ConsensusDocs is a unique coalition to publish best practice standard construction contract. On September 27,2017 ConsensusDocs hit a 10-year milestone. The ConsensusDocs coalition is a first of its kind industry-wide effort to bring the A/E/C industry together to create standard construction contracts that create a better contractual foundation to build successfully. The original mission and current mission continues to be to optimize better project results with less transactional costs – namely claims, contingencies, litigation, and contentious contract negotiations.
Unfortunately, shortly after accomplishing the release of ConsensusDocs, the construction industry hit not just a recession, but a depression. Consequently, getting the industry to move to better and fairer contracts when less contracts are being signed was challenging . . . but insurmountable. Now with a healthy construction economy, the good news is users subscribing to the documents is not only growing, but accelerating.
Now there is a ten year-track record of success for projects utilizing ConsensusDocs contracts that experience less claims and litigation than other standard contract documents which are written. The key was getting way from the traditional perspective of a particular segment of the industry writing the contract to getting all the players perspective to better align all parties to reach project completion successfully. And manuscripted contracts that are one-offs written by one party’s perspective to advantage itself ultimately doesn’t work well either. Project histories using ConsensusDocs contracts help demonstrate that there really is a better way to build. This contrasts an approach that creates contractual silos that attempt to legitimize itself from reams of reported court cases that keep getting longer.
The ConsensusDocs Coalition goal was and continues: To improve the design and construction industry with best practice contracts that are fair to all parties. Here are some of the highlights results:
- Launched in the year 2007
- 10 years of existence
- 40 leading construction associations participating in the Coalition
- Over 100 standard contract documents
- Covering all 4 major project delivery methods.
- Over, 2,500 subscribers.
- Over 4,000 registrants on the ConsensusDocs Technology Platform (launched in 2012)
- Over $1,000,000 in donated free educational licenses value
- 1,000s of successfully completed projects with an estimated value of construction put in place of Billions of dollars.
- 2 comprehensive updates and 7 Industry first standard contract Documents (such as IPD and BIM)
The milestones demonstrate a better path forward. ConsensusDocs offers a fundamental contractual difference that enables an Owner of construction project to be more active in construction decisions. At the end of the day, an Owner has the most to gain or lose in a projects success, so their default role for everything should not just be as a check-payer. Also, a principle tenant of the coalition effort is that fair contracts get better results. Moreover, contract documents should be written clearly to be understood and facilitated contract administration, not to obfuscate and litigate. Direct party communications can actually be positive to help reduce and mitigate claims, rather than create contractually silos.
One of the most difficult obstacles to effectuate change is to demonstrate a proven track record of success in traditionally slow-moving industries that are reluctant to change. Construction and legal contract drafting both fit into that category. However, there are two compelling reasons to change and maybe third. The first is that our current system of flowing down contractual risk to the lowest and often weakest party in the contractual change has been proven to be broken – and therefore needs to be fixed. The best studies on the subject, including one from Construction Industry Institute (CII) conclude that unfair contract provisions raise prices and get poor project results. Secondly, even if our traditional contract standard were working well, that doesn’t mean you competition isn’t going to disrupt the current way of doing business and replace it with a more efficient way. Cleary, the industry is starting to change. Even if IPD is not the dominate project delivery method, most construction companies are trying to incorporate lean principles into their construction processes. Your contracts need to keep up with business processes. And lastly, today’s construction market has vastly improved to the point that those “weaker” parties in the contractual change are getting stronger and are going to demand fairer contracts.
Conclusion
Even if you do not use a standard contract document whole cloth, updates to consensus standard contracts are extremely valuable to ensure your contractual practices are keeping up with today’s industry. ConsensusDocs will continue to create new documents, guidebook comments, and updates to help move the entire industry forward in a way that benefits constructors, owners, and design professionals alike with better project results and less claims. In 10 years, ConsensusDocs has become a viable option with a track record of success. During the next 10 years, they should become the defaults standard for a better foundation to build.
About the author: Brian Perlberg, Esq. is Executive Director of ConsensusDocs. He works in the Washington, D.C. area and can be reached at bperlberg@consensusDocs.org.