June 19, 2020
by Kevin O’Beirne, PE, FCSI, CCS, CCCA
Sometimes combining dissimilar things can be surprisingly beneficial (e.g. chocolate and peanut butter). In other instances, mixing different items can have adverse results, and may need expert guidance (the author acknowledges the advice and comments on drafts of this article from Gerard Cavaluzzi, Esq., vice-president and general counsel at Kennedy/Jenks Consultants, Inc., New York). A great example of the latter is when architects and engineers preparing construction documents are allowed to employ their own standard specifications for a project, but need to use the owner’s own, possibly unique documents for Division 00–Procurement and Contracting Requirements.
Combining Divisions 01-49 specifications with a set of Division 00 documents with which they are not coordinated is akin to performing a head transplant. Failure to do the complex operation correctly can result in a set of construction documents that is like Frankenstein’s monster: unpredictable, uncontrollable, and dangerous to everyone.
Consequences of improperly coordinated construction documents
Several adverse consequences may occur if the Division 00 documents—especially the owner-contractor agreement and general and supplementary conditions—are not well-coordinated with the specifications of Divisions 01-49.
Gaps in the contractual requirements
Busy design professionals with limited budgets may not have the time to read all the owner’s Division 00 documents and may assume that certain topics are covered therein, as they are in the design professional’s own Division 00 documents. Such an assumption may be fraught with risk that may not be revealed until a problem arises during construction, such as submittal of a claim. In such circumstances, it is not unusual to discover the required clause is not in the contract. Explaining that to the owner would be uncomfortable, and could be harmful to the designer’s business interests.
This is the opposite of the problem discussed above. Instead of omitting an important clause, the contract documents have two or more provisions covering the same topic, often using different wording. This increases the potential for conflicting requirements. In construction disputes arising from conflicting contract language, courts and arbitrators may rule that only the less-stringent provision is enforceable or, even worse, invalidate all the articles that are in question and substitute its own interpretation.
At the time of pricing, when bidders know or suspect there are gaps or conflicts in the proposed contract documents, they may add contingencies to the bid price(s), thus increasing the project cost for the owner. The same thing can happen when negotiating changes in the contract price during construction. A clear, well-coordinated set of construction documents likely results in fewer contingencies, and thus reduces the overall project cost.
Increased potential for changes, claims, and disputes
An ill-coordinated set of documents has the potential to foster a difficult construction stage, as the design professional and owner seek to clamp down on change proposals and added costs, while the contractor tries to get what they believe is due. Such changes, claims, or disputes may arise directly from gaps or conflicts in the contract documents, or may manifest later as the contractor seeks to recoup a loss from another, unrelated change issue. No one budgets for war during construction, so fighting a seemingly endless series of skirmishes is costly, tiring, dismaying, and can result in embarrassment and deteriorated relationships. All these negatives are less likely to occur when the documents are well-coordinated with each other.
Another consideration is specifications obtained from sources outside the design professional’s own standard construction documents. Third-party documents may have been drafted to coordinate with other Division 00 documents or none at all. Such specifications, when used, need editing to coordinate with the project’s Division 00 documents.
Basic, yet critical principles
When the construction documents are organized in accordance with CSI’s principles—and most of them are to some extent—there is a ‘system’ at work, which many design professionals and owners may be unaware of. Understanding this is critical to achieving a properly coordinated set of construction documents. According to CSI MasterFormat, Division 00 comprises procurement and contracting requirements and includes the documents indicated in Figure 1.
When the project involves using Division 00 documents with which the design professional is unfamiliar, it is important for the architectural or engineering team to read and understand them.
The project’s general conditions, which may be modified by supplementary conditions, set forth broad administrative and procedural requirements and basic allocations of risk and responsibility that are often expanded on in Division 01 specifications. Thus, Division 01 should have a close relationship with the general conditions. These are further expanded in “Part 1–General” of the Division 02-49 specifications via requirements specific to the work results of that section. This essential interrelationship of the general conditions, Division 01, and “Part 1–General” of the specifications is illustrated in Figure 2.
Professionals preparing construction specifications need to understand the importance of these interrelationships to reduce the potential for coordination problems at the construction stage.
To underscore this point, the organization of topics in Division 01 of CSI MasterFormat—used for organizing the spec sections and other documents in project manuals—is identical to the order of topics in “Part 1–General” of CSI SectionFormat, which is an organizational format for the provisions within a specifications section.
The documents in the project manual—Division 00, addenda, and the specifications of Divisions 01-49—are not the only ones requiring coordination. The drawings as well as the terms and terminology used in them must be consistent with the project manual.
Once construction starts, the need for coordinating documents continues, as the design professional drafts contract modifications such as change orders. To ensure consistent interpretations, all the components of the contract documents need to be fully coordinated and integrated with Division 00 and each other.
Perhaps the best way to ensure coordinated construction documents is for the owner to allow use of the design professional’s own standard construction documents, which, presumably, include Division 00 documents that are well-coordinated with Divisions 01-49 specifications. In many cases, this means the architect’s standard specifications are coordinated with the standard Division 00 documents of the American Institute of Architects (AIA), especially AIA A201, Standard General Conditions of the Contract for Construction, and engineers’ standard construction documents for engineer-led projects are coordinated with the Division 00 documents of the Engineers Joint Contract Documents Committee (EJCDC), especially EJCDC C-700, Standard General Conditions of the Construction Contract.
However, many owners have their own set of Division 00 documents. Often, an owner’s Division 00 is unique to them and has many years of entrenched history, thus they and their legal counsel may be reluctant to allow design professionals to use their own AIA or EJCDC Division 00 documents. So, it is often necessary for design professionals to combine Divisions 01-49 specifications with the owner’s Division 00 documents. The following tips can help effect the necessary coordination among the documents.
Identify the source documents in the design professional’s scope of services
In the design professional’s proposal and scope of services, the source documents for Division 00 and the specifications should be clearly identified. Failure to do this could create a deep hole in the design professional’s budget and schedule. If the signed professional services agreement clearly identifies the source documents, and the owner later decides other documents are necessary, the design professional has a basis for negotiating a suitable amendment to the contract, with appropriate changes in compensation and time. As discussed later in this article, the time needed to use different Division 00 documents can be substantial.
Properly budget the effort
Even under ideal circumstances, many architects and engineers under-budget the preparation of Division 00 documents and specifications. The time and effort to coordinate specifications with someone else’s Division 00 can be considerable. In this writer’s experience, not less than 40 to 80 work hours by an experienced specifier, already familiar with the project’s Division 00, is necessary to edit the Division 01 specifications in order to coordinate with an owner’s non-standard Division 00. Also, additional time is required for appropriate coordination of revisions in Divisions 02-49, although the effort for that may be less on a per-section basis than what is necessary for Division 01.
Read, understand, and heed Division 00
It is critical for the design professional to read, understand, and heed Division 00 prior to drafting any Divisions 01-49 specifications. The professional responsible for reviewing the owner’s Division 00 should carefully make notes during his/her evaluation of the document as reminders of the provisions that need to be coordinated with the specifications, especially Division 01. Among other things, it is critical to note what is not covered in the owner’s Division 00 but is covered in the Division 00 with which the design professional’s standard specifications are coordinated. There may be opportunities to incorporate provisions from the design professional’s Division 00 into either the owner’s Division 00 or, where appropriate, the project’s Division 01 specifications.
Read, understand, and heed Division 01
Someone has to read the Division 01 specs, too. Optimally, it should be the same person who reviewed the owner’s Division 00. It is advisable to prepare more additional notes on the coordination needs for Division 01.
Consistent use of defined terms
It is important to identify the defined terms in the owner’s non-standard Division 00 documents and compare them with the defined terms and terminology used in the design professional’s standard construction documents. Many defined terms used in the design professional’s specifications—typically indicated with either initial-capitals or in all-capital letters—are likely not the same as those in the owner’s Division 00 documents. For example, where AIA and EJCDC documents refer to the project owner as “Owner,” the owner’s non-standard Division 00 may use other terms such as “City,” “District,” or “Company.” Sometimes, the owner’s documents use multiple defined terms to refer to different individuals or entities within the owner’s organization. Where AIA documents call the design professional “Architect” and EJCDC documents use the term “Engineer,” non-standard Division 00 documents may use “Consultant,” “Design Professional,” “A/E,” or something else. Some non-standard Division 00 documents omit the role of the design professional altogether. This poses a significant challenge for the specifier attempting to coordinate the documents.
It is important the defined terms are used consistently across all the construction documents. Sometimes, non-standard Division 00 documents do not locate all the defined terms in one, convenient place, thereby requiring the specifier to hunt for them. In contrast, EJCDC C-700 includes all defined terms in its Article 1. AIA A201 sprinkles its defined terms throughout its 38 pages.
Also, many non-standard Division 00 documents do not consistently use their own defined terms, thus presenting substantial difficulty for the specifier.
Do not assume
If the specifier is inexperienced with this type of work or uncertain about the meaning of a provision in Division 00 or elsewhere in the proposed construction documents, it is best to obtain advice from an experienced person, who understands how to interpret such clauses. If an incorrect assumption is made, the consequences could be significant at the construction stage.
Get them coordinated
There is no escaping it. Someone has to get into the weeds and work out the problems. One can use the notes prepared during the reviews of Divisions 00 and 01. As the design professional goes through the specifications, it is advisable to think critically of whether the topic(s) addressed in that section are coordinated with the owner’s non-standard Division 00, and to be conscious of the gaps that need to be filled.
Unfortunately, more detailed advice is impossible because each set of non-standard Division 00 documents is unique like Forrest Gump’s box of chocolates: “You never know what you are gonna get.”
Other concerns associated with using non-standard Division 00 documents
There are many ways in which a non-standard Division 00 can increase the owner’s and design professional’s risk such as:
It is a dangerous, liability-filled world out there, no matter how much care one takes to avoid damages and loss.
Based on this writer’s review of more than 100 different owners’ non-standard Division 00 documents, a brief overview of common typical risk-management clauses are presented below. The clauses are commonly of concern when using non-standard Division 00 documents. The following should be checked on all non-standard Division 00 documents.
Identification of the design professional
For proper risk management, the design professional should be identified by its full, legal/contractual name and office address in the construction contract. AIA and EJCDC documents do this in the owner-contractor agreement. Often, non-standard documents omit this entirely.
A related matter is to evaluate the third-party obligations on the design professional set forth in the owner’s non-standard documents against the established or likely scope of the design professional’s services during construction. Optimally, the design professional’s third-party obligations noted in the construction contract should match those in the associated professional services agreement.
Including the owner, design professional, and other consultants in the contractor’s indemnification obligations, and as additional insureds
This is a basic, essential risk-management protection that costs the owner very little or nothing, and can save everyone a lot of grief and money in the event of litigation. Such protection is beneficial under most states’ insurance laws and regulations. Often, additional insured status and being included in the contractor’s indemnification obligations are interrelated. Additional insured status is typically available for all types of insurance except workers’ compensation and the contractor’s professional liability insurance. The design professional and their sub-consultants often do not need to be insured on the builder’s risk insurance policy because they rarely have insurable property on the construction site. The significant majority of non-standard Division 00 documents reviewed by this author omit the design professional from these protections, and some leave out the owner as well. In contrast, EJCDC and AIA documents include the engineer, architect, and their sub-consultants along with the owner as additional insureds on most contractor-furnished insurance and also in the contractor’s indemnification obligations. None of these protections reduces the design professional’s insurance costs or need to carry its own liability insurance, but helps to protect the design professional and owner from damage and loss resulting from the contractor’s actions or inactions.
Waiver of subrogation provision
When an insurance carrier pays out a claim, it is not unusual for them to seek to recover the loss from other entities they believe may be responsible or contributed to the loss through litigation against them; this is called subrogation. The insurance carrier cannot sue its own insured (the contractor), but may litigate against the owner, design professional, and other subcontractors and consultants, unless there is a contractual provision requiring the contractor’s insurance carrier to waive its rights to subrogate. Such provisions need to expressly identify the entities to be covered by the waiver, and a written endorsement from the insurance provider is necessary to document that it has, in fact, agreed to waive its subrogation rights. Such a clause costs the owner nothing, and provides significant protection for the entities identified in the contractor’s waiver of subrogation provision.
The standard contract documents of AIA and EJCDC include a waiver of subrogation provision regarding builder’s risk insurance, protecting the owner, contractor, subcontractors, design professional, and other consultants. Many non-standard Division 00 documents reviewed by this article’s author have no waiver of subrogation provision and, when such a clause is included, it usually omits the design professional and other consultants, leaving them exposed to subrogation suits by insurance carriers when they rarely ever had any control over or responsibility for the associated loss.
Controlling the work
Many non-standard Division 00 documents reviewed by this writer allocate to the design professional extensive responsibilities to exert some degree of control over the contractor’s work, usually with the aim of ensuring the latter is doing a good job and is employing competent, experienced tradespersons. While the rationale for such provisions is understandable and seem reasonable at first, they muddy the contractual waters of responsibility for the contractor’s obligation to provide construction in accordance with the contract documents. Widely used standard contracts, such as those by EJCDC and AIA, make controlling work and the means, methods, techniques, sequences, and procedures of construction solely the contractor’s responsibility. The design professional should not have any responsibility to control the contractor’s work or its workers, or to evaluate the workers’ fitness because an obligation comes with a contractual right. Construction is difficult enough without the contractor claiming to be relieved of their contractual responsibilities because “the design professional did not tell me what to do” or to continuously check the workers’ competency and fitness for their tasks.
Safety and protection at the site
Many non-standard Division 00 documents interject, or allow interjection of, the design professional or owner into the contractor’s construction safety and protection procedures. While everyone wants a safe project without any property damage, such provisions create ambiguity as to which entity is truly responsible for safety and protection at the jobsite. Widely used standard contracts such as AIA A201 and EJCDC C-700 make safety and protection the sole responsibility of the contractor, which is where the responsibility should reside. Anything else, no matter how well-intentioned, has the potential to diminish the contractor’s responsibilities for ensuring construction site safety and protection, and increases the risk of the entities with the right to interpose themselves into the contactor’s onsite safety and protection practices.
Ordering work stoppage
Many non-standard construction contracts authorize or require the design professional to either stop or suspend construction work for various reasons, such as safety and protection concerns or when work is not proceeding in accordance with contract documents. However, an order to stop the work also means the design professional may be participating in a three-way mediation session to resolve the contractor’s associated delay claim because this is tantamount to opening the owner’s checkbook. Therefore, an engineer or architect should never have authority, or be obligated to, to stop the work of an owner-hired contractor. Standard contracts such as EJCDC C-700 and AIA A201 allocate such rights only to the owner.
What comprises contract documents?
Most of the non-standard construction contracts reviewed by this writer include multiple, and often, conflicting provisions concerning contract documents. This has significant potential to result in unintended interpretations of what the contract does and does not require, in the event of a claim or dispute. The contract should indicate what constitutes the contract documents at only one location—optimally, in the owner-contractor agreement. The listing and enumeration of the contract documents should be clear, complete, concise, and correct.
When required to use the owner’s non-standard Division 00 documents, it is wise for the design professional to perform a risk-management review with the goals of:
In this writer’s experience, such reviews, when performed by experienced, senior staff familiar with contractual issues, typically require 20 to 30 hours or more, as well as time for meeting with the owner to discuss findings and recommended changes and for making authorized revisions to the project’s construction documents.
It is pertinent to remember construction is a risk-filled business, so it is best to avoid going into construction stage with significant risks handicapping the owner and design professional, who should work together to determine the optimal, cost-effective risk allocations that best serve the project and the participants’ long-term interests. Each risk should be allocated to the party best-able to control and manage it.
When the owner requires the design professional to stitch together a set of construction documents from their own, unique Division 00 and the design professional’s own specifications—which are probably drafted to coordinate with either AIA or EJCDC standard contracts—significant challenges are likely. By heeding the recommendations set forth in this article, owners and design professionals can reap several benefits, including producing well-coordinated construction documents within budget, and with lower risk to the owner and design professional (opinions expressed in this article are the writer’s alone and should not be attributed to any other individual or entity).
Kevin O’Beirne, PE, FCSI, CCS, CCCA, is the national manager of engineering specifications at HDR, a global engineering and architecture firm. He has more than 30 years of experience designing and constructing water and wastewater infrastructure. O’Beirne serves on various CSI national committees and is an ACEC delegate to the Engineers Joint Contract Documents Committee (EJCDC). He can be reached via e-mail at kevin.obeirne@HDRinc.com.
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