While the risks and exposures in construction can be broad and complex, the contractual risks and exposures are perhaps the most integral factor in construction risk management. Failure to understand, identify and formulate solutions for contractual risk management can leave a contractor emerged in litigation, financial problems and insolvency. Whether you're creating a contract, adopting a contract, or signing a contract, understanding the key risks and the risk transfer mechanisms contained in the verbage is an essential ingredient in minimizing your exposures and risks.
The American Institute of Architects (AIA) contract documents comprise more than 80 forms that define the contractual relationship involved in the design and construction of projects. While use of the AIA forms is broad, there are elements that may favor the designer or the architect and leave the contractor harboring more of the risk.
In response, Associated General Contractors (AGC), Associated Builders & Contractors (ABC) and eighteen other construction trade associations have come together on ConsensusDOCS, a series of 70 documents which aims to allocate the risks to the parties in position to control and manage the risks.
Every construction contract is broken down into general conditions (see menu bar on the left). The verbage within the general conditions will vary from contract to contract, and with that carry different risks and exposures for all parties involved in executing the project under the contract.
Resources
Contract Risk Assessment Form
Killer Clauses in Construction Contracts (Oles Morrison Rinker & Baker)
Differing Site Condition Clause (Construction Risk)
Contract Risk Tranfer (IRMI)
Construction Contract Checklist (Southernstar Consultants LLC)
Top 10 Most Important Clauses of a Construction Contract (Defense Counsel Journal)
Standard Forms & Common Risk Transferring Provisions (Dickinson Wright)
Construction Contracts: Traps for the Unweary - I (Douglas Colville Peterson)
Construction Contracts: Traps for the Unweary - II (Douglas Colville Peterson)
