Construction contracts provide a foundation for project success or, if done wrong, project failure. Updating your contracts is essential. You should evaluate and update your contracts based on the latest technology trends, legal developments, and the insurance market. ConsensusDocs updates its documents more frequently than the American Institute of Architects (AIA). The ConsensusDocs Contract Content Drafting Council (Council) solicits and reviews industry feedback to keep the ConsensusDocs ahead of the curve in identifying and establishing industry best practices. UPDATE: On September 20th, ConsensusDocs published comprehensive revisions to its most used prime and subcontract agreements that address design-bid-build.

Delegated design is when the lead design professional, an architect or engineer, delegates a portion of design responsibility to the builder. Standard construction documents have traditionally addressed this issue in a rudimentary fashion. The updated ConsensusDocs now provide more details and procedures for design development, approval, and design coordination with the overall project design to better address delegated design.

Artificial intelligence or AI is causing significant disruption in the construction industry and our world. However, in the context of construction law, contracts, and risk management, the abbreviation “AI” refers (first and foremost and for purposes of this article) to additional insured (AI). Obtaining coverage as an additional insured is part of the foundation for insurance coverage and legal defense against claims in construction. AI status allows upstream parties to access downstream parties’ insurance coverage directly and request that the insurance carrier provide a defense. This article highlights the importance of appropriately tailoring AI coverage obligations in your contracts and how the ConsensusDocs and the American Institute of Architects (AIA) standard construction contract documents handle this issue differently.

Reaching an agreement on a construction contract that leads to a positive outcome for all parties involved – owner, builder, designer – should be the goal of your contract negotiations. What contract you start with as your foundation and which provisions you prioritize in your negotiations matter. On a webinar hosted by the Association of Corporate Counsel (ACC) entitled The Construction Tool-Kit for the In-House Counsel When Faced with a Construction Contract, Celestina Jimenez, Vice President & General Counsel at RK Industries, gave a brief overview of the three leading publishers of standard documents for construction, identified as the American Institute of Architects (AIA), ConsensusDocs, and the Engineers Joint Contract Documents Committee (EJCDC). She looks to provisions in ConsensusDocs to “come to a middle ground,” as they are “the best written to get to consensus.” Make plans to attend ConsensusDocs’ June 14th webinar on contract negotiation strategies for subcontract agreements. Register here.

ConsensusDocs is holding a webinar entitled What Contractors Need to Prioritize in Their Subcontracts on June 14th. General Contractors and Subcontractors will be able to identify the most important terms to negotiate and how ConsensusDocs addresses each issue by attending this webinar. These priorities include:

An Owner, General Contractor, and Subcontractor Walk into a Contract Negotiation Room and Agree on One Thing: ConsensusDocs is Extremely Helpful

Cost-of-the-work agreements (aka “cost plus” contracts) are commonly used in commercial construction contracting to establish the terms and conditions for a project based on the cost of the work performed.[i] The major families of standard construction contracts include a cost-of-the-work plus overhead and profit in their product offerings. In light of price escalation, supply chain disruptions, and rampant inflation, cost-plus contracts have been identified as a contracting tactic to address price uncertainty that still runs rampant in today’s design and construction industry. ConsensusDocs is offering a webinar that will take a deep dive into cost-of-the-work agreements and factors in evaluating if, how, and when to set a guaranteed maximum price (GMP) on such agreements. You can register for the April 26th webinar here.

The most significant construction cases include claims related to scope gaps, design changes, delay damages, lost productivity, cumulative impacts, and bad administration, according to John Sebastian of the law firm Watt Tieder who was one of three presenters on ConsensusDocs’ recently held a webinar on 10 Risk Management Maxims that Will Change your Approach to Project Delivery. Owner maladministration includes not responding to requests for information (RFIs) in a timely manner, and not responding to time extension requests. “The big cases always have indecision at their root cause. The worst decision is indecision,” Mr. Sebastian said, adding that “indecision in itself is a decision and ultimately becomes a big piece of what litigation disputes fight about.” The ConsensusDocs risk management webinar shared many important lessons learned from the battlefield of construction projects gone wrong that wound up in litigation.

In AGC’s annual survey with FMI, the top risks identified included price increases in materials and equipment, lack of skilled/craft labor as well as lack of field supervisors. While most respondents reported moderately higher or significantly higher backlogs today compared to the end of 2021, 70 percent of them admitted having a low labor force relative to backlog demands. Furthermore, almost 40 percent of survey respondents reported an increase in subcontractor defaults compared to a year ago.

Engineering News-Record (ENR) Magazine recently wrote a thought-provoking article entitled “Will Claims by Contractors on Big Design-Build Projects Ever End?” Progressive design-build is mentioned as a means to address some of the critiques that design-build faces today. Progressive design-build has attracted increasing usage on larger projects, especially horizontal construction.[i] So is progressive design-build (PDB) as good as a PB&J sandwich with the crusts cut off? And if so, what does that mean for standard form contract language around this approach?