Eighty-ninth in a Series—Each issue of this newsletter discusses important terms found in typical construction documents. This month, Construction Fellow Ben Hyden looks at a whole new set of construction documents, the Consensus- DOCS.
Last month, a consortium of 20 construction associations representing owners, contractors, subcontractors, designers, and sureties released what they call the “ConsensusDOCS.” The ConsensusDOCS offer a new catalog of standard form construction contract documents.
As the regular readers of this column know, the construction contract documents define the responsibilities and obligations of the parties during and after a construction project. On construction projects, the Contract Documents generally come in two forms:
- First, they can be an unmodified standard form document, prepared by the AIA, the EJCDC, or another construction-related association.
- Second, they can be—and most frequently are— modified standard form contract documents. These documents are simply the standard form contract documents modified by one of the parties, typically the owner, taking into account the advice of legal and construction professionals.
Even though the AIA and the EJCDC advertise that their contract documents are fair and objective and take into account input from owners, contractors, attorneys, architects and engineers, some construction- related associations were apparently dissatisfied with these documents.
As a result, three years ago, the Associated General Contractors of America invited representatives and associations from throughout the construction industry to collaborate on a catalog of standard form documents. The AGC’s goal was to draft contract documents that focus on the best interests of a construction project, rather than favoring one party or another.
We should note, however, that neither the AIA nor the EJCDC has endorsed the new ConsensusDOCS. Both organizations continue to promote their own documents. In fact, the AIA has announced that it will be releasing its 2007 revisions to its documents on November 5.
The collaboration started with the AGC’s existing contract documents. According to published reports of the development, the key issues included risk allocation, indemnity, consequential damages, liquidated damages, dispute resolution, and payments.
The ConsensusDOCS catalog offers more than 70 standard form construction contracts. Similar to those of the AIA and the EJCDC, the ConsensusDOCS contract document series includes documents to govern the various relationships related to the construction process:
- General Contracting (200 Series);
- Collaborative Documents (300 Series);
- Design-Build (400 Series);
- Construction Management at Risk (500 Series);
- Subcontracting (700 Series); and
- Program Management (800 Series).
The ConsensusDOCS include a new Tri-Party Collaborative Agreement. The owner, designer and contractor will sign this agreement and confer to make project-specific decisions. According to the publicity for these documents, “This LEAN construction approach is also known as alliancing or relational contracting. This innovative agreement creates a core team to make project decisions.” (For more on LEAN construction, see our October 2006 issue, “Lean Scheduling: An Innovation in Construction Scheduling?”)
Further, in an effort to resolve potential claims before they become contentious, the ConsensusDOCS require mediation before litigation or arbitration. The documents also revise bonding requirements and will eventually offer 20 unique documents related to bonds, each designed to cover a specific type of bond, such as performance or payment.
According to the ConsensusDOCS guidebook, the Standard Agreement and General Conditions between Owner and Contractor address issues differently than other standard contract documents do. The ConsensusDOCS guidebook outlines some of the characteristics of the General Conditions as follows:
- It emphasizes the primacy of the Owner- Contractor relationship and focuses on clear communication pathways and positive relationships. The design professional is removed from the dispute process between the Owner and Contractor.
- It clarifies that the Owner is responsible for design and design coordination, while the Contractor is responsible for design elements only if specifically noted. In that situation the Owner should supply all performance and design criteria. The Owner should approve submittals, and the approved submittals become contract documents.
- It defines “overhead” in a more detailed and clear manner to assist in finalizing change orders and the associated costs and to avoid disputes during the course of the project.
- It establishes how electronic information exchanges may be relied upon.
It remains to be seen if the ConsensusDOCS’ unique approach will be successful in practice. Any owner who contemplates using the ConsensusDOCS should keep in mind that the majority of the associations who participated in their development and who have endorsed the ConsensusDOCS appear to be contractor oriented.
An owner should read every ConsensusDOCS provision carefully to determine whether it is in the owner’s best interest to use these contractor-prepared documents versus the documents prepared by the AIA and the EJCDC, which have over 150 years of combined experience preparing and revising construction contract documents for owners.
NOTE: From time to time, this column will comment on specific aspects of the ConsensusDOCS as they come to be used on construction projects and familiarity with them highlights their strengths and weaknesses.