contracting between design professionals: and how consensusdocs contracts...
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Contracting Between Design Professionals: And How
ConsensusDocs Contracts Can Help
CSI Member Exclusive Webinar
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The Construction Specifications Institute is a RegisteredProvider with The American Institute of ArchitectsContinuing Education Systems. Credit earned on completionof this program will be reported to CES Records for AIAmembers. Certificates of Completion for non-AIA membersavailable on request.
This program is registered with the AIA/CES for continuingprofessional education. As such, it does not include contentthat may be deemed or construed to be an approval orendorsement by the AIA of any material of construction orany method or manner of handling, using, distributing, ordealing in any material or product. Questions related tospecific materials, methods, and services will be addressedat the conclusion of this presentation.
AIA
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Contracting Between Design Professionals: And How ConsensusDocs Contracts Can Help
Speakers: Charlie RogersPartner ‐ Smith, Currie & Hancock LLP, Atlanta, [email protected]
Charles VantinePartner ‐ Dentons US LLP, St. Louis, MO 314 259 5846 [email protected]
ModeratorBrian Perlberg Executive Director, [email protected]
www.ConsensusDOCS.org
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Learning Objectives:
Identify and discuss best practices for contacting between a responsible design professional and a subcontracting consultant design professional
Understand how the new ConsensusDocs 250 Standard Design Professional to Consultant Agreement addresses the unique risk management issues confronting contracting design professionals
Identify and understand keys contractual clauses design professionals and consultants should discuss and consider using to address their unique project and business needs.
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Einstein’s Rule for Construction Contracts“…the definition of INSANITY is doing the same thing, over and over again, and expecting different results.”
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How Consensus was Reached
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Why Consensus is Needed in Construction Contracts
Perception of Bias Standard form agreement favors interests of individual drafting association
Modifications exceed the original “standard form”
Parties try to push risk away rather manage it
Industry trending towards collaboration
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The ConsensusDocs Coalition40 Leading Construction Industry Associations
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ConsensusDocs Library of 100+ Documents 200 Series: General Contracting
222 (Quals), 240 (DP Long), 245 (DP short) 300 Series: IPD/Collaborative
300, 301, 310 400 Series: Design‐Build
420, 422, 499 JV 500 Series: Construction Management 700 Series: Subcontracting 800 Series: Program Management
803; Commissioning
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ConsensusDocs 250 Overview
Standard agreement for use by prime "Design Professional" and design "Consultant" ("250").
Purpose Fair allocation of risk Consistent with CD agreements Flow‐down the requirements imposed upon the prime
Working Group Project Team Volunteers from CD orgs. and practicing attorneys
Led by: Charlie Rogers, Charlie Vantine and Mike Lapicola.
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Unique Issues Facing Relationship Competing Owner & Design Professional (DP) interests for design costs & oversight
Redesign issues impacted by prime agreement + design changes/modifications
Time on site/supervision/review of submittals/etc. – Need for contract administration by Consultant for Consultant’s scope
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Predominant Issues Arising Between Design Professionals Flow‐Down Provision (Section 1.1) Priority of Agreements (1.1) Scope/Proposal (1.2) Insurance (Article 4) Cost Estimates (6.2.2) Submittals, etc. (6.3.1‐6.3.4) Site Visits/Project Oversight (6.3.5‐6.3.8) Additional Services (6.4) Indemnity (8.2) & (10) Payments; Pay‐When(if?)‐Paid (9) Consequential Damages (11) Termination (12) Disputes/Multi‐Party Dispute Resolution (13) Ownership of Instruments of Service and Other Documents (14) Strive for consistency with Consensus Docs 240 and 245
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Consistency Between Prime & Consultant Agreements Intent of Working Group was:
Consistency in using terms Concise and Flexible (use either long form 240 or short form 245 owner/design professional agreement)
Flow Down Prime Agreement provisions as controlling Eliminate Gaps
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Prime Agreement Flow‐Down § 1.1
Consistency in Documents! Explicit Flow Down to Consultant What to leave out Seamless and non‐conflicting provisions Avoid promising what one cannot deliver
However, NO FLOW‐DOWN is FOOL‐PROOF! Negotiated concessions to Owner may be problematic to Consultant vis‐à‐vis relationship with DP
Carefully negotiated terms in DP/Consultant agreement
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Priority of Contract Documents §1.1
What if… Conflict between Prime and Consultant Agreement?
Which agreement should Govern? Both routes have their own issues?
Consultant Agreement (250) has priority if there is a conflict since both parties signed Priority of Prime Agreement should be negotiated, not default
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Scope – §1.1 ‐ 1.2 Incorporate C’s proposals or NOT to incorporate?
Difficult to decide Upstream v. downstream perspective End goal
Make contracting easier; AND Clarify intent/interpretation/supremacy issues.
Best practices: Spend some time identifying inconsistencies in proposal and agreement and modify accordingly.
Proposal helps establish specific details of scope
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Scope – §. 1.1‐1.2, Cont.
“However, the Consultant’s proposal shall not be considered to vary, modify, contradict, amend, supplement or interpret the terms and conditions of this Agreement other than the description of services contained in Article 6, and any conflict between the Consultant’s proposal and this Agreement outside of that limited context shall be resolved in favor of the terms and conditions of this Agreement, which supersede the proposal and all prior negotiations, estimates, representations or agreements, either written or oral.”
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Insurance – Article 4 Who has what covered? Check for Consistency with requirements of Prime:
Coverages; Limits; Subrogation; Other Requirements
Best Practices: NO GAPs to protect BOTH DP & Consultant.
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Cost Estimates Consultant… any obligations?
IF included in Prime Agreement, Consultant shall likewise undertake those obligations (Sec 6.2.2): Assist in preparation, review and approval Provide cost estimates relative to Consultant's scope of work
Redesign to keep within Owner’s stated cost objective or cost parameters? Yes ‐ but with a compromise
If within "X"%....no additional obligation of Consultant absent additional compensation.
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Scope of Service – Consultant Obligations for Submittals, Etc. Consultant shall (sections 6.3.1‐.3.4):
Provide interpretation and clarification as requested (including providing responses to RFI's);
Review Submittals within 5‐7 days; Assist DP with requests for CO's; and Assist DP in Pay App review Provisions intended to ensure consistency with DP’s obligations in Prime.
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To Be or Not to Be . . . On‐Site? Ambiguity will burn one or the other
Conduct project specific assessment of need; encourage express agreement on number of site visits for both oversight/administration of the construction contract and project meetings should prevent: DP from getting bill for Additional Services that were not anticipated (and may not be paid by Owner); and
Consultant from being left holding the bag for additional site visits not in Consultant's estimate for time & cost
Best Practice: Transparency benefits both DP & Consultant.
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“Who” is on First? (Sec. 6.3.5 ‐ 6.3.8) 6.3.5 The Consultant shall visit the worksite no less than [__] ([__]) times, or pursuant
to such schedule established in Exhibit D to this Agreement, to become generally familiar with the quality of the Constructor's work related to Consultant’s scope of services and to determine in general whether the Constructor's work is proceeding in accordance with the Construction Documents prepared by Consultant. The Consultant shall not be responsible for ensuring that the Constructor's work is in accordance with the Construction Documents, but shall make a report to the Design Professional after each worksite visit.
6.3.6 The Consultant shall attend up to [___] ([__]) Project meetingswith the Design Professional, Owner and Constructor, or, if requested by the Design Professional, with the Owner and Constructor. Consultant shall prepare and furnish to Design Professional written minutes or a report of the substance of any meetings attended by the Consultant but not the Design Professional.
6.3.7 The Consultant shall assist the Design Professional and Owner in conducting up to [_____]([__]) inspections to determine date or dates of the Constructor's Substantial Completion of the Constructor's work; and up to [____] ([__]) inspections to determine the Constructor's final completion of its work.
6.3.8 The Consultant shall make up to [___] ([__]) visits to the worksite during the Constructor's one‐year correction period to assist the Design Professional and Owner in evaluating the need for corrective measures.
[Emphasis Added to Each]
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Additional Services – Sec. 6.4 Express exclusion of certain services from base scope results in those services being “additional” when required
Unique approach to dealing with the always anticipated need for the performance of services outside of base scope: Get it Writing Ahead of Time: (a) Typical component ‐ written authorization required:
Consultant shall not proceed with the performance of Additional Services absent written authorization from the Design Professional, which shall not be unreasonably withheld where Additional Services represent an increase in or departure from the scope of the Consultant Services. [emphasis added]
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Additional Services –§. 6.4 Cont. (b) Unique component ‐ Emergency Services:
However, in the event Consultant reasonably believes that Additional Services are necessary for compliance with the standard of care, or to ensure compliance with scheduling requirements of the Project…Consultant shall have the right to negotiate compensation for such Additional Services even if provided in advance of Design Professional’s written authorization. Such Additional Services shall be referred to as Emergency Services…. If Design Professional has properly and timely objected to the proposed Emergency Service as set forth herein, and the Parties are unable to resolve their disagreement, the matter shall be reserved for resolution pursuant to Article 13. Except as otherwise provided for in this section for Emergency Services, Consultant shall not be entitled to compensation for Additional Services absent Design Professional’s written authorization or consent. [emphasis added]
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Indemnity Upstream indemnity for delay‐related damages, which are almost always included in Prime Agreements (Sec 8.2)
General indemnity (Art. 10) ‐ Considerations: Limitation in General Indemnity (negligence based, property/personal injury limitations);
Consideration of Anti‐Indemnity Laws ( differs in various jurisdictions);
Broader, more specific indemnity for delays Best Practices:
Negotiate Specific indemnity provisions based on specific agreements;
Indemnity should be neither broader nor narrower than DP's upstream obligations
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Article 9 ‐ Payment “Pay‐if‐Paid” and “Pay‐When‐Paid” . . . Is there a difference? Maybe . . . Requirement that DP receive payment from Owner prior to obligation to pay Consultant could be construed as “pay‐when‐paid”; but: Some jurisdictions require specific language to enforce “pay‐when‐
paid” provisions, but never enforce “pay‐if‐paid” provisions No express “magic” language required for other jurisdictions for
either “pay‐if‐paid” or “pay‐when‐paid” Some jurisdictions do not enforce either type of provision
Practice Pointer: Negotiate and insert modifications to be consistent with applicable jurisdictional law
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Consequential Damages (Art. 11) Waiver, Limited Waiver and No Waiver Owner, DP, & Consultant have Differing Views:
Compromise position: 1. Limited Waiver; 2. Excludes losses covered by insurance; and 3. Excludes specific damage items enumerated by the parties
Best Practice: Critical to have consequential damages provisions consistent from DP perspective ‐ otherwise could get caught being responsible to Owner w/o recourse against Consultant (particularly given standard indemnity).
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Termination (Art. 12) Mutual Termination "For Cause" Provision.
“Material breach" with "no fault" of initiating Party DP can terminate "Without Cause" Consultant entitled to:
Payment for services performed through date of termination
Costs of termination (these should be specifically negotiated and identified if possible)
Premium $$$ No reciprocal right for Consultant to terminate without cause – b/c this would leave DP damaged.
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Dispute Resolution (Art. 13) Direct Discussions AAA Mediation as "Condition Precedent" Option of:
Arbitration Litigation
Multiparty proceeding Addressed b/c nature of construction disputes is that they touch more than one entity's scope
Same proceeding OR same arbitration panel or court
Prevailing party attorney's fees.
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Ownership of Documents (Art. 14) Ownership v. License for Owner’s use of Consultant’s Instruments of Service and other Property Rights? Committee ultimately determined that ownership provides fewer potential issues relative to Owner's use
Takes into account Prime Agreement Excepts Copyrights
Ownership commences upon "final payment" Hotly debated "final payment" v. payment of "undisputed amounts"
DP has obligation to ensure defense & indemnity for improper use of documents.
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Final Agreement? ConsensusDocs 250! Fair allocation of risk
Provides best opportunity for consistency with Prime Agreement
Simple to use
Integration of best practices.
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ConsensusDocs 250Standard DP/Consultant Agreement
Samples, Articles, Purchase atwww.ConsensusDocs.org
Speakers: Charlie RogersPartner ‐ Smith, Currie & Hancock LLP, Atlanta, [email protected]
Charles VantinePartner ‐ Dentons US LLP, St. Louis, MO 314 259 5846 [email protected]
ModeratorBrian Perlberg Executive Director, [email protected]
QUESTIONS? 34
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