly retain multiple Trade Contractors to be overseen by the CM. All

significant risk shifting issues between the Owner and the Contractor(s) track the remainder of

the ConsensusDOCS forms.

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800 Program Management Agreement and General Conditions Between Owner and Program Manager

801 Construction Management Agreement Between Owner and Construction Manager (CM is Owner’s Agent and Owner Enters Into all Trade Contractor Agreements)

802 Agreement Between Owner and Trade Contractor 9CM is Owner’s Agent 803 Agreement Between owner and Architect-Engineer (CM Acting as Agent Has Been

Retained by Owner)

PROJECT TYPE: PROGRAM MANAGER AND PROGRAM MANAGER / OWNER’S AGENT

ORGANIZATION: CONSENSUSDOCS

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CONSTRUCTION MANAGER AT-RISK CONTRACT DOCUMENTS

Each the AIA and the ConsensusDOCS offer forms tailored to “Construction Manager

At-Risk” situations. The risk allocation between the Owner and the Contractor is consistent

within each family with the manner in which the design-bid-build forms are tailored but adds the

element that the CM is performing preconstruction services prior to the time in which it becomes

a CM At-Risk.

The diagrams below depict the forms available for CM At-Risk projects. Below each

diagram is a brief explanation of items to consider in these forms, focusing on issues that differ

for the risk allocation highlighted in Project Delivery Method No. 1 (Design-Bid-Build) above.

AIA CM at Risk Documents

The AIA refers to its Construction Manager At-Risk forms in the heading as Construction

Manager as Contractor. There are two different commercial terms documents, the A133-2009

(Cost of the Work with a GMP) and the A132-2009 (Cost of the Work without a GMP).

CMAR with a GMP. The A133-2009 (formerly the A121 Cmc-2003) is essentially the

same as the A102-2007 agreement and provides that the CM is compensated on the basis of

“Cost of the Work plus a Contractor’s Fee with a Guaranteed Maximum Price.” This agreement

incorporates preconstruction services.

The Owner retains the CM during the design phase and the CM provides services to the

Owner necessary to develop a GMP, then proposes a GMP, and then the GMP is set by an

amendment to the contract. This provides a mechanism for the CM to become the “at risk”

Contractor on the Project.

CMAR without a GMP. The A134-2009 (formerly the A131CMc-2003) is the same as

the A133-2009, except that there is no Guaranteed Maximum Price. Under the A134, the CM

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prepares a Control Estimate and provides the Owner undated estimates as project proceeds. The

Control Estimate does not include any contractual limitations on amounts the Owner is required

to pay for the work.

Construction Manager Form. The C132-2009 (formerly the B801) is the agreement

between the Owner and the CM. The Agreement provides extensive provisions discussing the

CM’s responsibilities during each phase of the Project. In particular, the pre-construction

services provide two full pages of detail regarding interaction between the CM and the Design

Professional and the CM’s preconstruction services including cost and schedule.62 The

Agreement also contains a termination for convenience provision under which the Owner is only

required to compensate the CM for fee earned and reimbursables incurred.63

In contrast to the ConsensusDOCS 801 that provides a one-way indemnity provision in

favor of the CM, the C132-2009 contains a one-way indemnity provision in favor of the Owner

(but limited to available insurance coverage).64 The C132-2009 also contains a mutual waiver of

consequential damages.65

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A133 Standard Form of Agreement Between Owner and Construction Manager as Constructor where the basis of payment is the Cost of the Work Plus a Fee without a Guaranteed Maximum Price

A134 Standard Form of Agreement Between Owner and Construction Manager Where the Construction Manager is also the Constructor and Where the Basis of Payment is the Cost Plus a Fee and there is no Guarantee of Cost

A401 Standard Form of Agreement Between Contractor and Subcontractor B103 Standard Form of Agreement Between Owner and Architect, Construction

Manager as Advisor Edition C401 Standard Form of Agreement Between Architect and Consultant

PROJECT TYPE: CONSTRUCTION MANAGER – AT-RISK ORGANIZATION: AIA

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INTEGRATED PROJECT DELIVERY CONTRACT DOCUMENTS

Each AIA and the ConsensusDOCS now offer form documents for Integrated Project

Delivery (or IPD projects). The AIA form offers a total integration method where a single

purpose entity (SPE) is created between the parties in the form of a Limited Liability Company.

ConsensusDOCS offers a tri-party agreement where the Owner, the Design-Professional,

and the Contractor are all in privity of contract and identify risk allocation and responsibility for

cost overruns.

Each set of forms is depicted in a diagram below and further explained in a text chart.

While the contact of integrated project delivery forms is broad and complicated enough for an

entire program itself, these charts aim to highlight general areas to consider when selecting

forms.

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A195 Standard Form of Agreement Between Owner and Contractor for Integrated Project Delivery

A295 General Conditions of the Contract for Integrated Project Delivery A401 Standard Form of Agreement Between Contractor and Subcontractor B195 Standard Form of Agreement Between Owner and Architect for

Integrated Project Delivery C401 Standard Form of Agreement Between Architect and Consultant

PROJECT TYPE: INTEGRATED PROJECT DELIVERY ORGANIZATION: AIA

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PROJECT TYPE: INTEGRATED PROJECT DELIVERY ORGANIZATION: AIA 1 Project Type Full Integration IPD (uses the SPE model, with an LLC as the designated

entity) 2 Project Size 3 Project Team Management Group

• Owner • Designer • Constructor May invite other participants to join.66 AIA SPE entity is LLC • Available in all jurisdictions

• Provides benefits of limited liability

• Avoid partnership effect of tri-party agreement (and joint and several liability)

4 Ancillary

Forms

5 Level of Modification Required

Management Group’s functions: • Assist Owner to develop program (if not in existence)67 • Establish project communications protocol68 • Develop preconstruction site investigation plan69 • Manage budget to “further project objectives”70 • Oversee development of design documents71 • Establish design document standards72 • Establishment of BIM parameters: standards and technological

requirements73 • Development of detailed Target Value Design methods74 • Review and approve preliminary evaluation of project criteria and

requirements75 • Review and approve milestone schedule76 and construction schedule77

Assist to establish the Construction Budget78 • Review and approve cost models79 Approve use of contingency80 • Develop financial incentive program81

Bias/Critical Risk

Decisions: All decisions require unanimity unless specified Liability: • To Owner: Limit to required and available insurance82 • To Other Members: Limit to required and available insurance members

assign claims to company83

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PROJECT TYPE: INTEGRATED PROJECT DELIVERY ORGANIZATION: AIA

• To Company: company indemnifies members against uninsured claims84 • To Nonmembers: members assign claims to non-members to

company85 Compensation: • Limited to the Target Cost Estimate86

7 Misc. Notes

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300 Tri-Party Agreement for Integrated Project Delivery

PROJECT TYPE: INTEGRATED PROJECT DELIVERY ORGANIZATION: CONSENSUSDOCS

PROJECT TYPE: INTEGRATED PROJECT DELIVERY ORGANIZATION: CONSENSUSDOCS 1 Project Type Tri-Party IPD Situation (using Lean Construction principles) 2 Project Size Given requirements for documents and team to be premise,

likely more appropriate for larger projects 3 Project Team “Tri-Party” Agreement: Owner, Designer, and Constructor

Does not create a partnership or joint venture87 4 Ancillary

Forms See chart

5 Level of Modification Required

Detailed form—over 50 pages

6 Bias/Critical Risk

Risk Allocation: Two options to allocate risk among parties88 • “Safe harbor” decisions and “no blame” environment89 • “Traditional risk allocation”: each party responsible for own

negligence and beaches90 Incentives: • Creation of a financial incentive program91 • Reward superior performance in specified areas such as cost,

quality, safety, schedule, etc. Model: Target cost approach92 with provisions to allocate

responsibility for cost overruns93

Misc. Notes Susceptible to potential misinterpretation because IPD is different than other delivery methods and other contract forms.

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CONCLUSION.

The choice of contract documents can have a significant impact not only on the cost of

legal services to prepare the documents, but also on the allocation of risks and responsibilities

among the project participants. Thus, it is a critical decision to be made early in the project

planning. There are many choices in the market today for such documents for each project

delivery method, including competing offerings from organizations with differing biases or

structures for the project team and project administration. Therefore, a lawyer advising an owner,

contractor, designer or any other member of a project team should have a thorough

understanding of the structure of the various document families, and when they are appropriate

for a particular project and for a particular project team.

1 See N.J.A.C. 13:27-7A.1 et. seq; Charbesbois v. J. M. Weller Associates, 72 N.Y. 2d 587 (1988); N.Y. Education Law § 7200 et seq, 7300 et seq and 6500 et. seq. 2 see Corrino Civetta Construction Corp. v City of New York, 67 N.Y. 2d 297 (1980); Kalisch-Jarcho, Inc. v City of New York, 58 N.Y. 2d 377 (1983). 3 "Getting The Most for Owners in Construction Contracting", Slieverman, A.; The Voice, Fall 2009 4 "Construction Law" Allensworth, et al ed. ,Bruner, P., Chapter 1, page 5 ABA Publishing 2009 5 See ejcdc.org at About EJCDC. 6 “Contracts: In the Owner’s Best Interest,” Owner’s Contract at page 2; ‘What Should We Teach About Design-Build Contracts? A Learning Module,” Lee A. Ellingson, Journal of Construction Education Vol. 7, No. 3, pages 122-123 (Fall 2002). 7 www.ConsensusDOCS.org 8 DIBA’s document library consist of only 20 forms, inclusive of both contracts and exhibits and addenda. See DBIA Model Contract List, available at http://dbiabooks.com/shopdisplayproducts.asp?id=303. 9 "The American Institute of Architects Legal Citator", Stein,S.M. ed.; LexisNexis 2012; "Construction Law" Bruner & O'Connor, Vol. 2, Chapter 5 Section 5:21 - 5:272. 10 since 2011 the ConsensusDOCS don’t use the term “Contractor” referring instead to the “Constructor”. 11 AIA A201-2007, Section 1.1.8 (Initial Decision Maker); Section 15 (Claims and Disputes) 12 AIA Design-Build Contracts 13 AIA C-806 and AIA E-201 (2007) (provides non-exclusive license for Project use only)

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14 AIA A201-2007, Sections 1.5-1.6 (Instruments of Service). 15 AIA A201-2007, Section 2.2 (Owner Financial Information). 16 AIA A201-2007, Section 15.1.6 (Mutual Waiver of Consequential Damages). 17 AIA A101-2007, Dispute Resolution Menu; AIA A201-2007, Section 15 (Claims and Disputes) and 15.4.4 (Consolidation of Arbitrations). 18 AIA A201-2007, Section 3.3.1 (Owner Directed Means & Methods). 19 AIA A201-2007, Section 10.3.3 and Section 10.3.5 (Hazardous Materials). 20 ConsensusDOCS 752: Subcontract for Use on Federal Construction 21 There also are short form agreements that address the Owner-Contractor (205), the Owner-Design Professional (245), and the Contractor-Subcontractor (751) contractual relationships in a more abbreviated manner than do the standard agreements (ConsensusDOCS 200, 240 and 750 respectively). 22 The documents are structured in numerical series by project delivery method as follows: 200-series is for traditional contracting or design-build-build 300-series is for integrated project delivery 400-series is for design-build 500-series is for construction management at-risk 700-series is for subcontracting 800-series is for program management and construction management (agency) Within each series there is some inter-relation. For example, the administrative forms in the 200-series can be used for the 500 and 800 series. New documents that have been added since the original release include the 301 BIM Addendum; 310 Green Building Addendum; 725 Subsubcontract; and the 752 Federal Subcontract (and FAR Exhibit). 23 Tallies for references are as follows:

ConsensusDOCS 2007

ConsensusDOCS 2011

AIA A201 + AIA A114

Architect/Design Professional

37 42 312

Owner 398 392 413 Contractor/Constructor 520 474 729 Subcontractor 55 58 96

24 ConsensusDOCS Brochure for Owners at Reason Nos. 1 and 5, available at http://consensusdocs.org/wp-content/uploads/2011/09/10reasons_Aug2011_Low.pdf. 25 See CD 200 and CD 750 comparison. 26 See ConsensusDOCS Guidebook for ConsensusDOCS 310, p.3. The Green Building Addendum is intended to be used as an addendum to modify existing design or construction documents whenever an owner desires green goals and/or third-party rating recognition (i.e. LEED certification) for the project. The ConsensusDOCS Green Building Addendum is designed to cover the various rights, roles, and liabilities of the green project participants. In this regard, the ConsensusDOCS 310: • Identifies the role and responsibilities of the various participants; • Is compatible with the other ConsensusDOCS forms; • Creates a "Green Building Facilitator" ("GBF") responsible for compiling and/or coordinating the submittal documentation needed to achieve the green certification or other goals.

49

• Defines the green scope, allocates green building responsibilities and risks, apportions liability, and calls out changes to the design and construction to accommodate green-building goals. See also ConsensusDOCS Brochure for Owners, at Reason Nos. 8, available at http://consensusdocs.org/wp-content/uploads/2011/09/10reasons_Aug2011_Low.pdf. 27 The ConsensusDOCS 301 BIM Addendum, published in 2008, addresses contractual risk allocation issues as well as implementation issues in using BIM. The document is well suited for all projects using BIM that include early involvement of contractors. The BIM Addendum creates a framework to help guide users. Principally, the addendum assigns one entity to serve as the Information Manager. Importantly, the parties are required to execute a detailed execution plan. A checklist of the execution plan is given to determine the roles, requirements and processes the parties are going to chose and provide more details for a project specific basis. Significantly, the document gives “check-the-box” options for the level of detail for which the model can be relied upon. Initially, there are expectations that parties will attempt to limit the amount of reliance of others by saying that a BIM model is only given for informational purposes, but as owner’s demands and expectations grow, it is likely that they will want to rely on the model. See also ConsensusDOCS Brochure for Owners, at Reason Nos. 8, available at http://consensusdocs.org/wp-content/uploads/2011/09/10reasons_Aug2011_Low.pdf. 28 A new insurance exhibit for the ConsensusDOCS 725 has just been released. It provides a list of commonly required insurance, with blanks for the parties to insert the required limits of insurance. Among the key elements are: • Commercial General Liability Insurance coverage, leaving blanks for the parties to insert limits for bodily injury and property damage – per occurrence; a general aggregate limit, Completed Operations coverage, Contactors Protective for Subsubcontractor's/Vendor’s liability arising out of the hire of Sub-subcontractors, per Project Aggregate, and similar clauses. ConsensusDOCS 725 Subsubcontract Exhibit E - Insurance Requirements, Paragraph 1. • Blanks for the parties to check if the Subcontractor will or will not require the subsubcontractor to purchase and maintain additional liability coverage on either an additional insured or Owners' and Contractors' Protective Liability Insurance ("OCP") policy. ConsensusDOCS 725 Subsubcontract Exhibit E - Insurance Requirements, Paragraph 2. • A provision requiring the subcontractor to pay or reimburse the subsubcontractor for "any documented additional cost" the subsubcontractor incurs to procure the additional general liability coverage. ConsensusDOCS 725 Subsubcontract Exhibit E - Insurance Requirements, Paragraph 2. • Clauses providing for the parties to list whether coverage will be required, and the liability limits of such insurance, for: Business Automobile Liability Coverage, Workers Compensation, Excess Liability (in form or umbrella), and Professional Liability insurance. ConsensusDOCS 725 Subsubcontract Exhibit E - Insurance Requirements, Paragraphs 3-6. • A provision that (a) requires the subsubcontractor to deliver to subcontractor certificates of insurance evidencing that the required insurance has been obtained, and (b) allows the subcontractor to (i) terminate the subsubcontract if the required insurance is not obtained or (ii) purchase such coverage and charge the expense to the subsubcontractor. ConsensusDOCS 725 Subsubcontract Exhibit E - Insurance Requirements, Paragraphs 8. 29 See ConsensusDOCS 200 (2011), Section 14.1. In the 2007 version of ConsensusDOCS 200, “Contract Documents” is defined as the documents listed specifically in Section 14.1. Section 14.1 now provides a template for the parties to specifically identify the Contract Documents,

50

including specifically identifying any “Owner Provided Information” that is to be included as a Contract Document (as opposed to owner-provided information being for “information only”). 30 ConsensusDOCS 200 (2011), Section 10.2. 31 ConsensusDOCS 200 (2011), Section 9.2.4.1. 32 ConsensusDOCS 200 (2011), Section 8.2.2. 33 ConsensusDOCS 200 (2011), Section 3.8.1 and 2 and Section 3.9 (Correction of Work within 1 year). 34 ConsensusDOCS 200 (2011), Section 6.6 (Limited Mutual Waiver of Consequential Damages) 35 ConsensusDOCS 200 (2011), Section 6.5.2.1 and 6.5.3. 36 ConsensusDOCS 8.3 37 Provisions to ensure compliance with the Project Criteria through the life of the Project include the following:

• Section 1.1—includes project criteria and proposed changes into the definition of Design-Build Documents

• A3.2.6—Requires that construction documents will be consistent with approved design documents, including project criteria

• A3.2.5—requires DB to disclose to Owner in writing any deviations by which the design documents differ from the design-build documents, including the project criteria

• A3.2.9—arch has to certify that documents are consistent with the Project Criteria 38 B143, 3.2.1 39 A141 A.6.1 40 B143, 3.2 41 B143, 3.2.3.2 42 AIA A201-2007, Section 2.2 (Owner Financial Information). 43 AIA A201-2007, Section 15.1.6 (Mutual Waiver of Consequential Damages). 44 A141, 6.2 45 A141, A4.3 46 A141, 6.1 47 A141, A.4.4.2.3 48 A141, A.4.4.2.2 49 (CD 410) 50 (CD 415) 51 ConsensusDOCS Design-Build forms: 52 The design-build agreements were modified to specifically identify the individual contract documents, including expressly designating design documents as Contract Documents, after they are approved by the owner at the schematic design, design development, and construction document phases respectively. See ConsensusDOCS 410 (2011), Section 15.1. In addition, information provided by the owner is only a Contract Document if it is specifically identified as such. See ConsensusDOCS 410 (2011), Section 15.1, Section 3.6.4. Each of the identified documents are also included within the Order of Precedence clause. See ConsensusDOCS 410 (2011), Section 15.2. 53 “Contracts in the Owner’s Best Interest,” Owner’s Contract. Available at: 54 “What Should We Teach About Design-Build Contracts? A Learning Module,” Journal of Construction Education, Lee A. Ellingson (Fall 2002, Vol 7, No. 3, pp. 117-136).

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55 “Contract Documents of the Design-Build Institute of America,” J. Kent Holland, Jr. IRMI.com (May 2002) available at: http://www.irmi.com/expert/articles/2002/holland05.aspx?cmd=print. 56 AIA A232-2009, General Conditions for Construction, Construction Manager as Advisor Edition, at Sec. 9.4.1. 57 ConsensusDOCS 801, 2.1.1. 58 ConsensusDOCS 801, 3.2.11. 59 ConsensusDOCS 801, Article 8 (specifically 8.1.6, 8.1.10, 8.1.12, 8.1.13). 60 Compare provisions regarding Reimbursable Expenses (specifically Article 8 and Section 7.3.2) with provisions regarding General Conditions Items (specifically Sections 2.3.11; 3.2.11; and 7.5). 61 ConsensusDOCS 801, 4.5.4. 62 AIA C132-2009, Section 3.2 (Preconstruction Services) 63 AIA C132-2009, Section 9.5 to 9.7. 64 AIA C132-2009, Section 8.1.3. 65 AIA C132-2009, Section 8.1.4. 66 ConsensusDOCS 300, 4.1 67 AIA A195, 4.7.1 68 AIA A195, 4.9.1 69 AIA A195, 5.1 70 AIA A195, 5.2 71 AIA A195, 6.2 72 AIA A195, 6.8 73 AIA A195, 6.9 74 AIA A195, 6.13.2 75 AIA A195, 7.1 76 AIA A195, 7.3.1 77 AIA A195, 7.3.2 78 AIA A195, 8.1.3 79 AIA A195, 8.2 80 AIA A195, 8.3 81 AIA A195, 11.2 82 AIA 195, 9.3 83 AIA 195, 9.4 84 AIA 195, 9.5 85 AIA 195, 9.6 86 AIA 195, Article 9 and 10 87 ConsensusDOCS 300, 2.4.5. 88 ConsensusDOCS 300, 3.8. 89 ConsensusDOCS 300, 3.8.2.1 90 ConsensusDOCS 300, 3.8.2.2 91 ConsensusDOCS 300, 11.2 92 ConsensusDOCS 300, Article 8 93 ConsensusDOCS 300, Article 11