There is a long and rich history of the development and use of standardized contract documents in the US construction industry. There are several off-the-shelf contract options that have been strategically developed specifically for our industry.
One of my typical roles as an owner advisor is to review proposed construction management at-risk (CMAR) and design-build contracts from a commercial perspective—i.e., what’s the likely marketplace reaction to the contract and is the contract consistent with the philosophy behind collaborative delivery? I am continually amazed by what I see.
Words are important — an obvious truism and pertinent to a collaborative project delivery effort. The action item is to ‘mobilize the language’ for maximum effect in our contract documents for water/wastewater projects. First, a quick anecdote: A lawyer friend (not mutually exclusive) shared a simple and keen observation when I first worked with him on a contract review. He asked, “Know the difference between an engineer and a lawyer?” After searching my library of lawyer jokes, I had to admit ignorance of the difference. He said, “Lawyers know they’re not engineers.”
How many times have you read about construction projects that are delayed, over budget, have quality issues, or involve complicated claims? Historically, these are common occurrences in the construction industry that primarily derive from a misalignment of incentives between project owners, engineers, and contractors. Traditional contract models, which often position owners and contractors on different sides, are typically the root of the problem, yet they are still in widespread use, creating the risk of continued project overruns and performance shortcomings.
As discussed in the previous blog, the underlying principle of allocating and managing risk in projects using CMAR or design-build delivery methods is to embark upon a collaborative process between the owner and construction professionals with initial discussions on how to allocate specific risks to the party best positioned to manage and assume the risk. These decisions ultimately end up in the contract between the owner and construction professional.
The underlying principle of allocating and managing risk in projects using CMAR or design-build delivery methods is to embark upon a collaborative process between the owner and construction professionals with initial discussions on how to allocate specific risks to the party best positioned to manage and assume the risk.