The Construction Owners Association of America (COAA) is the largest association of construction owners in the United States. COAA just held its Spring Connect conference in downtown Baltimore on the University of Maryland, Baltimore (UMB) campus. One session featured “What I Love and Hate About Updating My Contracts from an Owners’ Perspective.” ConsensusDocs’ Executive Director & Senior Counsel Brian Perlberg spoke on a panel with Joe Cleves of Taft Law and Pen Wolf from the Cleveland Clinic.

Consensus doesn’t mean unanimity. ConsensusDocs is the first and only broad-based coalition in the United States that publishes standard construction contract documents. ConsensusDocs has existed for over 14 years and has grown to over 40 construction organizations, including the three largest owner organizations in the U.S. One aspect that made consensus possible was allowing each participating organization the opportunity to provide their own individual comments to the standard ConsensusDocs language. This is done through the ConsensusDocs Guidebook. You can access the published ConsensusDocs Guidebook here: https://www.consensusdocs.org/guidebook/.

The AGC annual convention included a session entitled “Who’s on the Hook for Design Defects in Design-Build Projects.” Fox Rothschild’s Dirk Haire, Les Synder of Infrastructure Construction Brightline West, and David Hecker of Kiewit presented. Attendees crowded into a standing-only room because more and more builders are facing design liability, especially design-builders on large infrastructure projects. The presentation highlighted how some owners abuse the submittal process on design-build jobs to make changes without compensating the builder with more time, money, or both. One project took a sample of owner comments and extrapolated that just one project generated over 15,000 submittals and generated over 110,000 comments of “concern” or “preference.”

Michigan State University (MSU) is a forward-thinking public owner that uses ConsensusDocs standard construction contracts as the basis for its projects. At the Associated General Contractors of America (AGC) annual conference held in Grapevine, Texas, MSU's STEM Teaching and Learning Facility was considered “the most significant construction project of 2021” by AGC. Granger Construction Company was the Construction Manager and a signatory party on the ConsensusDocs 500 contract. Granger received the association's top prize, Construction Risk Partners Build America Grand Award, and the award for the best construction management renovation project under $99 million.

In construction, alternative project delivery methods typically refer to design-build, construction management at-risk (CM@R or CMAR), and integrated project delivery (IPD). Design-build and CM@R have been commonly used for so long that it seems strange to call them “alternatives.” IPD and design-build are more written about as a subject matter. However, CM@R is just as popular as ever, and some practitioners see CM@R as the project delivery method that delivers project schedule towards completion the fastest. Experienced practitioners of CM@R like the ability to commence construction before all the design details for the entire project are determined. In Iowa, both chambers of the legislative body recently approved legislation, Senate Bill 183, that expands the authorization to use CM@R on public projects and explicitly disallows design-build for public projects. This would make Iowa one of two states banning design-build for all public projects joining North Dakota.

IPD represents a small share of project delivery methods used in the United States, but there are advantages. Lean construction works most efficiently with an IPD agreement providing the contractual framework to collaborate. A highlight recent study concluded that the business case for lean construction is compelling. A recent AGC webinar outlining the study can be accessed here.

In a favorable decision issued March 11, the TN Court of Appeals agreed with AGC of America and AGC of Tennessee that a subcontractor cannot sue a general contractor on one and the same set of facts for not only breach of contract (seeking to recover its purely economic losses) but also in tort for misrepresentation (seeking compensatory and punitive damages). The court of appeals ruled that the subcontractor’s ability to recover monetary damages was limited by its contract with the general contractor. As such, the court vacated the lower court’s award of punitive damages because they were not permitted under the contract.

ConsensusDocs recently presented a webinar entitled “Contract Killer Clauses and How to Negotiate Out of the Them.” Rather than the party that is in the best position to manage and mitigate risk, construction contracts often shove risk down the throat of the weakest party in the contractual negotiation chain. This is not effective risk management. Studies indicate that contract amount may increase up to 20% to account for just the top five most abused construction contract provisions.

Good legal writing is simply good writing. Construction contracts written in legalese confuse rather than clarify performance expectations. “Gotcha clauses” buried in a contract leads parties to distrust one another. ConsensusDocs standard construction agreements are written in clear and concise language. This helps the parties understand, administer, and interpret the contract. One distinguishing feature in ConsensusDocs is the integration of the general terms and conditions into the agreement. This allows parties to complete an agreement with one document instead of two, which has many benefits.