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finance & business
CONTRACTS
New Standard Forms Seek Unity on Fairness
Consensus documents by owner and contractor groups focus on industry best practices
By Richard Korman

The cooperatively produced standard-form contracts written mainly by owners and contractors under the ConsensusDOCS banner contain new payment security for subcontractors among other terms. With all of the 70-plus forms due to be released Sept. 28, the effort represents three years of work by 23 industry associations and an attempt to speed up contract negotiations and build trouble-free projects by starting from mutually agreed ideas of what is fair.

ConsensusDOCS developed agreements “in the best interest of the project” and “owner satisfaction,” says Stephen E. Sandherr, CEO of the Associated General Contractors of America. “Each of us had an equal voice at the table,” says E. Collette Nelson, executive vice president of the American Subcontractors Association.

Lynn M. Schubert, president of the the Surety & Fidelity Association of America, says her members had become concerned about the “increasing shifting of risk in contracts.” The open discussions held by the participating ConsensusDOCS associations assured her that the documents “truly represent who best bears the risk as opposed to who will have to pay for it.”

Under the agreement reached by the coalition members, core participating as­sociations will cease publishing their own documents as ConsensusDOCS forms be­come available, and the associations will invest in and share profits from the sale of ConsensusDOCS documents.

Engineering associations, for example, had been invited to participate but only recently agreed to participate to a limited extent. The Engineers Joint Contract Documents Committee is "the newest kid on the block" to join the effort as an observer and "is not at this point prepared to endorse any of the Consensus DOCS" pending completion of its review, says Willcox Dunn, a Richmond, Va.-based attorney and Consensus DOCS observer for EJCDC.

The American Institute of Architects represents a more nettlesome problem to ConsensusDOCS. As the industry powerhouse in standard-form agreements, AIA politely declined to participate in ConsensusDOCS.

A key AIA staff member fails to see the value of uniting behind a single set of documents. “When they first brought it up and we had a big meeting about it three years ago, they wanted everyone who was currently publishing any document to turn their intellectual property over to the new nonprofit for ConsensusDOCS,” says Suzanne Harness, AIA’s managing director and counsel for contract documents. “You could see, if you have a successful program, that is risky.” Terms of participation later were relaxed but AIA still was not interested, she says.

BLACK

We just had a fundamental question of whether there is a need for new programs,” says Harness, who notes that AIA consults all industry groups in preparing new versions of its documents. “It seems the market is well-served and offers people a choice. It’s hard to see the value in only having one program, a monopoly, if you will.

EJCDC's Dunn says that organization's review of ConsensusDOCS's design-build agreement will be critical to its decision on whether to continue to participate in the program. Even so, EJCDC's participation so far has been "pretty significant," says Brian Perlberg, AGC's senior counsel for construction law and contract document programs.

Updates to several 10-year-old AIA standard forms of agreement are due in November.

Standard agreements from both ConsensusDOCS and AIA have been written with changing industry technology, such as building information modeling (BIM), in mind.

ConsensusDOCS’ standard-form agreements grapple with some of the stickier aspects of risk. For example, ConsensusDOCS forms require dispute mitigation, mediation and the parties decide at the time of contract signing on whether to use arbitration or litigation as the last resort.

In AIA’s latest version of its A201 agreement, General Conditions for the Contract for Construction, all initial claims are subject to an initial decision by the architect before the parties move to mediation or arbitration.

ConsensusDOCS has another key improvement for subcontractors: the contractor-sub agreement does not re­quire subs to indemnify the contractor, owner, architect or others for all kinds of claims...

 

 

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