Comparative Contracts Independent Exercise:
Instructions: Three different projects are being constructed by your firm, which is a multi-disciplinary and multi-market Construction Management firm in the mid-Atlantic.
As part of your panoply of services, your CM firm uses model contracts from the three primary model contract developers in the United States: 1) American Institute of Architects (AIA), 2) AGC's ConsensusDocs, and 3) the Engineers Joint Contracts Documents Committee (EJCDC), which is a consortium of ACEC, ASCE and NSPE, three prominent engineering non-profit groups. During this year, your firm will use a different subcontract (AIA 401, ConsensusDocs 750, or EJCDC C-523) for each of the three different projects described below:
1. New Oxford Town Parks and Recreation Area - Your firm has been awarded the $5 million prime contract for the Recreation area, and you have decided to subcontract the $850k work for the Site Drainage, Retention Pond and Parking Lot to the low bid excavation and paving contractor. Fill out the appropriate subcontract form for Solid Earth Excavating Company, including appropriate CSI specification sections, likely drawing series (Letter specific) and amounts. The Owner is particularly concerned about certain aspects of the project, including environmental protection and sustainability, insurance and bonds, and unit prices for parking lot paving in the event that the Town has additional funding available later in the project. Ascertain where the contract addresses particular issues and provide specific citations, and if the contract does not adequately address the issue, provide alternative language for insertion in a specific section of the contract that is related to the issue. Issues include: a.) Due to the Owner's concern over environmental protection, the Subcontractor must submit and have approved a site pollution prevention and stormwater management plan, as well as addressing dust and noise that may affect the habitat of the Great Grey Owl; b.) The Owner is insisting on a two-year contractor's warranty rather than a standard one-year warranty, which may affect insurance and bonds of the Subcontractor; c.) although a larger parking lot is shown on the drawings, only a portion is paved with 3 inches of asphalt, with the remainder only surfaced with compacted gravel and stone, with a possible change order for additional paving later in the project; and d.) after the start of the project, excavation at the retention pond site revealed a buried electrical cable that was not shown on the drawings or mentioned in the specifications.
2. Alloway Elementary School - The new $25 million elementary school project in south Jersey has been awarded to your firm, and you are somewhat concerned over the low roof slope of 1/4" to the foot shown on the roof plans. The roof assembly consists of tapered insulation and a 60 mil EPDM ballasted rubber roof, and your subcontractor has signed a $1.2 million subcontract to install the roof and associated system (insulation, flashing, penetrations, curbs, sealants, etc.) and provide a warranty of 20 years for the system. The Owner is insisting on full replacement cost under the warranty for the entire 20 years, which presents a challenge for obtaining appropriate insurance and/or a roof bond. The subcontractor has also - despite generally reliable work for a variety of clients in the past five years - been cited for safety violations after more than one employee was injured, and worker's compensation rates have ballooned. It is incumbent on you to make sure the Subcontract addresses safety, worker's compensation, and having safety meetings weekly to stave off any additional injuries and to maintain a safe work site. You may also want to check the termination provision in case Blue Sky personnel do not comply with your "safe site" requirements, and you may have to finalize the work using another Subcontractor. Complete the subcontract for Blue Sky Roofing Company by listing appropriate drawing series (designate prefix letters) and identify what CSI specification divisions will be appropriate to the work of Blue Sky, as well as finding the provisions necessary to address the issues above. Enumerate each of the Subcontract provisions and provide additional contract language (and specify where the language should be inserted, if necessary) to cover all of the legal issues mentioned above.
3. Glassboro Garden Apartments - The $10 million Glassboro Garden Apts project consists of two and three story masonry block buildings using CMU and bar joist construction with facing brick on the entrance elevations only. A subcontract has been signed with Grapevine Masonry Company to perform the $420k of work related to this craft specialty. Grapevine is an old line subcontractor, known for quality work at a slow pace. Due to the Owner's early completion, schedule, you are worried about being done on time. First, identify what drawings and specifications are likely to be necessary for this aspect of the work, and fill out the contract with this information. Next, address time and completion issues and determine whether the Subcontract language is strong enough to ensure that this Subcontractor performs on time. Grapevine is also known as a firm that constantly looks for change order opportunities for issues such as tooled mortar joint quality, lintel size, additional reinforcing for walls or anchorage and acceleration due to interference by other subcontractors. Does your subcontract address all of these issues or is additional language needed? Please reassure your firm that the provisions (identify each) cover these issues, or provide new language and show where to insert the text. Given the Subcontractor's continuing propensity to ask for change orders and to constantly gripe about payment, you have decided to place Pay-If-Paid and Pay-When-Paid clauses in the Subcontract. However, if you are late on any payments, you will agree as prime to pay appropriate interest (identify the provision). You will want to cap the overhead and profit on any legitimate change order claims by Grapevine to a maximum of 10% and 10%. If time is of the essence on the contract, you will also want to have mutual agreement on a progress schedule and have this schedule inserted as an Exhibit in the contract.
Please remember the importance of flow-down (and flow-up) of obligations under Contractor -Subcontractor relationships. You may submit a separate itemized listing of the above issues with explanations, or you may annotate your contracts and submit them for review.