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The Construction Advantage, Project Delivery Methods | Choosing the Right Contract Form


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The Construction Advantage, Project Delivery Methods | Choosing the Right Contract Form

Kelly Gagliuso

Project Delivery Methods | Choosing the Right Contract Form

By Kelly Gagliuso  

Modern contracting arrangements now offer a number of ways to deliver a project to the owner, including design-build, construction management and traditional bid-build. These delivery methods are reflected in standard forms offered by the American Institute of Architects (AIA) and a handful of other professional organizations, including the Design-Build Institute of America (DBIA) and the Engineers Joint Contract Documents Committee (EJCDC), or custom documents can be created by the owner and the contractor for a specific use. As a result, it is important to understand which forms are appropriate for each delivery method.

The first step is to determine how the project will be delivered to the owner. Will the contractor be fully or largely responsible for designing the project, either through its own personnel or outside consultants? If so, the parties should probably be looking at a design-build contract form. Alternatively, the owner’s consultant may provide the design, but seek input from the contractor during the design process concerning materials, constructability, cost estimating or value engineering. If so, the contractor is likely acting as a construction manager, either as an advisor only or as both advisor and the ultimate constructor of the project. In this case, the parties should probably select an appropriate construction management form. The project may also follow a more traditional path where the owner works separately with a design firm to complete (either fully or substantially) a design package for the owner which is then put out to bid to select contractors. In this scenario, the contractor has little or no input in the design prior to the bid and the parties should consider a traditional bid-build contract.

Although almost any pricing mechanism can be applied to each delivery method, design-build and construction management projects are almost always priced on a cost-plus basis. This method assumes that the owner will pay the contractor’s actual costs of completing the work, plus a percentage fee. Cost plus agreements may also set a GMP or guaranteed maximum price for the project. In these forms, the contractor agrees with the owner that the total cost of the work will not exceed the GMP. These are also referred to as “open book” contracts since the owner has the right to review and audit all of the contractor’s costs. By contrast, bid-build contracts generally carry a fixed price which the contractor guarantees to the owner for completing a scope of work which is well defined at the time of its bid. Unlike cost-plus arrangements, bid-build arrangements are not open book. Once the owner accepts the price offered, it has no right to audit the contractor’s costs or expenses.

If you have questions about which form is best for your project, please get in touch with our Construction Practice Group for assistance. We are well versed in all project delivery methods and available forms.

 

Attorney Conor Shankman to Moderate American Bar Association Construction Series 


What You Don’t Know Can Hurt You and Your Client: Scheduling for Construction Attorneys, Part I is taking place on December 15th at 1:00 PM EST moderated by Bernstein Shur Attorney, Conor Shankman. The construction schedule is a critical source of information for construction claims attorney and represents key evidence for most delay claims. Construction attorneys need to understand the basic principles involved in the development and maintenance of construction schedules. Concurrent critical paths, fragnets, excusable delay and revised baseline schedules are all terms you need to know.

Click here to learn more and register. 

 

Construction Group Updates & Developments

Construction is a risky business, whether you are an owner, general contractor, subcontractor, supplier, or surety. Day to day, everyone in the industry is worried about negotiating contracts, resolving bid disputes, and managing change orders and delays all of which are important to a project’s success. And when something goes wrong, parties are trying to avoid litigation—or pursue it successfully. No matter what your primary concern or goal, we can help set you up for long-term success.

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Conflict Evaluation & Resolution Team

We are proud to announce the formation of our new Conflict Evaluation & Resolution Team(CERT)! Our professional neutrals have formed CERT based on our dedication to show how parties in conflict can achieve the best net outcome through dispute resolution.

Our team comprises seasoned trial attorneys, mediators, arbitrators as well as a former federal judge. We offer evaluation and resolution assistance in both traditional and novel ways. Although each neutral has broad trial and dispute resolution experience, each neutral has one or more specialties, including bankruptcy and finance, construction and commercial litigation, antitrust, securities, and labor and employment law. With numerous members on the team, we can offer more prompt and flexible scheduling as well as increased flexibility on how we bill—and we’re ready to work with you.

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