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Comparing the Standard Form Design-Build Agreements: AIA, ConsensusDocs & DBIA Agreement Forms

Practising Law Institute June 25, 2014

New York, New York

Alison Ashford Patrick J. O’Connor, Jr.

Brian Perlberg

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Documents Compared

►AIA A141-2014 Owner/Design-Builder Agreement

AIA A141-2004 Agreement

►ConsensusDocs 410 Design-Build Agreement & General Conditions

• Integrated agreement and GCs

►DBIA Nos. 525 & 535 Owner/Design-Builder Agreement and General

Conditions

Scope of Work (Process)

►AIA: Owner’s Criteria (Art. I) – Evaluated by DB (4.2) → Preliminary

Design (4.3) → DB‘s Proposal (4.4) → DB Amendment (4.4.3 + Ex.

A)

►ConsensusDocs: Owner’s Program (2.3.18) → Evaluated by DB

(3.1.1) → Schematic + Construction Drawings (3.1.4 - 3.1.7) → GMP

Proposal (3.2.1) → Acceptance by Owner → Amendment #1 (3.2.4)

(A list of additional services provided at 3.11 for which a separate

agreement is needed unless specifically included in GMP

Amendment)

►DBIA: Basis of Design Documents (Owner’s Criteria (1.2.14) + DB’s

Proposal – Deviation List) = Basis of Agreement (2.1) Design

Documents prepared after agreement formed (2.4)

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Pricing (Construction)

►AIA: Menu Approach → Design-Build Amendment allows parties to

select either (1) stipulated sum; (2) cost of the work + fee; or (3) cost

of the work + fee with a Guaranteed Maximum Price (GMP) (A.1.1)

►ConsensusDocs: Cost of the work + fee with a GMP

(alternative CD 415 lump sum to be used with CD 400)

►DBIA: Lump sum (Art. 6) (Doc. 530 employs a GMP model)

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Design-Builder’s Proposal (Substance)

►AIA:

Preliminary Design Documents (including clarifications, assumptions,

and deviations from Owner’s Criteria)

Proposed Contract Sum (including compensation method, which if cost

of the work, a breakdown by trade, allowances, contingencies and fee)

Substantial Completion Date

Qualifications and Exclusions

Key Personnel

Date proposal expires (4.4.1)

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Design-Builder’s Proposal (Substance) (cont.)

►ConsensusDocs (3.2.2, GMP set by Amendment 1):

List of design documents

List of allowances

List of assumptions and clarifications

Date of Substantial Completion

Schedules of alternative and unit prices

Contingency (3.2.7)

Self-performed work

Statement of patented/copyright materials

Date proposal expires (3.2.2)

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Design-Builder’s Proposal (Substance) (cont.)

►DBIA:

The DB Proposal is a part of the Basis of Design Documents which shall

include a Deviation List (deviations from Owner’s Criteria), if any exist

(2.1.2)

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Design-Build Proposal (Status)

►AIA: Not a Contract Document

►ConsensusDocs: Not expressly identified as a Contract Document

►DBIA: A Contract Document (part of Basis of Design Documents)

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State of Design at Time of Pricing

► AIA: Pre-GMP Amendment (Preliminary Design – program functions, site plan,

building plans, sections and elevations, structural system, major building systems

and outline specifications) (4.3) GMP given after Preliminary Design

Post-Amendment – Construction Documents (only enumerated design documents

are treated as Contract Documents (A.3))

► ConsensusDocs: Pre-GMP Amendment (Schematic to Construction Documents,

although possible to enter into GMP Amendment prior to Construction Documents

(3.1.7 & 3.2.1)) (All design documents at various phases are Contract Documents

(15.1))

► DBIA: Agreement to Construct entered into at signing. Status of Design is set forth

in Basis of Design (Art. 2). Post-Agreement (Interim design submissions, as agreed

upon, shall be consistent with Basis of Design Documents (2.4.1); DB shall submit

Construction Documents to Owner for approval – must be consistent with Basis of

Design Documents (2.4.2))

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Ownership of Design

► AIA: Those who create Instruments of Service (IOS) own the IOS. Owner

receives a limited irrevocable and non-exclusive license to use design for the

project (DB obtains similar license from designers); if Owner alters or uses

the design without retaining authors then Owner releases and indemnifies

DB, architect and authors (Art. 12).

► ConsensusDocs: Owner receives ownership of all design documents

(3.1.8.1) and parties check box on how to assign copyrights (3.1.8.2). Owner

may use design documents upon termination to complete project (3.1.8.3)

and may use design documents to maintain, renovate or expand project

(3.1.8.4), but at Owner’s sole risk if DP is no longer involved.

► DBIA: DB retains ownership (4.1) and Owner receives either limited license

or full ownership (upon selection of alternatives) upon payment (also may

use design upon termination for a specified sum (4.3.2)) and any alteration

by Owner at its sole risk (4.2) and Owner indemnifies others (4.5).

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Project Financial Info

►AIA: (7.2.7) Before moving dirt, yes, afterwards must be 1) fails to

make a payment; 2) material change 3) reasonable concern that

Owner can’t pay

►ConsensusDocs (4.2). DB may request in writing and stop work if not

provided. Owner has affirmative right to give notice of material change

to financing

►DBIA. DB may request and stop work if not provided.

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Warranties and Standard of Care for Design

►AIA: DB warrants the work free from defects (3.1.12). “Work”

includes the design (1.4.3). Warranty may be above standard of care,

which is based on local standards. AIA B143 has not such warranty.

►ConsensusDocs: DB warrants that materials and equipment

furnished under the construction phase will be free from defective

workmanship (3.8.1). Expressly disclaims U.C.C. warranties (3.8.2).

Standard of care is based on national standard for similar projects.

►DBIA: DB warrants that the construction, including materials and

equipment, will be free from defects (2.9.1). DB’s design must meet

prevailing industry standards. However, Owner has option (Art. 15) to

identify specific performance standards that can be objectively

measured.

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Indemnification

►AIA: DB indemnifies Owner (and its agents/employees) from all

claims and losses (including attorneys’ fees) arising out of or resulting

from the performance of the work, but only to the extent caused by

negligent acts or omissions of DB (architect, consultant or contractor).

(3.1.14.1)

►ConsensusDocs: DB indemnifies Owner (employees, consultants,

members, agents) from claims (including attorneys’ fees) for bodily

injury or property damage other than to the Work itself but only to

extent of DB’s negligence (subs or others employed by DB). DB

entitled to reimbursement for defense costs paid above percentage of

liability (11.1.1). A similar indemnity runs from Owner to DB (11.1.2).

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Indemnification (cont.)

►DBIA: DB indemnifies Owner (employees) against claims and losses

(including attorneys’ fees) for bodily injury or property damage other

than to the Work itself to the extent resulting from negligence of DB

(design consultants, subs, or others employed by DB) (7.4). A similar

indemnity runs from Owner to DB (7.5.1) Other indemnities

(patent/copyright, tax claim, payment claim (mechanics’ liens)) apply

(Art. 7).

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Limitation of Liability, Damage Waivers & Liquidated Damages

► AIA: No general limitation of liability provision. There is a prompt in the

DB Amendment for the parties to add language, if they wish, with respect

to liquidated damages (A.2.2). Owner and DB (their contractors (includes

designers), subs, consultants, agents, etc.) waive rights to extent loss

covered by property insurance (B.3.2.7), final payment waivers (9.10.4 &

9.10.5), mutual waiver of consequential damages (14.1.7) with exception

for any liquidated damages

► ConsensusDocs: Limited mutual waiver of consequential damages,

losses covered by insurance or items specifically listed from either

substantial completion or final completion are excluded. No limitation of

liability. Parties can specify liquidated damages (6.4). Final payment

waivers (10.5.2 & 10.5.3), waiver of subrogation (covers designers) for

damages covered by property insurance (11.3.3).

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Limitation of Liability, Damage Waivers & Liquidated Damages (cont.)

►DBIA: Fill in blank for Owner’s Liquidated Damages (5.4) (also

provides for early completion bonus fill point (5.6)); liquidated

damages for DB’s damages for delay fill point (5.7). Mutual waiver of

consequential damages with exception for liquidated damages (10.5).

Final payment waivers (6.7.2 & 6.7.3). Defective work discovered

after substantial completion gives no right to withhold funds but

treated as warranty work (6.7.4). Waiver of subrogation is provided

(5.3.5) and covers designers. Parties can agree to compensate DB

for force majeure events (5.7)

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Termination for Convenience

►AIA: Right afforded to Owner (13.2.4). DB entitled to payment for

work executed plus costs incurred by termination. DB also entitled to

“reasonable overhead and profit” on work not executed.

►ConsensusDocs: Right afforded to Owner (12.3). DB to be paid for

completed work, all loss or expense in connection with the work, plus

demobilization costs. Parties to agree upon payment to DB for Design

Phase and Construction Phase services and a premium based upon

timing of termination (12.3.1 and 12.3.2).

►DBIA: Right afforded to Owner (Art. 8). DB to be paid for work

completed and termination expenses and reasonable overhead and

profit on these items. DB entitled to additional payment as stated

percentage of remaining balance of contract price depending upon

date of termination.

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Changes

► AIA: Owner has right to unilaterally require DB to perform changes in the

work even if dispute over pricing (6.3). The Owner’s Change Directive to be

compensated as agreed upon or by Owner’s choice if no agreement (6.3.3 to

6.3.7). DB may dispute amount of compensation under Disputes article

(6.3.9 and Art. 14). Disputes over whether an item is a change are covered

by Art. 14 and DB must proceed with work (14.1.4).

► ConsensusDocs: Owner has right to unilaterally require DB to proceed with

changed work (9.2). If parties disagree on pricing, the cost of the change to

be determined by the “reasonable actual expense incurred and savings

realized in performance of the Work resulting from the change.” (9.5.4)

Owner pays DB 50% of its actual direct cost to perform the disputed work

and both parties reserve rights to dispute item under the Agreement.

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Changes (cont.)

►DBIA: Owner afforded unilateral right to make changes (Art. 9). DB is

entitled to cost reimbursement for change proposals Owner elects not

to proceed with (9.1.3). Owner may issue change directive prior to

agreement on cost or time (9.2). Disputes over whether an item is a

change or over the cost of an admitted change shall be resolved

under Disputes article (Art. 10), however DB shall proceed with the

work upon Owner’s direction but DB entitled to be paid 50% of its

reasonable estimated direct cost to perform work and both parties

reserve all rights (9.4.3).

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Claims and Disputes

►AIA: Parties to make election between litigation or arbitration (or

other) (1.3). Failure to elect means litigation. Time limit on claims as

per applicable law, but in no event later than 10 years after substantial

completion (14.1.2). Notice requirements for claims – 21 days after

occurrence or recognition if before final payment (14.1.3.1) and upon

prompt notice after final payment (if not waived by final payment)

(14.1.3.2). Initial decision on claim is condition precedent to

arbitration or litigation (14.3.1). Party waives right to pursue claim if,

upon receiving a demand for mediation, it fails to “file” for mediation

within 60 days (14.2.6.1).

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Claims and Disputes (cont.)

► ConsensusDocs: Parties select either arbitration or litigation (13.5). No

default where election is not made. Arbitration may be AAA or JAMS with

AAA the default if no election. Attorneys’ fees and costs borne by non-

prevailing party. Formal dispute resolution to be proceeded by (1) direct

discussions (13.2) and (2) mediation (13.4). There is an option for project

neutral or Dispute Review Board (13.3).

► DBIA: Arbitration is the default method of Dispute Resolution (10.3 / 535)

but parties are prompted to make election for court adjudication in Article 11

of Doc. 525. Parties are first directed to resolve disputes through direct

discussions (10.2.2 and 10.2.3) and, if unsuccessful, then via AAA mediation

(10.2.4). Notice requirements for claims – written notice to be provided not

more than 21 days after occurrence giving rise to claim or after claiming party

reasonably should have recognized event or condition giving rise to claim

(10.1).

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Building Information Modeling/Transmission of Electronic Date

►AIA: Prior to electronic exchange of Instruments of Service or other

documents, parties must agree on specific conditions regarding

format, limitations and licensing (1.1.12). For digital form, parties must

establish necessary protocols governing transmissions (1.1.12)

AIA Document E203-2013

AIA Document G202-2013

►ConsensusDocs: Requires parties to agree to a written protocol

governing the exchange of electronic/digital data and which

encompasses various minimum requirements (4.9)

ConsensusDocs: 200.2

ConsensusDocs: 301 (BIM Addendum)

► 4.3.11 establishes level of reliance and accuracy of transmissions

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Building Information Modeling/Transmission of Electronic Date

►DBIA: Parties to agree upon software for transmission of data and

protocol for making changes to electronic documents. Standard of

care with respect to creation of the data preserved (Article 12).

Building Modeling Information Exhibit

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