Does your designer contract have provisions in it for additional compensation in the event the construction project takes longer than the parties anticipate? If you use the AIA 201 (2007) general conditions for the Contractor, it may. The AIA provisions include:
§ 1.1.2 THE CONTRACT
The Contract Documents form the Contract for Construction. The Contract represents the entire and integrated agreement between the parties hereto and supersedes prior negotiations, representations or agreements, either written or oral. The Contract may be amended or modified only by a Modification. The Contract Documents shall not be construed to create a contractual relationship of any kind (1) between the Contractor and the Architect or the Architect’s consultants, (2) between the Owner and a Subcontractor or a Sub-subcontractor, (3) between the Owner and the Architect or the Architect’s consultants or (4) between any persons or entities other than the Owner and the Contractor. The Architect shall, however, be entitled to performance and enforcement of obligations under the Contract intended to facilitate performance of the Architect’s duties.
The language that I bolded is very important language. It may provide a mechanism to recoup additional service fees for extended construction administration services. Note, however, that I said “may.”
If your fees are based on a set number of construction days, what happens if the project gets extended? Do you simply go without pay for extra months of CA services? Do you re-negotiate with the Owner at that time? You should consider this issue in advance to avoid disputes later on.
Best practice? A clause in the Owner-Designer contract that states that additional services compensation will kick in after a certain date, at a set value per month.
If you wait until the issue comes up during the final phase of construction, you have much less bargaining power. You also run the risk of the Owner claiming errors and omissions against you when you present a bill for extra services. Deal with the issue up front, in much the same way that unit prices for rock overages are provided for upfront in the contractor’s contract.
Do you have experience with getting additional compensation after construction delays? What worked best for your company? Share below.
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“The best time to plant a tree was 20 years ago. The next best time is now.” ~Chinese Proverb
If you haven’t yet acted to streamline your contracts and your new client procedures, do so now. Unless, that is, you like spending time with your lawyer. Lawsuits take time and money. Avoid them (and your lawyer) through good risk avoidance practices.
Last year I wrote a post on 6 Ways to Limit Risk through effective use of contracts on your Projects. Included in that list were such tips as:
- Always, always, always use a contract for each new project. (Verbal agreements are very hard to prove in Court). Without a written contract, you are trusting yourself to laws you may not agree with or giving up valuable protections.
- Get your contract reviewed by your insurance carrier. Insurance check-ups through your agent or broker are usually free. Why risk it?
- Have your contract reviewed by your attorney. ( I happen to know someone who does this regularly for her clients.)
- Establish a new client protocol. Make sure all new clients sign proposal or engagement letters. Document now; worry less later.
These are all extremely important ways to minimize your risk. Of course, if you are reading this blog, I recognize that I am probably preaching to the choir. But it is worth repeating. Just do it.
Do you have procedures that minimize your company’s risk? Tell me in the comment section, below, what has worked for you.
If you need help creating or revising your contracts or client protocols, drop me an email at email@example.com.
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Are you being asked to sign contracts that are prepared by the Owner? If so, do you have a policy in place to have each such contract, Master Agreement, or Statement of Work be reviewed by your attorney? You should. An ounce of caution is worth a pound of cure, as they say.
One of the most important contract terms to review in any contract is the indemnity provision. I’ve discussed how indemnity provisions work in the past. If you haven’t already read that post- do it now. (Go ahead, I’ll wait).
Today, I want to address indemnity in the context of non-form contracts presented to you by an Owner for execution. Generally these are presented with no expected negotiation on your part. Remember, however, that everything can be negotiated. A few small changes up front can save you lots of time and expense later if there is ever a lawsuit.
Because these contracts are drafted by the Owner (or, rather, his
horribly biased zealous attorney), they tend to be overreaching and broad. Recent contracts I have reviewed ask the architect to indemnify the owner for the design team’s negligence, “regardless of whether or not other parties are also negligent.” That phrase is very troubling, and should be stricken. Otherwise, the Owner will have an argument that because the design team was negligent, they must indemnify the Owner for all negligent acts (other than the Owner’s own negligence), including those by other parties.
A better, proportional indemnification provision should include indemnification “to the extent the claim is found to be caused by the negligence of the design team.” (Even better, of course, would be a limitation of liability based on your design fees, but I recognize that it is often impossible to negotiate such a limitation with some
blood-sucking sophisticated Owners.)
Do you have comments about indemnity provisions in contracts you have been asked to sign? Drop me a note in the comment section, below.
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Wouldn’t it be nice to have a handy resource of “green” builders, tradesmen, and material suppliers when you are designing your next project or writing your next set of specifications? Check out the Western North Carolina Green Building Directory, where you’ll find all this and more.
And, if you are a green architect, engineer, or designer, you can add yourself to the directory if you are a member of the Western NC Green Building Council.
Know of a resource for design professionals? Drop me a line and I’ll feature it in an upcoming “Tuesday Tip.” And, sign up for email delivery of all blog posts to your inbox (through the subscription box at the top of the page) so you’ll never miss out on practice tips!
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From time to time I get notices of conferences, webinars, and teleseminars that relate to construction professionals. I try to pass as many of the worthwhile ones along as I can, so you know what events are available. Today, I have a “two-fer”: a telephone marketing training aimed at Engineers, and a green building program aimed at Architects.
Up first, who doesn’t like FREE? On April 16th and April 26th, at 8pm ET, Anthony Fasano, P.E., LEED AP, ACC, author of Engineer Your Own Success, is hosting a Teleconference. The program is called “7 Steps to Building LinkedIn Relationships that Will Help You Advance Your Career“, and it is aimed at helping Engineers build their career through LinkedIn. While the program is free, you must pre-register. If you pre-register and cannot attend live, the recording will be available for 48 hours after the call in time.
Next, the Greenbulidingfocus Conference & Expo 2011 will be held in Charlotte, North Carolina. This “green building” event is held at the Charlotte Convention Center on April 20th and 21st. All tracks carry CEUs. FREE PASSES are available for out of work architects- contact AIA Charlotte for details.
Sign up now for email delivery of my blog posts so you never miss out on any of these opportunities. And, if you know of a conference, webinar, or event that readers of this blog might find useful, drop me an email.
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