BEC Attendees Learn About Risk Management and Contract
Las Vegas is a town for risk-takers, where just like in construction,
you can win it all-or lose it all. So perhaps Vegas was the appropriate
venue for contract glaziers to attend the Glass Association of North
America's BEC Conference earlier this week, where one of the hot
discussion topics was risk management. In addition to risk management
several of the conference's speakers talked about other contract-related
issues for contract glaziers, including contract insurance.
Colette Nelson of the American Subcontractors Association (ASA)
spoke to attendees about new versions of the American Institute
of Architects (AIA) AIA A201 -- General Conditions and A401 - Model
Subcontract documents. Both will be available later this year. She
said that contractors and subcontractors have looked to AIA as having
the most accurate documents for many years. ASA has concerns, though,
over the new versions.
"Immediately, for your own protection, if you're using any
documents that reference AIA documents you need to be very sure
that it specifically references the 1997 AIA documents," Nelson
said. "The new set [may not have] have the provisions that
protect you now."
A group called the Construction Industry Contracts Coalition (CICC)
was formed to represent the interests of the construction industry
in developing and publishing consensus contract documents based
on areas such as best practices and proper risk allocation.
"The participants truly believe that this will stabilize industry
transactions," said Nelson. "It gives an alternative to
contractors, designers, etc. who are no longer comfortable with
the AIA documents." She explained that the CICC believes the
new documents [on which it is working] will decrease individual
transaction costs. "When you reach a stalemate you have something
in the industry to point to on which everyone agrees."
Nelson says the CICC's documents will include conditions that go
beyond AIA A 201, including insurance, protection against back-loading
and limitations on warranties, etc.
In addition, ASA will be modifying its subcontract addendums to
reflect the new contract documents.
"The new ASA bid proposal will urge you to condition your
bids on the new construction industry's subcontract form,"
she said. "We are also issuing a broad, comprehensive education
process to enter this new era of construction documents through
webinars, teleconferences and regional conferences."
She closed by encouraging subcontractors to condition their bids.
"If you don't, you have nothing to go back on."
Richard Usher, from Hill & Usher LLC, an insurance and surety
agency, also spoke during the conference. His focus was on contractor
insurance, indemnity and risk transfer. He explained that when people
are jointly responsible for something in tort, they are jointly
or proportionately libel; most have the notion that liability should
be in proportion to the contribution of their liability.
"In absence of tort liability, we put together contracts and
decide how we are going to allocate risk," he said. "I
like to think that in construction, contract control and liability
should be connected. ASA is on a mission to apply more comparative
negligence standards across the states-we call it the Pottery Barn
explanation; if you broke it you own it."
Usher talked about different indemnity provisions, beginning with
broad form indemnity. "This essentially stands for the proposition
that if I am an owner and I want to hire a sub, if something goes
wrong, even if it's not my fault, I am not going to be responsible
for it," he said. "That's a pretty tough situation for
trade contractors to find themselves in-to take on the responsibilities
of a much larger consequence of their work."
Intermediate is another form of indemnity. Usher said that it is
intended for the purpose that so long as the entity asked to be
indemnified, there does not need to be fault on the part of the
General indemnity, Usher explained, is a limited indemnity. "You
can supplement the tort with a contract indemnity where you are
only responsible to the extent of the party's fault or cost."
Usher also reviewed ASA's subcontract chart of anti-indemnity statutes
by state. "You need to know when you work in one state or another
that the laws may change," he said.
"You also need to know more about insurance [today] than you
used to," Usher said. "We need to let legislators know
that we will be 100-percent responsible for our own fault, but we
will not be 100-percent responsible for those [issues] that are
not our fault," he added. "We can be fully responsible
for that which we do wrong. The builders want proportionate liability;
I want to connect control and responsibility."