A New Age of Consensus?
AWCI's Construction Dimensions January 1, 2008
"Can't we all just get along?" -Rodney King
These frustrated words, issued as a result of the 1992 riots in Los Angeles, may also have some application to the construction industry. For too long, the industry has been driven by conflict that begins when the owner puts one-sided contract documents out for bid, the contractor sends at least one, if not more, one-sided document to the subcontractor, and so forth, all the way down the "construction food chain." It has been a lot easier to draft unfair, risk shifting contract language, than it has been to seek cooperation and fair terms from the construction team to ensure a timely project, on budget and with a fair profit for those doing the work.
While trade association forms have traditionally been less onerous than proprietary contract forms, each group publishing the form has had its own member's best interests in mind, and often little else.
This was the situation in the industry when many of the major construction trade associations, including groups as diverse as Associated General Contractors of America and the American Subcontractors Association, got together with other associations (representing owner, contractor, surety and subcontractor interests) in a collaborative process that has culminated in the ConsensusDOCS.
The ConsensusDOCS offer an alternative to unfair risk shifting and reflect "best practices" and appropriate risk allocation. The ConsensusDOCS family of documents offers more than 70 documents dealing with General Contracting (200 Series); Collaborative Documents (300 Series); Design-Build (400 Series); Construction Manager at Risk (500 Series); Subcontracting (700 Series) and Project Management (800 Series).
They have been endorsed by more than two dozen of the leading construction associations in this country including the ASA, Association Builders & Contractors, AGC, Associated Specialty Contractors, Association of the Wall and Ceiling Industry, Construction Owners Association of America, Construction Industry Roundtable, National Association of State Facilities Administrators, National Association of Surety Bond Producers and Surety and Fidelity Association of America.
This historic alignment has not gone unnoticed by the industry. Engineering News-Record, in its Sept. 24, 2007, cover story, said that the "New Standard Forms Seek Unity on Fairness" and in its editorial that the "New Consensus Standard Documents Should Be Exciting." It is indeed exciting to have so many diverse groups agreeing to fair documents reflecting best practices, not the lowest common denominator or simply a form that protects its own members at the expense of others.
The ConsensusDOC 750 Subcontract contains these key elements:
- Sub is entitled to payment within seven days after the contractor is paid. "Pay when paid."
- When the sub is not timely paid, the sub may stop work.
- Conflicts between documents are construed in favor of the subcontract terms.
- Indemnification is limited to the sub's negligence. 111 Review of plans/specs does not imply constructability.
- Unconditional lien waivers are prohibited.
- LDs are limited to the sub's actual responsibility.
- Arbitration must take place where the project is located.
- Sub is not required to indemnify the contractor's willful and repeated safety violations.
- Additional Insured is not mandated.
Largely out of a concern about the "additional insured" mandate inserted for the first time in the 2007 edition of the AIA A401 Subcontract, ASA decided not to endorse the newly issued edition of AIA's Subcontract. Subcontractors continue to believe that it is inequitable to force a subcontractor (and its insurance carrier) to bear a loss (and higher premiums) when a contractor or owner causes a loss.
Hopefully, the ConsensusDOCS issue in a new era of collaboration and consensus to a challenging industry, by encouraging all to manage the risk they control in a cooperative way with all members of the construction team. The ConsensusDOCS are an important tool available to advance the cause.
More information concerning ConsensusDOCS can be found at www.consensusdocs.org.