Every business contract is different, but most of them have at least one thing in common: they’re put in place to protect the legal rights of a company when it engages in any type of business relationship or transaction.
Knowing that each design-build project comes with its own requirements, risks and nuances, Holly Streeter-Schaefer, an attorney and chair of the Design Build Institute of America’s (DBIA) Contracts Committee, says it’s important to understand all potential project risks first. This is important because contracts are all about “allocating risk,” she explains.
“The DBIA forms (available at dbia.org/dbia-forms) are a great starting point that contain a lot of the provisions that you would want to see in most design-build contracts,” Streeter-Schaefer says. “The forms are flexible and allow you to modify as needed for your project’s specific requirements.”
The DBIA’s list of forms cover agreements such as those between the design-builder and owner, for consultant services, with subcontractors, and even proposal and warranty bonds. These forms touch on every aspect of a project and clearly lay out how the project should proceed. They include details about additional services provided by the design-builder, owner’s responsibilities, how payments are handled, who oversees subcontractors, liability for workers’ compensation, resolving disputes, and when the contract can be terminated.
Within the agreements themselves, dealers should use clear, concise language to define each party’s obligations and rights to the other. This will help businesses account for all the obligations, rights and allocated risk. And while dealers may start off with a standardized form that incorporates elements like payment terms, indemnifications, insurance requirements and change order rights, they will also have to modify the language to meet each project’s specific needs.
“Depending on the type of project and who your client is — greenfield or existing site, public or private owner, etc. — there will be different provisions to include,” Streeter-Schaefer advises. “The advice I always give people is to understand the project and your role in it (i.e., what you are and aren’t going to do) and ensure that your contract is consistent with that.”
Randy Truitt, vice president at C&T Design and Equipment Co., Inc., says maintaining a degree of flexibility is also important when drawing up design-build contracts. You can also build upon the experiences from past projects when drawing up new contracts.
“We’ve learned something from every design project we’ve worked on,” Truitt says. “We get boots on the ground, visit the locations and spend a lot of time with the clients not just talking equipment, but talking operations, contracts and other elements that contribute to the overall project success.”