Originally published in Interiors & Sources

01/01/2008

Standard Construction Contracts: New Forms from Three Sources

This course examines the recent reissuing and revision of major groups of standard contract forms by the three construction associations.

By Robert Paul Dean and Susan McClendon

 

This material is approved by AIA for earning one AIA/CES Learning Unit (HSW). The learning objectives below provide a context for learning as one reads "Standard Construction Contracts".

We offer a set of questions designed to test THE READER'S comprehension of the content. The actual test, along with instructions on applying for AIA/CES credit, are offered only online. This course will continue to be offered on our Website through January 2009 and will be updated by ARCHI-TECH's editors as necessary to keep the information current. All Web content associated with this course is free. However, there is a $10 administrative charge for taking the exam.

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LEARNING OBJECTIVES

After reading the content, one should be able to:

  1. Be aware of the availability of recent updates to standard construction contract forms from several associations
  2. Understand the role of standard contract documents, their advantages over customized agreements, and the importance of coordinating contract provisions within "families" of documents
  3. Know which associations maintain control of their documents through proprietary editing software
  4. Know which documents are available in hard copy as well as electronically

Three construction industry associations have revised or reissued major groups of standard contract forms within the last few months: The three organizations are The American Institute of Architects (AIA), the Engineers Joint Contract Documents Committee (EJCDC), and the Associated General Contractors of America (AGC) in conjunction with 19 other construction associations comprising a new organization called ConsensusDOCS. This article will provide a brief overview of the three document programs, compare and contrast their new offerings, and summarize key features of each.

The AIA Documents Program
The American Institute of Architects was formed in 1857 and issued its first standardized document, a fee schedule, in 1866. Its first standard form agreements were published in 1888, followed by its first "General Conditions" document in 1911. Due to antitrust considerations and adverse rulings by the U.S. Department of Justice, AIA today offers no guidance on architectural fees, but the documents program has expanded to encompass more than 100 contractual and administrative forms that are available both in hard copy and in electronic form.

AIA describes its documents program as the oldest and most comprehensive such program of standardized construction contracts in the world. The update that was released in November 2007 comprises almost 40 new and revised contract forms, including the most popular "family" of documents that is based on the A201 keystone form, The General Conditions of the Contract for Construction. Related documents include A101 - Standard Form of Agreement Between Owner and Contractor where the basis of payment is a Stipulated Sum and B101 - Standard Form of Agreement Between Owner and Architect. The AIA documents program is on a 10-year renewal cycle, so the recent update is the first major revision to AIA's key documents since 1997.

The EJCDC Documents Program
The Engineers Joint Contract Documents Committee was formed in 1975 and today is a joint venture of the National Society of Professional Engineers/Professional Engineers in Private Practice (NSPE/PEPP), the American Council of Engineering Companies (ACEC), the American Society of Civil Engineers (ASCE), and the Associated General Contractors of America (AGC). The stated goal of the organization is "to produce and promote the use of quality administrative documents for constructed facilities involving professional engineering services."1

In March 2007, EJCDC released a new edition of its construction-related contract forms, which are heavily used in horizontal construction projects such as municipal and utilities construction. These 21 documents replace the previous 2002 editions and supplement more than 40 other documents comprising the full program. The 2007 documents include C-700 - Standard General Conditions of the Construction Contract and C-520 - Suggested Form of Agreement Between Owner & Contractor, Stipulated Price.

The ConsensusDOCS Documents Program
The newest of the three document organizations featured in this article, ConsensusDOCS comprises a group of 20 construction associations that have agreed to cooperate in the production of standard form construction documents representing consensus within a broad spectrum of the construction industry.

More than 70 standard forms have been included in the initial ConsensusDOCS release, published in September 2007. Most of these documents have been based on standard forms that have been "contributed" to the group by AGC and the Construction Owners Association of America (COAA) and subsequently modified by consensus. The ConsensusDOCS documents are grouped into several categories that are available separately, including General Contracting, Design-Build, Construction Management, Subcontracting, and Program Management. There is also a unique new three-way agreement between owner, designer, and constructor, ConsensusDOCS 300 - Standard Form of Tri-Party Agreement for Collaborative Project Delivery.

Competition and Controversy
Although all three programs include documents for general construction, including owner-designer and owner-contractor agreements, each program emphasizes certain relationships and topics and minimizes or omits others. Understandably, AIA's list of documents includes a preponderance of contract and administrative forms related to architectural services. AIA's documents, however, also include several dozen forms intended for use between other parties, including the A201 general conditions document. There are also numerous owner-contractor and owner-construction manager agreements that have been coordinated with the A201 document and corresponding owner-architect agreements.

Although AIA professes that its documents are balanced and fair (a claim also made by EJCDC and ConsensusDOCS), AIA documents are developed in-house by an appointed committee of AIA members, supplemented by a full-time professional staff and outside counsel. AIA does invite limited input from outside organizations, such as the AGC, Associated Specialty Contractors (ASC), and American Subcontractors Association (ASA). It is also true that a few of its documents are endorsed or recommended by outside organizations, but in a noteworthy shift from previous editions over a period of 50 years, the 2007 release of AIA's key A201 general conditions document was pointedly not endorsed by AGC. In an October 2007 press release, AGC said that "the new edition does not fairly balance risk among all parties but instead significantly shifts risk to general contractors and other parties outside of the design profession."2

Cynical observers have noted that subsequent to its endorsement of the 1997 edition of A201, AGC began to publish its own family of documents that competes with those published by AIA. The new AGC-backed ConsensusDOCS product that was released in September 2007 includes its own combined owner-contractor agreement and general conditions document, ConsensusDOCS 200, in addition to several other agreement forms that include general conditions.

A cover story and an editorial in the September 19, 2007, edition of Engineering News Record included statements indicating that the ConsensusDOCS documents had been developed by 23 industry organizations representing owners, contractors, subs, sureties, insurers, and designers. The claim of input from design organizations was subsequently rejected in a letter to the editor of ENR that was signed by the chief executives of AIA, NSPE, ASCE, and ACEC, who wrote, "To our knowledge, no organization in the design professional community has provided comments on, or contributed intellectual property to, ConsensusDOCS."3

In assessing the competing claims, it is interesting to note that AGC is a member of both the ConsensusDOCS organization of 20 associations and one of the four associations comprising the EJCDC. The other three EJCDC associations joined with AIA in rejecting the claim of designer involvement in ConsensusDOCS, leaving AGC on its own with a foot in each camp.

It is certainly true that each of the three organizations is now promoting its own documents program primarily to its members but also to others within the construction industry. Each of the programs claims to be "fair and balanced," "fair and objective," and "fair to all parties," according to their respective websites, but there are significant philosophical differences amongst the three. It is understandable from an outsider's perspective that each program would appear to be biased toward its respective constituency, but ConsensusDOCS seems to have the high ground at the moment because it is made up of organizations representing owners, contractors, subcontractors, and sureties - if not architects and engineers.

How the Programs Differ
Below is a table that shows the major document categories for each of the programs. As indicated in the table, each program is organized somewhat differently, but there are some correlations between document sets. There are also unique aspects to each program. For example, the AIA program now includes documents that deal with projects located outside the United States. The EJCDC documents include a significant number of forms dealing with environmental remediation, procurement, and agency funding. And the ConsensusDOCS program includes a number of documents that deal with program management, in addition to the unique tri-party agreement previously mentioned.

All three organizations subscribe to the concept that standard, "model" documents as a starting point for construction agreements are preferable to custom documents because the latter often favor the drafting party, are untested in the courts, and must be more carefully reviewed by legal counsel due to their unique language. The philosophical differences between the programs are more difficult to elucidate.

AIA's program has the distinct advantage of almost 120 years of evolution, with contract terms being refined in response to court cases and changes in the construction industry. Although many AIA members think the standard documents should be drafted to protect the architect - and many critics think they have been drafted to protect the architect - AIA has sought to achieve a balance that will induce building owners to use the documents. If the documents were widely perceived to be unfair, it is doubtful they would be as well accepted as they currently are within the construction industry, generating revenues that are many times that of either the EJCDC or ConsensusDOCS programs. The AIA document "families" are also designed to work together, with agreement forms and general conditions provisions that are consistent in setting forth the rights and responsibilities of the various parties.

EJCDC's documents program is now more than 30 years old, and its documents are tailored to the needs of its professional engineering members. AGC's documents program, which has now been absorbed by the ConsensusDOCS initiative, is the newest kid on the block, with documents that apply to a range of entities and project delivery methods. For both of these programs, it is critical that their documents be accepted as fair and balanced because they are competing with the AIA for acceptance by building owners.

In the press release that announced the new ConsensusDOCS program, for instance, the statement was made that, "The release of ConsensusDOCS represents the first time that broad industry representation has had an equal voice in collaboratively drafting construction contracts." In a fairly obvious swipe at AIA, the press release goes on to say, "ConsensusDOCS is unique because each document was drafted to reflect the project's best interests, rather than a single party interest."4

Document Delivery Options
The original concept that underlies standard, or model, contract documents was that the printed paper form could be used directly as the actual contract document. If modifications were necessary, as they always would be for agreement forms, the required information could be printed or typed directly into blanks within the document or entered into the margins and unnecessary provisions stricken out. For more extensive changes, separate, supplementary documents could be prepared that would modify the printed form. With the dawn of word processing, the concept of rolling a printed form into a typewriter quickly became obsolete, and AIA struggled for years with the problem of protecting its copyrighted documents and preventing unauthorized use of its intellectual property.

Today, only AIA continues to offer hard copy documents for sale in addition to its electronic documents, although EJCDC allows users to print their own "original" hard copy. ConsensusDOCS documents, on the other hand, are available only electronically, through AGC's DocuBuilder® software.

The AIA's document software and the DocuBuilder software allow modification of the model forms for specific projects while preventing unauthorized (and unpaid) use. In contrast to these protective software packages, EJCDC's electronic documents are available only as Word files and can be purchased as a group on a CD-ROM or downloaded individually from its member websites. The only protection provided for the copyrighted documents is a license agreement under which licensees agree to use the documents only for "bona fide contract documents." The same agreement prohibits users from presenting the documents as EJCDC documents unless they are used without any alterations or the changes from the standard contract forms are clearly shown.

AIA's proprietary document software is based on Microsoft Word and is designed to show any changes to the standard forms. Users may choose to print completed documents with changes shown by underlining and strikethroughs or they can print "clean" documents that indicate changes by margin flags and an additions and deletions report that follows the actual document. Users must purchase an annual subscription to the entire document collection or buy a metered account that automatically deducts the cost of each document when it is actually printed. AIA also offers its 10 most popular documents in download form through an arrangement with Denver-based IHS Inc. Users may purchase single documents and fill in blanks online, then download and print them through the use of a free Adobe plug-in that locks the document from further editing.

The ConsensusDOCS documents currently must be downloaded (although a CD-ROM option will be available shortly) and are available by series subscription or through a meter. Subscribers have unlimited 1-year use of each document series for which they have paid, and metered users have access to all documents for an unlimited period and pay only when a document is actually printed, with the document charge automatically deducted from an account on the user's computer. As with the AIA documents program, users of the DocuBuilder software may print comparative documents that show changes from the standard forms by underlining and strikethroughs, or they can print a "clean" version that shows by margin flags where changes have been made. In the latter case, a special footer warns readers that changes may have been made from the standard documents.

Conclusion
Each of the three document programs described in this article has its strengths and weaknesses. Each program is focused at a particular constituency but requires the goodwill of a common key group - construction owners. The programs are now competing for market share and each strives to present its documents as fair and balanced for all parties. As the oldest by far, the AIA program has a huge lead in the marketplace, with document revenues comprising more than half of AIA's annual budget. The newer programs are not starting from zero, but they are a long way from catching up to the AIA juggernaut. It should be interesting to see how well they do over the next few years. 

Robert Dean (rdean@bsdsoftlink.com), an architect, is president and chief operating officer of Building Systems Design Inc. (BSD). He was a member of the AIA Documents Committee for 14 years and currently is BSD's project director for the DocuBuilder® software, which was developed by BSD for AGC and ConsensusDOCS.
Susan McClendon
(smcclendon@bsdsoftlink.com), also an architect, is BSD's executive vice president and project director for BSD SpecLink®, BSD's specifications software product. She has recently updated the SpecLink database to coordinate the specifications with all three document programs discussed in the article.

REFERENCES:

  1. "Policy and Procedures Manual," Engineers Joint Contract Documents Committee, January 2006."
  2. "AGC Members Unanimously Vote Against A201 Endorsement: General Terms and Conditions Document Fails to Provide Balance"; The Associated General Contractors of America; October 12, 2007.
  3. Letter to the Editor, Engineering News Record, McGraw-Hill Construction; October 10, 2007.
  4. "New Release of ConsensusDOCS Poised to Change the Industry"; ConsensusDOCS, September 28, 2007.

ARCHI-TECH welcomes comments on the distance education program, including its content, format, and process for AIA/CES learners. 
Please contact Maureen Patterson at (319) 364-6167 or maureen.patterson@architechmag.com.   

Stamats Buildings Media, publisher of ARCHI-TECH, is the provider of ARCHI-TECH'S AIA/CES distance education programs.  Stamats Buildings Media's provider number is J683.

 


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Wood construction is both cost and energy efficient. Check out Morton Buildings and our designBUILD team online today to discover all the benefits of post-frame construction.


When choosing a metal-clad building for your next construction project, consider Morton Buildings, Inc., and their designBUILD team, we’ll make your dream a reality.

Yaskawa drives offer quality performance for air handlers and cooling towers on the roof to secondary chilled water pumps in the basement

Bluebeam® Revu® simplifies digital facilities document management from design review to leveraging as-builts, maintenance manuals and O&Ms submittals.

We Can Help You Reduce Energy by 30%

Our mission is to help our customers manage their buildings' energy costs, improve reliability, and enhance performance while having a positive impact on the environment.
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