ConsensusDocs has just announced published updates to the ConsensusDocs 410 Design-Build (Cost of the Work with a Guaranteed Maximum Price (GMP)] and the ConsensusDocs 415 Design-Build (Lump Sum) standard agreements prime agreements as well as the ConsensusDocs 450 Subcontract and ConsensusDocs 460 Subcontract.
Highlights include the following (all section references are to the ConsensusDocs 410 unless indicated otherwise):
Limited Waiver of Consequential Damages
Revised the limited waiver of consequential damages (§6.5) to clarify that insurance coverage is exempt from the consequential damages waiver only if the insurance coverage pays for the loss. Waiver of consequential damages is one of the most important and negotiated provisions in construction contracts. The previous standard language excluded insurance coverage from the waiver of consequential damages. This principle remains as insurance provides a fair way to allocate risk among the parties.
Builder’s Risk Policy
Eliminated the requirement to cover “existing structures” under this property insurance. Obtaining property insurance through a Builder’s Risk policy that covers damage to existing structures may not always be feasible. There was also a clarification to measure the risk of loss as transferring at Substantial Completion rather than Final Completion (§11.3.1).
Interim Directives
Revised and provided additional clarity surrounding interim directives. ConsensusDocs uses this term to include directed change orders that are ordered because of a lack of agreement on cost and schedule impacts, as well as field instructions. AIA uses the term “construction change directives (CCDs)” for a similar concept. The revisions clarify that an owner’s issuing an interim directive does not necessarily increase cost or time.
Reasonable Attorney Fees
Throughout the standard agreement, clarified that all reimbursable attorneys’ fees must be reasonable. It is worth noting that ConsensusDocs provides for the non-prevailing party in claims to pay reasonable attorneys’ fees and court costs, which is unique to ConsensusDocs standard contract documents.
Statute of Repose
Added statute of repose in addition to statute of limitations as reasons for barring commencing arbitration. Some state courts have ruled that the statute of limitations and statute of repose don’t apply to arbitration actions. Therefore, it is prudent to put this in standard contracts (§13.5.11).
Cost-of-Work
Added itemized cost-of-the-work items incurred due to emergency and legal, mediation, and arbitration fees and costs not associated with a dispute between the parties.
No Waiver of Performance
Clarified the “no waiver of performance” language so that not necessarily enforcing or insisting upon a contractual right does not waive such contractual right by implication (§14.6).
Contingent Assignment
Added a required contingent assignment provision for suppliers as well as subcontractors in subcontractor and supplier agreements §5.3.1.4).
Hazardous Materials
Created a duty to defend as part of a Design-Builder’s indemnity obligation to hold the owner harmless for hazardous materials brought to the site by the Constructor or someone the Constructor is liable (at subsection §3.7.7.3).
Warrant
Clarified that Constructor’s warranty obligations to correct material and equipment defects for owner-provided materials equipment are limited to installation defects (§ 3.8.2).
Late Payments
Set the interest for late payments for construction work at the statutory rate rather than the prime rate (§10.6 and the elimination of §10.1.4).
Risk of Loss
Change the risk of loss from Final Completion to Substantial Completion (§11.3.6).
Damaged Work
Clarified that Constructor’s obligations to remedy damage or loss do not apply to damage covered by an owner’s property insurance or is attributable to the owner or the owner’s separate contractors (§3.5.6).
Pollution Liability Insurance
Included a check-the-box option for the owner to require pollution liability insurance.
Emergency Costs
Clarified that costs related to emergencies affecting the safety of persons or property are a cost-of-the-work item (§8.2.17).
Bonds
Specified that performance and payment bonds must be issued by a surety company holding a certificate of authority to conduct surety business.
Penal Sum
Eliminated the requirement that a rider to the penal sum be made if the contract price or GMP increases more than 10 percent.
Prime Contract
Added a definition of “Prime Contract” in the ConsensusDocs 450 and 460.
ConsensusDocs subscribers who have access to the design-build documents will get immediate access to these newly updated documents upon publication. Existing users can choose whether to use the new standard forms or the previous edition for the next 13 months. ConsensusDocs is a Coalition of over 40 different design and construction associations. Each group has an equal voice at the drafting table to write best-practice standard construction contracts that are fair to all stakeholders in the A/E/C industry. Each national association group participating in ConsensusDocs is invited to provide two volunteers for the comprehensive drafting process, making up the Council.
Comments or questions about this article can be directed to Brian Perlberg, Executive Director & Senior Counsel, ConsensusDocs Coalition, at bperlberg@ConsensusDocs.org.
Additional Resources
ConsensusDocs Guidebook, which you can access here