AIA AGC splitting?

[Dick Seibert]

For the last several years the AGC and AIA have been working together to provide mutually acceptable contract documents, I read that the AGC has voted unanimously to reject the new AIA 201:

AGC’s membership expressed grave concerns that the new 2007 edition of the A201 significantly shifts risks to contractors and other parties outside of the design profession. Some of the troublesome provisions in the new A201, which AGC has consistently recommended against for more than three years, include:


New restrictions on obtaining owner financial information
Significant new liability exposures when carrying out owner-mandated means and methods, as well as when encountering hazardous waste
Numerous new technical requirements that carry dire consequences for providing an architect-approved submittal schedule or new deadlines for appealing initial decisions.
Importantly, there is a philosophical disagreement that all communications must funnel through architects, which leads owners and contractors to work in silos instead of together. This approach starkly contrasts with the more collaborative and innovative direction of the rapidly changing industry. This chasm will only grow during the expected ten-year lifespan of the A201. Consequently, AGC membership concluded that the A201 does not positively serve the industry as a standard document because it does not fairly balance risk among all parties. AGC will provide preliminary suggested modifications to the new A201 on www.agc.org/contracts.

AIA has attempted to discount the unanimous vote against endorsement as being driven by revenue considerations, rather than the risk-shifting provisions that AIA has publicly acknowledged. Moreover, AGC’s recent endorsement of the EJCDC General Conditions document (2007 edition), which was collaboratively drafted with AGC, demonstrates that the association considers endorsement based upon merit and not revenue.*

What ever happened to ConsensusDocs?



*http://newsmanager.commpartners.com/...-01/index.html

[Bob Kovacs]

The concensus docs have been supported/adopted by the ABC (the open shop version of the AGC), and as the article says, the AGC is supporting the EJCDC documents, which have been around for a few years now with limited usage. We saw the EJCDC docs a few years ago when they were proposed on a lab-intensive project where the MEP engineer was taking the lead on design rather than the architect, and our attorney had only a few minor issues with them.

Every large GC always takes exception to a ton of clauses in the AIA docs anyway, so whichever set of contracts get thrown in front of them, they'll provide the standard set of exceptions/qualifications that their attorney has prepared for those documents.

You do realize that 99.9% of the guys on the board here have no idea what we're talking about, right? lol

[Overbuilders]

Dick,

I first read about this in the 9/24 edition of ENR, the magazine I told you about a few months ago. I can't locate the article on their website, however. There is great news for subcontractors, as the contractor-sub agreement no longer requires subs to indemnify the contractor, owner, or architect for any and all claims, but instead limits the indemnity to the extent caused by negligent acts of omissions. Also, contract wording will now require payment to subcontractors within seven days of billing, ending the harmful 'pay-if-paid' standard that absolutely kills specialty subs. Woohoo!

We'll see how it plays out in the real world...


Another interesting article:

http://aec.cadalyst.com/aec/Web+Excl.../detail/467775

[Bob Kovacs]

I find it amusing that the AIA commented about the AGC endorsing a set of documents based on revenue rather than merit, yet the article Rick linked to notes that the AIA makes $10 million/year selling their contract docs- 1/4 of their overall revenue. Talk about the pot and the kettle......

Rick- I wouldn't count on that 7-day pay clause remaining in the contracts that GC's give to their subs- it'll be the first clause modified by the GC's. If they're not getting paid in 7 days, neither will the subs. I think the pay-if-paid clauses need to be struck, but the payment timeframes will likely never change if the GC's terms don't.

[Overbuilders]

Rick- I wouldn't count on that 7-day pay clause remaining in the contracts that GC's give to their subs- it'll be the first clause modified by the GC's. If they're not getting paid in 7 days, neither will the subs. I think the pay-if-paid clauses need to be struck, but the payment timeframes will likely never change if the GC's terms don't.

I know, Bob, I seriously *LOL* when I read the details of the new clause in the article. And it's also why I ended my last post with "We'll see how it plays out in the real world..."

[Dick Seibert]

You do realize that 99.9% of the guys on the board here have no idea what we're talking about, right?

That's sad, but I have to agree with you. When you came on board a few years ago one of my hopes was that you were going to be able to raise the level here.

the contractor-sub agreement no longer requires subs to indemnify the contractor, owner, or architect for any and all claims, but instead limits the indemnity to the extent caused by negligent acts of omissions.

But General Contractors' GL policies all require that indemnification clause; in fact, when I submit my subcontract to my carriers every year that's all they care about, one even told me to forget about submitting the entire document, just send them my Hold Harmless and Indemnification clause. Is this an attempt on the part of the AGC to turn the insurance industry around since the AGC controls the majority of the bigger contractors (I'm not talking stick builders)?

[Overbuilders]

Is this an attempt on the part of the AGC to turn the insurance industry around since the AGC controls the majority of the bigger contractors (I'm not talking stick builders)?

Possibly. From a legal standpoint, Dick, might it also make it easier for an innocent subcontractor to be dismissed from a frivolous or unwarranted lawsuit (the term escapes me), where everyone who has set foot on the project, or glanced at it while driving down the freeway gets caught in the lawsuit, thereby making it easier to recover legal fees?

[Dick Seibert]

Rick:

I've got to give this some thought, it came as a real surprise to me yesterday. Why would the AGC, a general contractors' organization, want to eliminate the Hold Harmless and Indemnification from their subcontractors? The ASA has been trying to get this eliminated for years, so between the AGC's agreement to both the economic and insurance desires of the ASA I have to think there is some kind of agreement between the AGC and the ASA.

I don't know, but faster pay to subs, along with less liability on the sub's part, and easier insurance qualification might indicate that the AGC is willing to sacrifice this to get more and smaller subs into projects? Maybe to facilitate minority hiring? I suspect the AIA won't go along because their lawyers want as many deep pockets at the settlement table as possible. This is pure speculation on my part, I'm sure we will be reading a lot more about this soon, for the AGC to turn away from years of attempted reconciliation with the AIA is astounding. Obviously it's lawyers for the AIA, AGC, and ASA fighting in the background, subs have fought the "pay when paid" clause for years and I can't believe the AGC capitulated on this issue alone, I have it in my AGC subcontract agreements, never use it, but it's there if I have a bad sub and need it, or if I have a non-paying client, the subs should hang out with me if it gets serious.

[Overbuilders]

I understand. One reason I do much less commercial today than I did ten years ago is the unfair burden placed on companies such as mine to finance jobs for owners and GCs. Sixty, ninety, and one hundred twenty days out! No thanks. I still look at commercial projects all the time, but if the contract terms are imbalanced, I smile (or laugh) and walk away.

A shortage of qualified subcontractors, per chance? Newly instituted hiring practices in some states that force specialty trades to provide proper and legal documentation prior to employment or face stiff penalties, forcing illegal and undocumented workers to friendlier environs? I sure hope so...

[Dick Seibert]

A shortage of qualified subcontractors, per chance?

Perhaps, the AGC looking to the future with less skilled labor, thinking of going to the NAHB model of subcontracting to employers hiring illegal labor? Just speculating.

[Allan Edwards]

Perhaps, the AGC looking to the future with less skilled labor, thinking of going to the NAHB model of subcontracting to employers hiring illegal labor? Just speculating.

OK, I've been a member of the NAHB since 1980 and pretty well keep up with them but I am not aware of nor have I ever heard of the "NAHB model of subcontracting". I've seen NAHB surveys of what % of their work that homebuilders subcontract (it's a high%-something like 92% of all work is subbed), but I've never seen them promoting a certain model.