Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s...

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Owner’s Guide to Surviving the AIA’s A201 John Markovs Deputy County Attorney Montgomery County, MD Jeff Chapman Ford Nassen & Baldwin Austin, TX Chris Dunn Waller Lansden Nashville, TN IMLA 77 th Annual Conference – Austin, TX October 21-24, 2012 Panel Moderator: Roy Cooper Arcadis International U.S., Inc.

Transcript of Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s...

Page 1: Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s Guide to Surviving the AIA A201 •Introduction of the Speakers •Goals for the Program**

Owner’s Guide to Surviving the AIA’s A201

John Markovs Deputy County Attorney

Montgomery County, MD

Jeff Chapman Ford Nassen & Baldwin

Austin, TX

Chris Dunn Waller Lansden

Nashville, TN

IMLA 77th Annual Conference – Austin, TX October 21-24, 2012

Panel Moderator: Roy Cooper Arcadis International U.S., Inc.

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INTRODUCTION – John Markovs

Owner’s Guide to Surviving the AIA A201

• Introduction of the Speakers

• Goals for the Program**

**ULTERIOR MOTIVE:

Program to kick-off IMLA’s Construction Contract Drafting Initiative (“CCDI”)!

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INTRODUCTION – John Markovs

Goals of the CCDI

• Create Form Construction Documents for use by IMLA Members

• Draft Revisions to Certain Families of Construction Documents for use by IMLA Members

• Who should participate in the CCDI?

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INTRODUCTION – John Markovs

Generous Assistance with CCDI

• Waller Lansden – Nashville, TN

• Ford Nassen & Baldwin – Austin, TX

• ARCADIS International U.S., Inc.

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INTRODUCTION – John Markovs

A Brief History of Standardized Form Construction Documents

• 1857-The American Institute of Architects (AIA) was founded

• 1878-American Bar Association was founded

• 1888- AIA and National Association of Builders (predecessor to Associated General Contractors of America) drafted “Uniform Contract” – the first standard form construction contract

• Since 1911 to present – AIA published sixteen editions of standard form construction documents

• Other special interest groups have followed

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INTRODUCTION – John Markovs

What are the Leading Families of Construction Documents?

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INTRODUCTION – John Markovs

What group is conspicuously missing?

• OWNERS!

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INTRODUCTION – John Markovs

Modern Construction Contracts

• AIA family of construction documents

• Other families of construction documents

• All created with specific agendas

• Each family of documents have a different approach to risk allocation between the owner, general contractor, and architect/engineer

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INTRODUCTION – John Markovs

AIA Document A201 -2007 General Conditions of the Contract for Construction

• Used with AIA A101-2007 Standard Form of Agreement Between Owner and Contractor Where the Basis of Payment is a Stipulated Sum

• Topics to be covered during the program

• Payment, Compensation for Changes in the Work (including related site conditions), and Disputes (Markovs)

• Scope of Work and Scheduling (Chapman)

• Risk, Insurance and Bonding (Dunn)

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PAYMENT, COMPENSATION FOR CHANGES IN THE WORK (INCLUDING SITE CONDITIONS), AND DISPUTES

John Markovs

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PAYMENT, COMPENSATION FOR CHANGES IN THE WORK (INCLUDING RELATED SITE CONDITIONS), AND DISPUTES – John Markovs

Payment

• Revise Article 9 Payments and Completion:

• Section 9.3 Applications for Payment

• Section 9.7 Failure of Payment

• Section 9.8 Substantial Completion

• Section 9.9 Partial Occupancy or Use

• Section 9.10 Final Completion and Final Payment

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PAYMENT, COMPENSATION FOR CHANGES IN THE WORK (INCLUDING RELATED SITE CONDITIONS), AND DISPUTES – John Markovs

Compensation for Changes in the Work (including related site conditions)

• Revise Article 7 Changes In Work

• Section 7.2 Change Orders

• Section 7.3 Construction Change Directives (7.3.7 and 7.3.10)

• Revise Article 8 Time

• Section 8.2 Progress And Completion

• Section 8.3 Delays And Extension Of Time

• Revise Article 3.7 Permits, Fees, Notices and Compliance with Laws

• Section 3.7.4 (Site Conditions)

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PAYMENT, COMPENSATION FOR CHANGES IN THE WORK (INCLUDING RELATED SITE CONDITIONS), AND DISPUTES – John Markovs

• Revise Article 14 Termination or Suspension of the Contract

• Section 14.1 Termination By The Contractor

• Section 14.2 Termination By The Owner For Cause

• Section 14.3 Suspension By The Owner For Convenience

• Section 14.4 Termination By The Owner for Convenience

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Disputes

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PAYMENT, COMPENSATION FOR CHANGES IN THE WORK (INCLUDING RELATED SITE CONDITIONS), AND DISPUTES – John Markovs

Disputes (cont’d)

• Revise Article 15 Claims and Disputes

• Section 15.1 Claims

• Section 15.2 Initial Decision

• Section 15.3 Mediation

• Section 15.4 Arbitration

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SCOPE OF WORK AND SCHEDULING

Jeff Chapman

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SCOPE OF WORK AND SCHEDULING – Jeff Chapman

Contract Performance Provisions

• Scope of Work

• Compliance with Laws

• Scheduling

• Warranty

• Suspension and Termination

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SCOPE OF WORK AND SCHEDULING – Jeff Chapman

Scope of Work

• §3.2 review of contract documents and field conditions

• Opportunity to define Contractor’s scope

• Require Contractor to verify field conditions

• Identify conflicts between contract documents and site

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Page 18: Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s Guide to Surviving the AIA A201 •Introduction of the Speakers •Goals for the Program**

SCOPE OF WORK AND SCHEDULING – Jeff Chapman

Scope of Work (cont’d)

• Revise A201 to require frequent verification of conditions

• Contractor to provide notice of conflicts to owner and architect

• Remove language describing Contractor’s “capacity as a contractor”

• Require Contractor to study plans, verify field conditions and report discrepancies

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SCOPE OF WORK AND SCHEDULING – Jeff Chapman

Compliance with Laws

• Building codes, local ordinances, statutory obligations

• Controlling law based on location of project

• Rights and remedies

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SCOPE OF WORK AND SCHEDULING – Jeff Chapman

Compliance with Laws (cont’d)

• Strike language making Contractor “not responsible for ascertaining that contract documents comply with applicable building codes, etc.”

• Require contract be governed by state law where project located

• Require venue in locality /county of project

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SCOPE OF WORK AND SCHEDULING – Jeff Chapman

Scheduling

• Hugely important aspect of project management for owner

• Require frequent schedule updates

• Work from required baseline prepared at inception

• Require submittal schedule

• Update to monitor material selections and delivery

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SCOPE OF WORK AND SCHEDULING – Jeff Chapman

Scheduling (cont’d)

• Require Contractor to maintain updated construction schedule at project site

• Provide mechanism for Owner-ordered acceleration

• No cost increase if due to Contractor delay

• Do not exempt supply or delivery from Contractor responsibility

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SCOPE OF WORK AND SCHEDULING – Jeff Chapman

Scheduling (cont’d)

• §2.4 Provide Owner Right to Carry Out Work

• Include provision to allow supplementation to correct delay

• Require notice by contractor of all delays

• In writing and separate from schedule updates

• Failure to provide waives contractor right to recover or triggers owner’s right to delay damages offset

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Practice tip: Be aware of surety defenses on performance bond!

Page 24: Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s Guide to Surviving the AIA A201 •Introduction of the Speakers •Goals for the Program**

SCOPE OF WORK AND SCHEDULING – Jeff Chapman

Warranty

• General provision at §3.5 provide basic protection

• Implied warranties vary by jurisdiction

• Best to modify A201 to avoid jurisdictional differences

• Make all warranties express and contractual

• Provide separate warranty provisions

• Contractual warranty

• Material, systems and manufacturers’ warranties

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Page 25: Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s Guide to Surviving the AIA A201 •Introduction of the Speakers •Goals for the Program**

SCOPE OF WORK AND SCHEDULING – Jeff Chapman

Warranty (cont’d)

• Specify minimum of one (1) year warranty

• Require additional time for some systems (optional)

• MEP – 2 year • Structural – 5 year

• Obligate Contractor to repair after written notice by Owner

• Require transfer of all materials, systems and manufacturers’ warranties

• Express obligation prior to final payment

• Deliver after substantial completion, but prior to final completion

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Page 26: Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s Guide to Surviving the AIA A201 •Introduction of the Speakers •Goals for the Program**

SCOPE OF WORK AND SCHEDULING – Jeff Chapman

Suspension and Termination

Consider both Convenience and Cause provisions

Suspension for convenience by Owner

• Absolute right of owner

• Will expose owner to delay damages (if allowed by contract)

• Compensate for equipment costs, mobilization, extended general conditions, etc.

• Grant additional time to contract

• Exclude profit and home office overhead

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Page 27: Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s Guide to Surviving the AIA A201 •Introduction of the Speakers •Goals for the Program**

SCOPE OF WORK AND SCHEDULING – Jeff Chapman

Suspension and Termination (cont’d)

Termination For Cause If Contractor Default

• Will trigger obligations by Surety

• Delineate events of default as grounds for termination

• Provide written notice to cure to Contractor and Surety

• After cure period without correction -

• Free to terminate or suspend at any time

• Non-exclusive election by Owner

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Page 28: Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s Guide to Surviving the AIA A201 •Introduction of the Speakers •Goals for the Program**

SCOPE OF WORK AND SCHEDULING – Jeff Chapman

Suspension and Termination (cont’d)

Termination For Convenience

• Provides owner way out of contract

• Can be useful to overcome impasse or claim

• Particularly if fault not easily assigned

• Most include provision for compensation owed to contractor

• Payment for all work completed to date

• Exclude profit and overhead or unperformed work

• Pay for costs associated with termination

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Page 29: Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s Guide to Surviving the AIA A201 •Introduction of the Speakers •Goals for the Program**

SCOPE OF WORK AND SCHEDULING – Jeff Chapman

Suspension and Termination (cont’d)

Termination For Convenience

• Require written notice with immediate suspension

• Reasonable time for demobilization and

• Provision of necessary documentation

• Such as warranty as final pay request

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RISK, INSURANCE AND BONDING

Chris Dunn

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Page 31: Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s Guide to Surviving the AIA A201 •Introduction of the Speakers •Goals for the Program**

RISK, INSURANCE and BONDING – Chris Dunn

Claims for Consequential Damages

• The Perini case

• The AIA’s historic policy shift in 1997…

• What are consequential damages?

Page 32: Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s Guide to Surviving the AIA A201 •Introduction of the Speakers •Goals for the Program**

RISK, INSURANCE and BONDING – Chris Dunn

Waiver of Consequential Damages

• What is the impact on the Owner?

• Is the Waiver “mutual”?

• Which party is best positioned to control project risk?

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RISK, INSURANCE and BONDING – Chris Dunn

Waiver of Consequential Damages

• Are consequential damages insurable?

• Are you authorized to agree to the waiver?

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Page 34: Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s Guide to Surviving the AIA A201 •Introduction of the Speakers •Goals for the Program**

RISK, INSURANCE and BONDING – Chris Dunn

Waiver of Consequential Damages

• Revising § 15.1.6.

• Liquidated damages clauses

• Insurance exceptions

• Caps on classes of damage

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RISK, INSURANCE and BONDING – Chris Dunn

A201 Article 11: Insurance and Bonds

• Houses Contractor & Owner Requirements

• Detail light

• Trap for the unwary

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Page 36: Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s Guide to Surviving the AIA A201 •Introduction of the Speakers •Goals for the Program**

RISK, INSURANCE and BONDING – Chris Dunn

A201 Article 11: Insurance and Bonds

• CGL Insurance

• Specify ISO form, duration, limits

• Additional Insureds

• Completed Operations

• Unacceptable Exclusions

• Excess Coverage

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Page 37: Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s Guide to Surviving the AIA A201 •Introduction of the Speakers •Goals for the Program**

RISK, INSURANCE and BONDING – Chris Dunn

A201: Builder’s Risk Insurance

• “Final Frontier” of American Construction Insurance

• What it covers and what it doesn’t

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Page 38: Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s Guide to Surviving the AIA A201 •Introduction of the Speakers •Goals for the Program**

RISK, INSURANCE and BONDING – Chris Dunn

A201: Builder’s Risk Insurance

• § 11.3 of A201, “All Risk”

• Revise significantly

• Dated formulation antiquated concepts

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Page 39: Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s Guide to Surviving the AIA A201 •Introduction of the Speakers •Goals for the Program**

RISK, INSURANCE and BONDING – Chris Dunn

A201: Builder’s Risk Insurance

• § 11.3 Revised regarding:

• Duration of coverage

• Coverage scope

• Named Insureds included

• Exclusions permitted and not

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Page 40: Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s Guide to Surviving the AIA A201 •Introduction of the Speakers •Goals for the Program**

RISK, INSURANCE and BONDING – Chris Dunn

A201: Builder’s Risk Insurance

• Liberty Mutual/Wietz

• (Arizona Court of Appeals)

• Fourth Street Place v. Travelers

• (Nevada Supreme Court)

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Page 41: Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s Guide to Surviving the AIA A201 •Introduction of the Speakers •Goals for the Program**

RISK, INSURANCE and BONDING – Chris Dunn

A201: Indemnity

• § 3.18.1

• “Narrow form”

• State-specific requirements and modifications

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Page 42: Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s Guide to Surviving the AIA A201 •Introduction of the Speakers •Goals for the Program**

RISK, INSURANCE and BONDING – Chris Dunn

A201: Bonding

• § 11.4 Performance and Payment Bonds

• Light on detail

• Revision needed, sometimes state-specific features to incorporate

• Debatable value of bonding

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Page 43: Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s Guide to Surviving the AIA A201 •Introduction of the Speakers •Goals for the Program**

Questions?

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Page 44: Owner’s Guide to Surviving the AIA’s A201 - IMLA · INTRODUCTION – John Markovs Owner’s Guide to Surviving the AIA A201 •Introduction of the Speakers •Goals for the Program**

Owner’s Guide to Surviving the AIA’s A201

John Markovs Deputy County Attorney

Montgomery County, MD

Jeff Chapman Ford Nassen & Baldwin

Austin, TX

Chris Dunn Waller Lansden

Nashville, TN

IMLA 77th Annual Conference – Austin, TX October 21-24, 2012

Panel Moderator: Roy Cooper Arcadis International U.S., Inc.


DNV Rp a201 Plan Approval Document Type 2010-04

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Owner’s Guide to Surviving the AIA’s A201 · Owner’s Guide to Surviving the AIA’s A201 John Markovs Deputy County Attorney Montgomery County, MD Jeff Chapman Ford Nassen &

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