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.
The $1.2 trillion bipartisan Infrastructure and Jobs Act (IIJA) included the “Build America, Buy America Act” which applies a domestic preference to all taxpayer-funded infrastructure projects. The Office of Management and Budget released new guidance on these rules on April 18th, 2022. The new guidelines are meant to assist federal agencies in the application of “Buy America” requirements and the waiver processes for all federally funded infrastructure projects and not just those funded by the IIJA. The requirements are currently set to be in effect starting May 14th.
Construction Official Says New Guidance will Undermine New Bipartisan Infrastructure Measure’s Benefits, Adds the Kind of Red Tape that Betrays Americans’ Confidence in Federal Spending
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.
While traditional contracting or design-bid-build is still the most prevalent project delivery method in the United States construction market, the design-build project delivery method has risen in usage significantly over the past 20 years to become a well-established contracting vehicle by private and public owners alike for all types and sizes of construction projects. The ConsensusDocs design-build standard contract documents are some of the most used in the United States. A comparison of the ConsensusDocs design-build contracts as compared to the American Institute of Architects (AIA) and Design-Build Institute of America (DBIA) can be found here.
At the recent AGC conference, one of the concerns that stood out is the design liability faced by construction companies. It is one of the most important risk management issues faced by general contractors today. Design liability concerns are not limited to just design-build projects. It is a hot-button issue for builders because the line between an architect’s responsibility to create sufficient design documents and a builder’s responsibility to execute the means, methods, and techniques is increasingly blurry. Problems arise when owners, design professionals, and builders point fingers, rather than truly collaborate, and communicate. While construction technologies used to assemble complex systems within buildings are increasingly sophisticated, such sophistication is unfortunately not matched with increased information sharing and effective communication.