CONSTRUCTION LAW

 

One of the most important aspects of starting a business is deciding where to locate the business. Once the “where” question is decided, there are many other decisions regarding the physical facilities that must be made including whether to lease, buy, or build your office.

 

Regardless of whether the decision is to lease or buy, the office space rarely will meet the needs of the business without some modifications. A new business owner, therefore, will likely find themselves entering into contracts for remodeling or new construction.

 

In the construction industry, there are two main types of project delivery methods for which an owner may contract: design/bid/build and design/build. The traditional project delivery method, design/bid/ build, divides responsibility three ways between the Owner, Designer, and Contractor. Under the traditional design/bid/build project scenario, an Owner contracts with the design professional for the design and then contracts separately with the contractor for construction. Under the design/build project scenario, the Owner contracts with a single design/build entity which is responsible for both the design and construction. The design is typically based upon a performance specification given to the design/builder by the Owner and the design/builder is responsible for selecting materials, coordinating design and construction, and controlling costs.

 

Several organizations, such as the American Institute of Architects (AIA), Engineers Joint Contract Documents Committee (EJCDC), Associated General Contractors of America (AGC), and Design/Build Institute of America (DBIA), have written “standard” agreements for construction projects using either project delivery method. The potential problem with relying on these agreements is that each organization will have written the contract to protect themselves or their membership, each jurisdiction may be different, and the “standard” agreements may not reflect the specific project needs and expectations of the Owner.

 

Construction law is a very complex subject. In most construction projects, there are several parties involved, each having specific duties and responsibilities. The resources in this bibliography were limited to those topics which may interest a new business owner – identifying the type of contracts available, identifying key provisions for forming the contract, estimating project costs, and avoiding pitfalls.

There is a plethora of construction resources available from many sources; however, the difficulty is in finding resources that will be useful to an owner. Most construction resources are written to address issues pertaining to contractors or design professionals.

 

This bibliography is designed to assist the owner in finding current information on construction contracts and construction law. It not only includes information on where to find the “standard” contracts, but also includes books and articles pertaining to construction contracts published between 1994 and 2007. The resources were located and obtained using internet search engines and databases such as Google and Westlaw; reviewing construction book catalogs published by BNi News and McGraw-Hill both in print and on-line; and requesting resources through Washburn Law Library interlibrary loan program.

 

Websites

 

Standard Agreements

 

The following websites were found using Google’s search engine and searching each organization’s website. Each of these organizations, AIA, AGC, DBIA, and EJCDC, has written standard agreements for construction projects. Even if customized agreements are being contemplated for use on a construction project, the standard agreements are good references and a “starting point” from which to develop a construction contract. There is no reason to reinvent the wheel, but when evaluating a standard agreement, one must keep in mind who is writing the contract.

 

 

 

AIA Documents, http://www.aia.org/SiteObjects/files/docs_paperpricelist.pdf

 

The American Institute of Architects (AIA) is an architect advocate organization which publishes over 100 documents for managing transactions and relationships involved in construction projects including contracts for traditional design/bid/build projects and newer methods of project delivery such as design/build. Their “A” series documents are written for Owner/Contractor relationships.

The AIA documents are widely used and are considered “standard” in the industry. They are prepared with input from owners, contractors, attorneys, architects, engineers, and others. The AIA’s first contract document, Uniform Contract for use between Owner and Contractor was published 1888. In 1911, the AIA published its first standardized General Conditions for Construction. Copies of current AIA documents may be purchased in electronic or paper form from this website. Paper copies can also be purchased at any local AIA office.

 

For purposes of reference and information, sample copies of current AIA documents are contained in the Architect's Handbook of Professional Practice annotated below under Books.

 

 

 

AGC Contract Documents, http://www.agc.org/page.ww?section=Contract+Documents&name=About+Contract+Documents

 

 

The Associated General Contractors of America (AGC) has over 100 contracts and forms related to the construction industry including contracts for design/bid/build and design/build methods of project delivery. Founded in 1918, the AGC is the oldest and largest construction trade organization and is considered “the voice of the construction industry.”

 

AGC standard agreements are jointly written with owners represented by the Private Industry Advisory Council (PIAC). The AGC agreements are available in paper form from AGC and may be ordered by phone or online.

 

 

 

DBIA Contract Documents, http://dbia.hbp.com/itemlist.cfm?catid=15&compid=1&pcatid=0

 

 

Like other organizations, the Design/Build Institute of America (DBIA) also publishes “standard agreements” for use in construction projects which can be purchased in electronic or paper form online. The DBIA publications only pertain to projects using the design/build method of project delivery where architecture/engineering and construction services are integrated under a single contract.

 

DBIA was founded in 1993 to “advocate and advance single source project delivery within the design and construction community.” Since DBIA is a relatively new organization, their documents have not been as widely used in the industry. With the increased interest in design/build, however, their contracts are gaining in popularity.

 

 

 

EJCDC Products, http://www.nspe.org/product_search.asp?cntProductSection=5

 

 

The Engineers Joint Contract Documents Committee (EJCDC) also publishes “standard agreements” for both design/bid/build and design/build methods of project delivery. EJCDC documents are prepared with the advice of legal counsel and reflect the experience of the practicing engineers who constitute the EJCDC.

 

The EJCDC construction documents are available for purchase in electronic or paper form online. These documents are widely used within the engineering community; however, they are considerably more expensive than the other available standard agreements.

 

The EJCDC is a committee within the National Society of Professional Engineers (NSPE). The NSPE, founded in 1934, is the recognized voice and advocate of licensed Professional Engineers.

 

 

 

Articles

 

Contract Provisions

 

The following articles were found using the Google search engine using key words of “construction contracts” and “design/build & insurance.”

 

 

George J. Arnold & Thomas J. Kucera, Construction Contract Administration & Claims Resolution, Int’l Mun. Lawyers Ass’n, 69th Annual Conference, October, 2004.

 

This article addresses key contract provisions, project administration, and claim resolution. Although the authors speak to these three areas in the context of municipal projects, the same considerations are important in any construction contract. The article outlines the importance of key contract provisions including bid schedules, daily reports, notice and notification of claims, dispute resolution clauses, and provisions to audit the contractor’s financial records. The article also stresses the importance of adequate contract administration, and provides guidelines for claim resolution consistent with the contract provisions.

 

 

Terry R. Tennant, Advanced Project Delivery Systems: Design-Build and Design Delegation Insurance Issues, ABA Forum on the Constr. Indus. & Section of Pub. Contract Law, October, 1998.

 

This article compares and contrasts design/bid/build and design/build project delivery methods with respect to insurance issues. Although primarily directed to contractors, the author explains the types and extent of coverage required in construction projects. This article provides valuable information and insight to the owner who wants to ensure that the contractors working on their project have adequate coverage and that the construction contract contains provisions for these types of insurance.

 

 

The following article was found using the Westlaw using key words of “building and engineering contracts.”

 

Justin Sweet, Standard Construction Contracts: Some Advice to Construction Lawyers, Constr. L.J. 7(1), 8-23 (1991).

 

This article discusses the advantages and disadvantages of standard contracts for private construction projects. The author points out several insufficiencies in standard contract provisions, while acknowledging that standard contracts serve as “invaluable connectors” between contract participants. The author also gives basic advice to attorneys in selecting and using standard contracts, and advice as to when a customized contract may be a better choice.

 

 

Project Delivery Method

 

The following article was found using the Westlaw using key words of “design-build.”

 

2 Bruner & O’Connor on Constr. Law § 6:22, Factors relevant to selecting delivery method—Relative merits of design-bid-build, construction management, and design-build delivery methods, (Westlaw Bruner & O’Connor on Constr. Law Database, 2006).

 

In this short article, the authors compare design/bid/build, construction management, and design/build methods of project delivery with respect to several factors relevant to selecting delivery method including: unit cost, construction speed, delivery speed, cost growth, schedule growth, and construction quality. From this article, an owner can contemplate the effects of project delivery methods on cost and schedule.

 

 

Books

 

The following books, except the 2007 ENR Square Foot Costbook, were obtained through the Washburn Law Library inter-library loan program. Although available in a few libraries, the 2007 ENR Square Foot Costbook, is generally held in reference materials and not available through interlibrary loan. In addition, the cost information changes each year and most libraries will not purchase the book every year, so if you find one in the library, it will most likely be outdated. Most books listed are available for purchase from the BNi Building News National Construction Book Catalog, vol.82, Late Winter 2007, http://www.bnibooks.com/, or other sources listed in the annotation.

 

 

Standard Agreements

 

American Institute of Architects, Architect's Handbook of Professional Practice, Joseph A. Demkin, ed., John Wiley & Sons, Inc., 2001.

 

If an owner would like to review all the AIA documents before purchasing them individually, this book contains sample copies of all current AIA documents and is available in many university libraries. Sample copies of AIA standard agreements are included in print and on the CD-ROM that accompanies the Handbook. The Handbook also includes a section entitled "Documents Finder," which provides a brief synopsis of each document.

 

The book is also available for purchase online at http://www.wiley.com/WileyCDA/, http://www.amazon.com/, http://www.Barnes&Noble.com/, http://booksense.com/, http://froogle.google.com/, or through local components.

 

 

Construction Problems and the Law

 

Arthur F. O’Leary & James Acret, Construction Nightmares: Jobs from Hell and How to Avoid Them, William D. Mahoney, ed., BNi Publications, Inc., 2002.

 

Construction projects are complex; therefore, many things can go terribly wrong during the project. This 414-page paperback book presents real-life stories of construction projects gone “bad”. Author O’Leary, a 40-year construction project veteran, provides examples of problems that can arise in a construction project including errors in plans, extras, delays, interference, scheduling, change orders, defective construction, incompetent contractors, inadequate supervision, etc. After O’Leary sets the stage for the reader in providing what went wrong and how, Author Acret, a 40-year construction law veteran, legally analyzes each project and provides the probable outcome of any arbitration or litigation which may arise. His legal analyses address key contract provisions, breach and cancellation of contracts, termination, dispute resolution, liens, insurance, bonding, and the roles and duties of the owner, architect, and contractor in a construction project.

 

The authors address issues that are far too familiar in the construction industry including the dangers of contracting with a friend or trying to “help” a contractor relative; allowing contractor substitutions in lieu of specified materials; and unethical, sometimes illegal, actions in which owners and contractors engage to reduce project costs. This book provides practical information and insight on how to avoid and resolve construction problems and disputes before they become nightmares.

 

 

"The Design/Build Deskbook", John R. Heisse, II and James S. Schenck, IV, eds., ABA, 2004.

 

The deskbook basically consists of two parts. The first part, the first five chapters, contain information basic to design/build contracts regardless of jurisdiction and the second part provides a review of the law, authored by hundreds of practicing construction lawyers, for each state or province.

Like most construction resources, this book is geared toward design or construction firms wishing to pursue design/build projects in each of the 50 states, the District of Columbia, and the provinces of Canada. However, Chapters 2 and 4 contain valuable information for the owner. Chapter 2 contains an extensive discussion of the pros and cons of design/build from the owner’s point of view, and provides a detailed comparison of the “standard” contracts between the Owner and Design/Builder, including those available from AIA, AGC, DBIA, and EJCDC. (See Website annotations above.) Chapter 4 examines the risks faced by owners and design/builders and suggests ways to address the risks through insurance and bonding.

This book is available through interlibrary loan or for purchase from the ABA Bookstore at http://www.abanet.org/abastore/index.cfm?section=main&fm=Product.Search&type=a&cid=73&p=2

 

 

Estimating

 

Most construction cost estimating guides are structured for the contractor based on manpower/equipment time and material quantities, which requires the user to decipher quantities from drawings and estimate the manpower required for the project. The following books provide costs based on square footages for specific types of building projects, which makes it easier for people outside the construction industry to understand. The costs are most useful to establish a budget for construction or to check a contractor’s bid for reasonableness.

 

Square Foot Costs, 28th Annual Edition, Barbara Balboni, ed., R.S. Means Co., Inc., 2007.

 

R.S. Means Co. construction cost data books are perhaps the most widely used in the construction industry. Their Square Foot Costs book is organized into well-defined sections including a residential section; commercial, industrial, institutional section; and an assemblies section which can be helpful if remodeling. The costs given are the “national averages.” Since costs can vary with location and time, this guide provides information on location factors as well as historical cost indexes which may be used to adjust the “national average” for a given location.

 

This book may be purchased at http://www.constructionbook.com/xq/ASP/id.460/subID.521/qx/default2.htm?CMP=KNC-MSN.

 

The 2007 ENR Square Foot Costbook, Engineering News Record, 2007.

 

The costs presented in this guide were compiled by Engineering News Record, Design Cost Data, and BNi Building News from actual project cost data. This cost guide is more technical in that costs are provided by architectural division. This could be useful on larger projects where the contractor’s bid is tabulated by architectural specification sections.

 

The book is arranged in four sections:

(1) Current Square-Foot Costs. This section, by Design Cost Data, provides square foot and total costs by architectural division, i.e. sitework, concrete, wood, electrical, mechanical, etc.

 

(2) Construction Economics. This section, by Engineering News Record, provides cost information on the most commonly used construction materials and is graphically presented to show 1- to 5-year cost trends for key building materials, showing how and where material costs affect overall construction costs.

 

(3) Unit-in-Place Costs. This section, by BNi Building News compiles over 6,000 unit prices by architectural division for most aspects of construction.

 

(4) Cost Adjustment Factors. Since prices around the country can vary considerably, this section, by Design & Construction Resources, provides adjustment factors for regional variations in labor and material costs.