CONSTRUCTION & DESIGN AGREEMENTS FOR OWNERS. Presented by ALEXANDER F. FERRINI, III
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1 CONSTRUCTION & DESIGN AGREEMENTS FOR OWNERS Basics for Projects of All Sizes Presented by ALEXANDER F. FERRINI, III
2 Why do I need an agreement?
3 Why do I need an agreement?
4 Why do I need an agreement? Design Fee control Schedule Budget control Ownership of documents/designs Insurance / Liability issues
5 Why do I need an agreement? Construction Cost control Schedule control Insurance / Indemnity Personnel Subcontractor protection Close out Warranty
6 Design Agreements: Initial Considerations One consultant or many?
7 Design Agreements: Initial Considerations Consultant Owner Architect Engineer Architect Owner Consultant Engineer
8 Whose form? Design Agreements: Initial Considerations
9 Whose form? Design Agreements: Initial Considerations AIA
10 Design Agreements: Initial Considerations Whose form? (or why you should not use AIA agreements) Architect as agent?
11 Design Agreements: Initial Considerations Whose form? (or why you should not use AIA agreements) Architect as agent? Architect as arbiter?
12 Design Agreements: Initial Considerations Whose form? (or why you should not use AIA agreements) Architect as agent? Architect as arbiter? Architect as witness?
13 Price Fee Design Agreements: Contractual Issues Basic services Additional services Reimbursable expenses
14 Price Fee Design Agreements: Contractual Issues Basic services Additional services Reimbursable expenses Of the Work Design to budget? Change orders?
15 Schedule Design Agreements: Contractual Issues Design Schedule Design phases C / A Services
16 Schedule Design Agreements: Contractual Issues Design Schedule Design phases C / A Services Of the Work Response time: Submittals RFI s, clarifications & sketches Change orders
17 Design Agreements: Contractual Issues Copyright What is it and who cares? Intrinsic value Additional fees / multiple locations Shield / sword in fee disputes
18 Design Agreements: Liability to who? Liability Issues 1 st Party (breach of contract / negligence / standard of care ) 3 rd Parties (indemnification)
19 Design Agreements: Liability to who? Liability Issues 1 st Party (breach of contract / negligence / standard of care ) 3 rd Parties (indemnification) Professional Liability Insurance
20 Design Agreements: Liability to who? Liability Issues 1 st Party (breach of contract / negligence / standard of care ) 3 rd Parties (indemnification) Professional Liability Insurance Limitation of Liability
21 Initial Considerations Pre-Con? LOI?
22 Initial Considerations Pre-Con? LOI? DO say in writing you are not obligated to pay until a formal contract is in place
23 Initial Considerations Pre-Con? LOI? DO say in writing you are not obligated to pay until a formal contract is in place DON T accept a proposal
24 Initial Considerations General Contractor vs. Construction Manager? What s the difference?
25 Initial Considerations General Contractor vs. Construction Manager? What s the difference? Privity Owner Architect Contractor Sub-Contractor
26 Initial Considerations General Contractor vs. Construction Manager? What s the difference? Privity privity TC TC A O TC A O CMa TC CM TC privity TC
27 Initial Considerations General Contractor vs. Construction Manager? What s the difference? Pricing
28 Initial Considerations General Contractor vs. Construction Manager? What s the difference? Pricing Fixed Price ( Lump Sum )
29 Initial Considerations General Contractor vs. Construction Manager? What s the difference? Pricing Fixed Price ( Lump Sum ) Cost Plus
30 Initial Considerations General Contractor vs. Construction Manager? What s the difference? Pricing Fixed Price ( Lump Sum ) Cost Plus Cost Plus, with a guaranteed maximum price ( GMP or Gmax )
31 Initial Considerations GMP Concepts Open Book Savings Contingency
32 Initial Considerations GMP Components Cost of the Work (i.e., the Trade costs)
33 Initial Considerations GMP Components Cost of the Work (i.e., the Trade costs) $10,000,000
34 Initial Considerations GMP Components Cost of the Work (i.e., the Trade costs) General conditions costs actuals / lump sum / % $10,000,000
35 Initial Considerations GMP Components Cost of the Work (i.e., the Trade costs) General conditions costs actuals / lump sum / % $10,000,000 $800,000
36 Initial Considerations GMP Components Cost of the Work (i.e., the Trade costs) General conditions costs actuals / lump sum / % Fee (Lump sum / %) $10,000,000 $800,000
37 Initial Considerations GMP Components Cost of the Work (i.e., the Trade costs) General conditions costs actuals / lump sum / % Fee (Lump sum / %) $10,000,000 $800,000 $324,000
38 Initial Considerations GMP Components Cost of the Work (i.e., the Trade costs) General conditions costs actuals / lump sum / % Fee (Lump sum / %) Contingency $10,000,000 $800,000 $324,000
39 Initial Considerations GMP Components Cost of the Work (i.e., the Trade costs) General conditions costs actuals / lump sum / % Fee (Lump sum / %) Contingency $10,000,000 $800,000 $324,000 $400,000
40 Initial Considerations GMP Components Cost of the Work (i.e., the Trade costs) General conditions costs actuals / lump sum / % Fee (Lump sum / %) Contingency Insurance & Bonds $10,000,000 $800,000 $324,000 $400,000
41 Initial Considerations GMP Components Cost of the Work (i.e., the Trade costs) General conditions costs actuals / lump sum / % Fee (Lump sum / %) Contingency Insurance & Bonds GMP = $10,000,000 $800,000 $324,000 $400,000 $648,000 $12,172,000
42 Scope Construction Agreements: Contract Issues Warranty of documents vs. everything I need
43 Scope Construction Agreements: Contract Issues Warranty of documents vs. everything I need Contract Language
44 Scope Construction Agreements: Contract Issues Warranty of documents vs. everything I need Contract Language Contractor to provide intended result Work that is reasonably inferable
45 Scope Construction Agreements: Contract Issues Warranty of documents vs. everything I need Contract Language Contractor to provide intended result Work that is reasonably inferable CM vs. GC
46 Schedule Contract Issues What is Substantial Completion? What is Final Completion (and who says so)? Liquidated damages? Delays and schedule claims
47 Schedule Contract Issues What is Substantial Completion? What is Final Completion (and who says so)? Liquidated damages? Delays and schedule claims The Critical Path
48 Contract Issues
49 Contract Issues
50 Payment Contract Issues Schedule & cycle Conditions precedent Lien waivers SOV Retainage
51 Contract Issues Additional Concerns Claims / Change Orders
52 Contract Issues Additional Concerns Claims / Change Orders Notice as a Condition Precedent
53 Contract Issues Additional Concerns Claims / Change Orders Notice as a Condition Precedent Waiver / Release
54 Contract Issues Additional Concerns Claims / Change Orders Notice as a Condition Precedent Waiver / Release Course of Conduct
55 Additional Concerns Contract Issues Claims / Change Orders Personnel / Staffing
56 Additional Concerns Contract Issues Claims / Change Orders Personnel / Staffing Subcontractors Approval Payment
57 Additional Concerns Contract Issues Claims / Change Orders Personnel / Staffing Subcontractors Approval Payment Warranty
58 Additional Concerns Contract Issues Claims / Change Orders Personnel / Staffing Subcontractors Approval Payment Warranty Indemnity / Insurance
59 Summary & Questions Olshan Frome Wolosky LLP Alexander F. Ferrini, III Park Avenue Tower 65 East 55 th Street New York, NY (212)
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