Contract Change #8: Direct Communications between Owners and Contractors (law note)

talking headsContinuing our 10 part series on Changes to the General Conditions of the Contract (AIA 201) [for the previous post, click here], Change #8 has to do with direct communications between the Owner and the Contractor.

As the Engineer or Architect of Record, you probably have frequently experienced Owners and Contractors communicating directly, in direct contravention of the language of the contract that requires them to endeavor to route all communications through the design team.  With the latest version of the 201, direct communication is now authorized, to recognize both the reality of what was happening on the ground and to recognize that sometimes Owners and Contractors may need to communicate without waiting for the design team.

In the new Section 4.2.4, Owners & Contractors are only required to include the Architect in communications that relate to the professional services of the design team.  HOWEVER, the Owner is required to promptly notify the Architect of the substance of any such direct communication.  The Owner-Architect agreement has been changed as well, to make it consistent with this new AIA 201 procedure.

Is this a good change?  Honestly, the verdict is out on that one (pun intended).  It may prove very helpful in keeping a project on track when the Architect is not regularly on-site.  However, the parties run the risk that they may make decisions that do effect the design team, without design team input.  Be cautious, and make sure the Owner *does* keep you informed.

Up tomorrow, Change #7– Contractor’s Means & Methods.

Contract Change #9: Owner’s Right to Carry Out the Work (law note)

construction workerChange # 9 to the AIA A201 General Conditions has to deal with the Owner’s Right to Carry Out the Work.  [Click here for the previous post on AIA Contract Changes.]

In prior versions of the General Conditions, if a contractor defaulted and the Owner (after giving notice) opted to cure by carrying out the work itself, an appropriate Change Order would be issued.  However, a Change Order is a contract that requires an agreement by both the Owner and Contractor, and, obviously, Contractors were reluctant to agree that they were in default and responsible for a deductive change order.

The new Section 2.5 allows the Owner to carry out the work if the Architect approves, without a signed change order.  Instead, the Architect can withhold or nullify a payment to the Contractor (under Section 9.5.1) to reimburse the Owner for the work carried out.

If the Contractor disagrees with the actions of the Owner or the Architect, or the amounts claimed as costs to the Owner, the Contractor can institute a Claim under the Claims section (Article 15) of the 201.

Up tomorrow, Change #8– Direct Communications on the Construction Project.

Contract Change # 10:   Differing Site Conditions (law note)

mud slide site conditionsAs promised in my note yesterday, today begins the first in a 10 part series on the most significant changes to the AIA A201, General Conditions to the Contract.

I’ll take the changes in reverse order, a la David Letterman…..

Change #10:  Differing Site Conditions

Previously, the A201 required a Contractor to provide notice to the Owner and Architect within 21 days after discovery of unforeseen site conditions.  This notification is required prior to the conditions being disturbed, so as to allow the Design Team the ability to evaluate the site and determine the compensability of any such differing conditions.

The requirement has been shortened to 14 days — that is, under the 2017 version, a Contractor must give the notification within 14 days of discovery.   See Section 3.7.4.

This is a small contract adjustment, but could prove substantially deprive a contractor of potential additional sums if caught unawares.  As the Architect or Engineer of Record, you should also be aware of this new 14 day requirement, which is a week shorter than most AIA deadlines.

Stay tuned for Change # 9, dealing with the Owner’s Right to Carry Out the Work, in the next post.

 

Photo courtesy NPS.

 

Like Death and Taxes, AIA Contract Changes are a Sure Thing! (law note)

AIA Contract ChangesLike death & taxes, you can count on the American Institute of Architects (AIA) to regularly update their standard form construction contracts.  Most such forms are updated every 10 years, and 2017 was no exception.

In the 2017 version, the changes are “evolutionary, not revolutionary”, according to AIA Managing Director and Counsel, Kenneth W. Cobleigh.  Ken and I both recently spoke at the North Carolina Bar Association’s Construction Law Forum on various AIA changes.

Over the course of the next two weeks, I’ll be presenting a 10 Part Series on the Top 10 Changes that you need to know about the AIA A201 General Conditions.

Stay tuned for Part 1, on Differing Site Conditions, which will be posted tomorrow morning.

 

Picture adapted from Investment Zen, with thanks.

Do I really need my own lawyer if the insurer is giving me one? (law note; tip)

Several readers have reached out to me about my post on getting a Reservation of Rights letter with comments and questions.  The most common refrain has been something along the lines of: “Do I really have to hire my own lawyer after paying insurance premiums just because I got one of those pesky ROR letters?”

not break bankThe short answer is that you do not *have* to hire your own lawyer.  But, it can be very useful.  And, it can be done economically so you don’t have to break the piggy bank.  You see, if you hire your own lawyer, they can be “back up” and simply monitor the lawsuit, while the insurance-retained lawyer does the yeoman’s work.  That way, if the insurance carrier begins to make noise about filing a declaratory judgment to deny the claim, you have your own lawyer already in place, knowledgeable about what’s happened in the case from the get-go.  But if the insurance company never “pulls the trigger” on denying the claim, then your private lawyer’s involvement (and bill) will be minimal.

Is there still a cost associated with having your own private lawyer involved?  Of course.  But the costs can be small, while still giving you protection should you need it down the road.  Think of it as just one more safety mechanism for your Firm.

I’ve been on both sides of the lawyer role– I’ve served as the private lawyer, and I’ve served as the insurance-retained lawyer.  Either way, it is a very workable solution with some very real benefits for the design community.

Have you retained your own lawyer in a “ROR” situation?  Share in the comment section below, or drop me an email.

Photo (c) TaxRebate via Creative Commons, with alterations