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Nov 28

The correct choice depends on the circumstances. In short, detailed schedules reduce the potential of incurring additional costs or delays. Requiring the contractor to submit detailed schedules at regular intervals preempts such gamesmanship and can provide significant leverage in a schedule-related dispute down the road. Law Firms: Be Strategic In Your COVID-19 Guidance... [GUIDANCE] On COVID-19 and Business Continuity Plans. This is especially problematic if the basis of the dispute is the architect’s own faulty design. This could occur if the developer is unable to get a certain land permit in place by a certain period of time (a situation over which the developer has relatively little control). Build a Morning News Brief: Easy, No Clutter, Free! Another item for the developer to consider prior to selecting a contracting form is whether to separate contractual responsibility for design services from contractual responsibility for construction. While separating design from construction may be familiar to many developers, this option often leaves the developer in the middle of two disputes (one with its contractor and the other with its architect) if a defect in the work arises later on. Click here to read more about how we use cookies. Without an incentive directly affecting the contractor’s bottom line to protect the work, the developer will end up paying out more on its builder’s risk policy than it otherwise would. AIA forms restrict the developer’s right to withhold payment to the reasonable judgment of the architect. The AIA A101 and A102 forms are the long-form construction contracts intended for use between Owners and Contractors. If such documents have not been fully developed as of date of execution of the contract (which is often the case), then the GMP will have to be developed at a later date. Key components of any successful construction project are selecting an experienced and capable contractor and entering into a well written and thought-out construction contract. If this is the case, an A133 form is more appropriate than an A102 form. Without such attention, a developer may find itself, to one extent or another, at the mercy of the contractor. If the “wrong” AIA form is ultimately used, confusion can ensue and the owner can be saddled with additional and unexpected costs. Releasing retainage at final completion also gives the developer some leverage in ensuring that warranty work is completed diligently. Another item for the developer to consider prior to selecting a contracting form is whether to separate contractual responsibility for design services from contractual responsibility for construction. The best construction contracts motivate the contractor to perform in a timely, efficient and cost-conscious manner by aligning the contractor’s interests with those of the developer to the greatest extent possible. At a minimum, this drives up administrative costs and burdens associated with directing the construction contract. Another common pitfall is using a form designed to be used between an owner and general contractor in a transaction between an owner and a different project participant, such as a project manager. Without detailed schedules, if claims arise with respect to a delay, the developer will be left in an inferior position to the contractor to reject such claims because it will not have the information necessary to truly evaluate the merits of the claim. The ensuing confusion is easily avoidable. If the “wrong” AIA form is ultimately used, confusion can ensue and the owner can be saddled with additional and unexpected costs. One example is if the contractor makes a claim against the developer for additional costs or schedule relief.

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