Comparing the Standard Form Design-Build Agreements: AIA, ConsensusDocs & DBIA Agreement Forms. Alison Ashford Patrick J. O Connor, Jr.

Transcription

1 Comparing the Standard Form Design-Build Agreements: AIA, ConsensusDocs & DBIA Agreement Forms Practising Law Institute June 25, 2014 New York, New York Alison Ashford Patrick J. O Connor, Jr. Brian Perlberg 1

2 Documents Compared AIA A Owner/Design-Builder Agreement AIA A Agreement ConsensusDocs 410 Design-Build Agreement & General Conditions Integrated agreement and GCs DBIA Nos. 525 & 535 Owner/Design-Builder Agreement and General Conditions 2

3 Scope of Work (Process) AIA: Owner s Criteria (Art. I) Evaluated by DB (4.2) Preliminary Design (4.3) DB s Proposal (4.4) DB Amendment ( Ex. A) ConsensusDocs: Owner s Program (2.3.18) Evaluated by DB (3.1.1) Schematic + Construction Drawings ( ) GMP Proposal (3.2.1) Acceptance by Owner Amendment #1 (3.2.4) (A list of additional services provided at 3.11 for which a separate agreement is needed unless specifically included in GMP Amendment) DBIA: Basis of Design Documents (Owner s Criteria (1.2.14) + DB s Proposal Deviation List) = Basis of Agreement (2.1) Design Documents prepared after agreement formed (2.4) 3

4 Pricing (Construction) AIA: Menu Approach Design-Build Amendment allows parties to select either (1) stipulated sum; (2) cost of the work + fee; or (3) cost of the work + fee with a Guaranteed Maximum Price (GMP) (A.1.1) ConsensusDocs: Cost of the work + fee with a GMP (alternative CD 415 lump sum to be used with CD 400) DBIA: Lump sum (Art. 6) (Doc. 530 employs a GMP model) 4

5 Design-Builder s Proposal (Substance) AIA: Preliminary Design Documents (including clarifications, assumptions, and deviations from Owner s Criteria) Proposed Contract Sum (including compensation method, which if cost of the work, a breakdown by trade, allowances, contingencies and fee) Substantial Completion Date Qualifications and Exclusions Key Personnel Date proposal expires (4.4.1) 5

6 Design-Builder s Proposal (Substance) (cont.) ConsensusDocs (3.2.2, GMP set by Amendment 1): List of design documents List of allowances List of assumptions and clarifications Date of Substantial Completion Schedules of alternative and unit prices Contingency (3.2.7) Self-performed work Statement of patented/copyright materials Date proposal expires (3.2.2) 6

7 Design-Builder s Proposal (Substance) (cont.) DBIA: The DB Proposal is a part of the Basis of Design Documents which shall include a Deviation List (deviations from Owner s Criteria), if any exist (2.1.2) 7

8 Design-Build Proposal (Status) AIA: Not a Contract Document ConsensusDocs: Not expressly identified as a Contract Document DBIA: A Contract Document (part of Basis of Design Documents) 8

9 State of Design at Time of Pricing AIA: Pre-GMP Amendment (Preliminary Design program functions, site plan, building plans, sections and elevations, structural system, major building systems and outline specifications) (4.3) GMP given after Preliminary Design Post-Amendment Construction Documents (only enumerated design documents are treated as Contract Documents (A.3)) ConsensusDocs: Pre-GMP Amendment (Schematic to Construction Documents, although possible to enter into GMP Amendment prior to Construction Documents (3.1.7 & 3.2.1)) (All design documents at various phases are Contract Documents (15.1)) DBIA: Agreement to Construct entered into at signing. Status of Design is set forth in Basis of Design (Art. 2). Post-Agreement (Interim design submissions, as agreed upon, shall be consistent with Basis of Design Documents (2.4.1); DB shall submit Construction Documents to Owner for approval must be consistent with Basis of Design Documents (2.4.2)) 9

10 Ownership of Design AIA: Those who create Instruments of Service (IOS) own the IOS. Owner receives a limited irrevocable and non-exclusive license to use design for the project (DB obtains similar license from designers); if Owner alters or uses the design without retaining authors then Owner releases and indemnifies DB, architect and authors (Art. 12). ConsensusDocs: Owner receives ownership of all design documents ( ) and parties check box on how to assign copyrights ( ). Owner may use design documents upon termination to complete project ( ) and may use design documents to maintain, renovate or expand project ( ), but at Owner s sole risk if DP is no longer involved. DBIA: DB retains ownership (4.1) and Owner receives either limited license or full ownership (upon selection of alternatives) upon payment (also may use design upon termination for a specified sum (4.3.2)) and any alteration by Owner at its sole risk (4.2) and Owner indemnifies others (4.5). 10

11 Project Financial Info AIA: (7.2.7) Before moving dirt, yes, afterwards must be 1) fails to make a payment; 2) material change 3) reasonable concern that Owner can t pay ConsensusDocs (4.2). DB may request in writing and stop work if not provided. Owner has affirmative right to give notice of material change to financing DBIA. DB may request and stop work if not provided. 11

12 Warranties and Standard of Care for Design AIA: DB warrants the work free from defects (3.1.12). Work includes the design (1.4.3). Warranty may be above standard of care, which is based on local standards. AIA B143 has not such warranty. ConsensusDocs: DB warrants that materials and equipment furnished under the construction phase will be free from defective workmanship (3.8.1). Expressly disclaims U.C.C. warranties (3.8.2). Standard of care is based on national standard for similar projects. DBIA: DB warrants that the construction, including materials and equipment, will be free from defects (2.9.1). DB s design must meet prevailing industry standards. However, Owner has option (Art. 15) to identify specific performance standards that can be objectively measured. 12

13 Indemnification AIA: DB indemnifies Owner (and its agents/employees) from all claims and losses (including attorneys fees) arising out of or resulting from the performance of the work, but only to the extent caused by negligent acts or omissions of DB (architect, consultant or contractor). ( ) ConsensusDocs: DB indemnifies Owner (employees, consultants, members, agents) from claims (including attorneys fees) for bodily injury or property damage other than to the Work itself but only to extent of DB s negligence (subs or others employed by DB). DB entitled to reimbursement for defense costs paid above percentage of liability (11.1.1). A similar indemnity runs from Owner to DB (11.1.2). 13

14 Indemnification (cont.) DBIA: DB indemnifies Owner (employees) against claims and losses (including attorneys fees) for bodily injury or property damage other than to the Work itself to the extent resulting from negligence of DB (design consultants, subs, or others employed by DB) (7.4). A similar indemnity runs from Owner to DB (7.5.1) Other indemnities (patent/copyright, tax claim, payment claim (mechanics liens)) apply (Art. 7). 14

15 Limitation of Liability, Damage Waivers & Liquidated Damages AIA: No general limitation of liability provision. There is a prompt in the DB Amendment for the parties to add language, if they wish, with respect to liquidated damages (A.2.2). Owner and DB (their contractors (includes designers), subs, consultants, agents, etc.) waive rights to extent loss covered by property insurance (B.3.2.7), final payment waivers ( & ), mutual waiver of consequential damages (14.1.7) with exception for any liquidated damages ConsensusDocs: Limited mutual waiver of consequential damages, losses covered by insurance or items specifically listed from either substantial completion or final completion are excluded. No limitation of liability. Parties can specify liquidated damages (6.4). Final payment waivers ( & ), waiver of subrogation (covers designers) for damages covered by property insurance (11.3.3). 15

16 Limitation of Liability, Damage Waivers & Liquidated Damages (cont.) DBIA: Fill in blank for Owner s Liquidated Damages (5.4) (also provides for early completion bonus fill point (5.6)); liquidated damages for DB s damages for delay fill point (5.7). Mutual waiver of consequential damages with exception for liquidated damages (10.5). Final payment waivers (6.7.2 & 6.7.3). Defective work discovered after substantial completion gives no right to withhold funds but treated as warranty work (6.7.4). Waiver of subrogation is provided (5.3.5) and covers designers. Parties can agree to compensate DB for force majeure events (5.7) 16

17 Termination for Convenience AIA: Right afforded to Owner (13.2.4). DB entitled to payment for work executed plus costs incurred by termination. DB also entitled to reasonable overhead and profit on work not executed. ConsensusDocs: Right afforded to Owner (12.3). DB to be paid for completed work, all loss or expense in connection with the work, plus demobilization costs. Parties to agree upon payment to DB for Design Phase and Construction Phase services and a premium based upon timing of termination ( and ). DBIA: Right afforded to Owner (Art. 8). DB to be paid for work completed and termination expenses and reasonable overhead and profit on these items. DB entitled to additional payment as stated percentage of remaining balance of contract price depending upon date of termination. 17

18 Changes AIA: Owner has right to unilaterally require DB to perform changes in the work even if dispute over pricing (6.3). The Owner s Change Directive to be compensated as agreed upon or by Owner s choice if no agreement (6.3.3 to 6.3.7). DB may dispute amount of compensation under Disputes article (6.3.9 and Art. 14). Disputes over whether an item is a change are covered by Art. 14 and DB must proceed with work (14.1.4). ConsensusDocs: Owner has right to unilaterally require DB to proceed with changed work (9.2). If parties disagree on pricing, the cost of the change to be determined by the reasonable actual expense incurred and savings realized in performance of the Work resulting from the change. (9.5.4) Owner pays DB 50% of its actual direct cost to perform the disputed work and both parties reserve rights to dispute item under the Agreement. 18

19 Changes (cont.) DBIA: Owner afforded unilateral right to make changes (Art. 9). DB is entitled to cost reimbursement for change proposals Owner elects not to proceed with (9.1.3). Owner may issue change directive prior to agreement on cost or time (9.2). Disputes over whether an item is a change or over the cost of an admitted change shall be resolved under Disputes article (Art. 10), however DB shall proceed with the work upon Owner s direction but DB entitled to be paid 50% of its reasonable estimated direct cost to perform work and both parties reserve all rights (9.4.3). 19

20 Claims and Disputes AIA: Parties to make election between litigation or arbitration (or other) (1.3). Failure to elect means litigation. Time limit on claims as per applicable law, but in no event later than 10 years after substantial completion (14.1.2). Notice requirements for claims 21 days after occurrence or recognition if before final payment ( ) and upon prompt notice after final payment (if not waived by final payment) ( ). Initial decision on claim is condition precedent to arbitration or litigation (14.3.1). Party waives right to pursue claim if, upon receiving a demand for mediation, it fails to file for mediation within 60 days ( ). 20

21 Claims and Disputes (cont.) ConsensusDocs: Parties select either arbitration or litigation (13.5). No default where election is not made. Arbitration may be AAA or JAMS with AAA the default if no election. Attorneys fees and costs borne by nonprevailing party. Formal dispute resolution to be proceeded by (1) direct discussions (13.2) and (2) mediation (13.4). There is an option for project neutral or Dispute Review Board (13.3). DBIA: Arbitration is the default method of Dispute Resolution (10.3 / 535) but parties are prompted to make election for court adjudication in Article 11 of Doc Parties are first directed to resolve disputes through direct discussions ( and ) and, if unsuccessful, then via AAA mediation (10.2.4). Notice requirements for claims written notice to be provided not more than 21 days after occurrence giving rise to claim or after claiming party reasonably should have recognized event or condition giving rise to claim (10.1). 21

22 Building Information Modeling/Transmission of Electronic Date AIA: Prior to electronic exchange of Instruments of Service or other documents, parties must agree on specific conditions regarding format, limitations and licensing (1.1.12). For digital form, parties must establish necessary protocols governing transmissions (1.1.12) AIA Document E AIA Document G ConsensusDocs: Requires parties to agree to a written protocol governing the exchange of electronic/digital data and which encompasses various minimum requirements (4.9) ConsensusDocs: ConsensusDocs: 301 (BIM Addendum) establishes level of reliance and accuracy of transmissions 22

23 Building Information Modeling/Transmission of Electronic Date DBIA: Parties to agree upon software for transmission of data and protocol for making changes to electronic documents. Standard of care with respect to creation of the data preserved (Article 12). Building Modeling Information Exhibit 23