Top 5 Reasons to Use a Standardized Contract Document

There is a long and rich history of the development and use of standardized contract documents in the US construction industry. There are several off-the-shelf contract options that have been strategically developed specifically for our industry:

  • 1888–Present – The American Institute of Architects (AIA) first published the “Uniform Contract” for use between an owner and contractor. Today, AIA publishes nearly 200 contracts and forms that are recognized throughout the design and construction industry.
  • 1975Present – The Engineers Joint Contract Documents Committee (EJCDC) was formed with the goal of developing fair and objective standard documents that represent the latest and best thinking in contractual relations between all parties involved in engineering design and construction projects.
  • 1993Present – A handful of the nation’s leaders in the architectural, engineering, and construction industry recognized the surge in use of the design-build delivery method and formed the Design-Build Institute of America (DBIA). Their intention is to be “the true authority on Design-Build Done Right,” and DBIA’s contracts cover all aspects of a design-build project, from preliminary agreement to final payment.
  • 2007–Present – ConsensusDocs was created by 20 organizations in the architecture, engineering, and construction industry with the founding principle that collaboration is key to success. ConsensusDocs aim to create a “meritocracy in contracts rather than a top-down approach that doesn’t adequately consider the expertise and input from other parties involved.

We have all heard comments that the various forms favor or focus on one party or role over the others—AIA is too architect focused, EJCDC favors the engineer, ConsensusDocs is too contractor friendly, etc.—but these anecdotal and often incorrect assumptions are completely outweighed by the advantages of using any of these standard forms of contract. All of these forms are systematically prepared, reviewed, and analyzed by committees of experienced industry professionals on all sides of the table, including professional liability, risk management, and legal experts. If we surveyed the various groups, I am confident they would all agree that the goal of the standardized forms is to create contract documents that are fair, objective, clear, thorough, and consistent with current practice and laws. These contract documents have been carefully crafted with input from all parties—owners, architects, engineers, and contractors—and this involvement truly leads to more fair and balanced risk allocation. These documents are updated on a regular basis to reflect industry trends, court decisions, and changes in applicable laws and regulations. In the correct spirit of standardization, in most cases these documents reflect a balanced and fair approach.

While we could go on and on about the benefits of using these standardized contract forms, we have boiled it down to our top five:

  1. Comprehensive and Fully Integrated. Standardized contract documents reduce the potential for errors, omissions, redundancies, or conflicts in construction documents. The documents are coordinated and integrated.
  2. Appropriate Distribution of Risk. These documents are carefully crafted to appropriately address each party’s role and responsibility, and they provide industry-accepted allocation of risk among all project participants.
  3. Bottom-Line Value. The parties can focus time and energy on developing the best technical solutions rather than on contract negotiations. Onerous or unclear contract terms can lead to the inclusion of unnecessary contingencies or avoidable claim situations.
  4. Facilitates Project Synergy. Tense contract negotiations can cause an adversarial relationship between the parties from the very outset. Standardized documents clearly and systematically address all aspects of the execution of the project. If everyone understands the expectations and processes required under the contract, it is a lot easier to cooperate and collaborate.
  5. Suitably Succinct and Familiar. We’ve all reviewed several-hundred-page contracts that are unnecessarily long and have far too many references to follow accurately. Most of the players in the industry have experience with and are comfortable with the standardized documents. These documents are appropriate in length and complexity and can be easily read and understood by both attorneys and non-attorneys.

Pick your poison on the choice of form but don’t ruin the benefit by adding so many mark-ups that the original is unrecognizable. Sure, every project requires some specific and unique provisions, but by and large, all of these industry forms address the various risk factors appropriately and clearly define the roles and responsibilities in a balanced and fair approach. The most effective way to reduce the price of risk and increase the value for money of a project is to fairly distribute risk to the parties that are best suited to see and manage that risk. As Michael C. Loulakis described in his blog post in January 2022, it is really in the best interest of the project and all parties involved to approach the contract in a fair and reasonable manner. Don’t let your attorneys run wild…we all know where that will get us (written by an attorney 😉).  If you, your representative, or your attorney identify issues with the standardized contract documents, provide feedback to the industry group and lobby them to change the documents. Amazingly enough, they usually listen, and while the changes may come slowly, they do come.

About Maren Fjord, Assistant General Counsel, Alberici

Maren Fjord is assistant general counsel for Alberici, and with a background in construction project management and law firm experience, Maren understands a diversity of viewpoints around the negotiation table. Alberici is a leading contractor in the water/wastewater market and has extensive experience with collaborative delivery methods including design-build and progressive design-build.
Topics: Alberici, Contracts.