Tag Archives: design professional

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

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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)

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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)

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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.

Agree to use your “professional best” ? You may lose insurance coverage! (law note)

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mistakesYesterday, I was part of a panel at the NC Bar Association Construction Law Winter Meeting, discussing insurance issues for design professionals.

One topic we touched on was how to avoid invalidating your insurance.  As most of you know, Errors & Omissions insurance (“E&O” coverage)  is meant to provide coverage for mistakes you may make in performing your professional architecture or engineering services.  E&O coverage is important to protect you in the event of a lawsuit because, as you know, no set of plans is perfect (nor is perfection the standard of care).

Be careful, though.  Do not promise to provide a higher standard of care than the “professional standard“.

If you are asked to sign a contract that states you will use your “professional best,” “best efforts”, “highest care” or similar, you are being asked to sign something that could cost you your E&O coverage.

Examples of such language:

[Architect] [Engineer] shall perform the Services in accordance with the highest standards of professional competence in the industry.

[Architect] [Engineer] shall exercise a high degree of care and diligence in providing the professional services.

Architect’s] [Engineer’s] services shall be of first class quality and free from defects.

E&O policies cover you for failing to meet professional standards, but not in cases where you agree by contract to provide a higher/better/best standard. 

Explain the risks in such language to your owner clients.  No owner will want to put your insurance policy in jeopardy, and they should be willing to strike or modify that language to ensure that your work on the construction project is fully protected and covered by your E&O policy.

Some examples of coverable standards:

All services to be performed shall be performed in a manner consistent with that level of care and skill ordinarily exercised by members of Designer’s profession.

All services shall be performed in a manner consistent with that level of care and skill ordinarily exercised by members of Designer’s profession currently practicing in the location of the project for which the services are rendered, or similar locations.

Remember this, and make sure your future construction contracts contain favorable language that will actually be insurable.  You know– the whole reason you have professional liability insurance in the first place!

Have you ever been asked to agree to provide your best efforts?  How did you handle the situation?  Share in the space below.

Orders of Precedence in Construction Contracts, and the conflict between architects and contractors

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duking it outA few years back, we discussed the Orders of Precedence clause in Construction Contracts.  I wrote a post talking about how having such a clause in a contract can help the parties navigate in the grey areas where specifications and drawings may disagree.

My post generated a follow up guest post from Phil Kabza, a MasterSpec specialist, on what he saw as the problems with an order of precedence clause in truly protecting all parties to the contract.

This week, Phil’s guest post generated a new, and thought-provoking (flame-provoking?) comment from “Joe GC”.  Joe writes:

It is another very typical situation of the Architect and Engineer doing a poor job and then trying to seek relief of their error at the contractors expense. Phil’s comments are based on the fact that all contractors are not ethical, which is simply not true. If the subcontractor is the expert, then why are the drawings and specifications prepared by Architect’s and Engineer?

This is exactly why Design Build delivery methods are becoming more popular by the day.   Single source responsibility from someone who really is an expert, not someone who has a lot of education and therefore purports to be an expert.

In otherwords in laymen’s terms “If I have to verify everything you draw and specify Mr. Architect, then why do I need you in the process at all”? If you are not responsible for the review of the submittals then why do I need to send them to you? No more “approved” stamps just “reviewed” stamps; it’s becoming a joke!

When will the Design Community wake up? That is why so many Architects and Engineers are now finding themselves working for contractors.  You are responsible for the Design Mr. Architect, it is cut and dry, simple as that, not rocket science and you do not need to be AIA or P.E. to understand it.

AIA needs to do more training, especially when it comes to spending time in the field. They need to understand what they are designing, just as the contractor needs to understand what he is building.  They have never seen it that way because they think they are above the contractor or smarter than the contractor.

Until they learn they are not better or smarter because of classroom education things will not be improving and the lawyers will continue to be the most successful.

 

Interesting perspective as to why Design Build is becoming more popular.  I think Joe is correct that Design Build is more popular now, but I think it has less to do with concerns about design professionals avoiding liability and more to do with the economic value in having the “buck stopping” at one single entity.

Is there a perception that designers are classroom educated but not field trained?  Is it a fair one?  Share YOUR thoughts with Joe and me, below.