Experienced construction professionals know their industry is fragmented and composed of diverse and often competing interests. Successful projects, however, are characterized by team members who realize they must align their interests to achieve the desired outcome.
Aligning interests for successful outcomes is a fundamental tenet of ConsensusDOCS, an initiative to develop standardized construction agreements being spearheaded by a coalition of more than 20 leading construction associations. These stakeholders collectively represent public and private owners, contractors, subcontractors, suppliers, designers, sureties and bond producers.
ConsensusDOCS seeks to benefit the risk environment of the construction industry by developing and publishing standardized forms that address risks and responsibilities in the “best interests of the project,” not solely in the best interests of a single party. The ConsensusDOCS coalition advocates that the “doors” of its document development process are open to all organizations and constituencies. The drafting process ensures any constituency with a stake in the development of a specific form has the opportunity to have a meaningful voice, regardless of whether that constituency is a formal member of the coalition.
ConsensusDOCS publishes a comprehensive library of more than 90 standardized forms that cover the main delivery approaches, such as design-bid-build, construction management and design-build. The library also includes coordinated design agreements and subsidiary forms, such as payment applications and change order forms. Further, ConsensusDOCS publishes the most extensive set of standardized bond forms available for private work. User Benefits
Adoption of ConsensusDOCS forms as preferred contract forms may return significant dividends to users, such as increasing the pool of qualified contractors, reducing or eliminating an adversarial environment, fostering positive relationships, avoiding time and cost contingencies to cover unreasonable or misallocated risks, and enhancing the project owner’s business reputation in the construction community. These dividends may translate into reduced total project costs, a lower incidence of project disputes and a shortened project delivery time.
Attributes of ConsensusDOCS forms that set them apart from other standardized forms include:
- integrating agreement forms with general conditions in one document with dispute provisions;
- placing provisions characterizing the relationship of the parties in one section at the beginning of the document;
- assuming the project owner will be an active, not passive, project participant;
- forging a close working relationship between the project owner and the contractor, particularly with respect to project communications and decision-making;
- removing the design professional as the initial decision-maker/arbiter of disputes between the project owner and the contractor;
- preserving, when possible, as much autonomy for project parties to develop their own early solutions to disputes, such as step negotiations and mediation; and
- ensuring multi-party proceedings to preserve the efficiency of the process and the consistency of results.
Use of accepted industry standard form agreements like ConsensusDOCS provides assurance to other key project parties, such as sureties, subcontractors and suppliers, that the provisions are fair and balanced, and do not pose an unreasonable assumption of risk for the prime contractor and downstream parties. Moreover, standard forms contain provisions familiar to insurers and sureties, which facilitates the underwriting processes for critical insurance policies and surety bonds.
Contracting parties, however, should retain knowledgeable legal counsel to review the form contract to ensure all terms and conditions are appropriate to the needs of the parties and are enforceable in the specific jurisdiction of the project.
Simply put, ConsensusDOCS is a unique effort that follows a tried and true model for construction projects—communicating and aligning party interests to achieve successful results. For more information about ConsensusDOCS and a listing of all available standardized forms, visit www.consensusdocs.com
A recently published standardized form, ConsensusDOCS 300, promises to make many project participants rethink their roles on construction projects. It establishes the expectations for a collaborative project environment upfront. The principal parties must form a project management group focused on collaborative decision-making and communication. The owner, the design professional and the contractor are all represented in the management group, which strives to reach decisions “in the best interests of the project” through consensus.
One advantage is that key trade contractors, at the discretion of the management group, can be consulted during the early stages of design and participate in preconstruction.
Moreover, the principal parties have the opportunity to share the risks and rewards of the project by establishing a financial incentive program. For example, the project parties may agree to release one another from the results of project decisions made collaboratively by selecting a “safe harbor” decision-making policy.
Lean construction principles—aligned interests, expansive communication, transparent decision-making and thorough planning—are evident throughout the structure of ConsensusDOCS 300.
ConsensusDOCS 300 anticipates that the parties may exchange documents and data electronically by providing an electronic communications protocol. It also lays the foundation for the parties to use building information modeling.
Next on the ConsensusDOCS “change” agenda: a standardized addendum for green building requirements.Mark H. McCallum is general counsel and director of government relations for the National Association of Surety Bond Producers, and Robert J. Duke is director of underwriting and assistant counsel for The Surety & Fidelity Association of America. For more information, email firstname.lastname@example.org or email@example.com.