Form to formation: the search for front-end efficiencies can derail construction project agreements.

• Author: Davis, Paul
• Position: BUILDING ALASKA

In all but the smallest construction projects, written project agreements are a necessity and, depending on the complexity of the project and number of parties involved, can evolve from a few pages to many. When anticipating construction projects, parties often spend more time visualizing the project itself, overlooking the time or money necessary to fully develop a new project agreement. The result is the frequent use of standard form agreements that are modified, many times by the parties themselves, to fit the circumstances of the new project's specifications. While this may create efficiencies, project owners may find themselves more disadvantaged by the use of standard forms than contractors and designers.

Where architects have the American Institute of Architects (AIA) and contractors have the American General Contractors Association (AGC), owners and developers lack the national organizations that help draft project agreements with their interests in mind. This is not to say that either the AIA or the AGC actually tries to take advantage of owners in their form agreements, but no one can say that architects or contractors are placed in secondary positions by their own organizations. Private owners often end up with agreements provided by someone else, frequently a project designer, project supervisor or general contractor. When you think about it, it makes sense. Where an individual owner may be involved in one construction project in his lifetime, a contractor may build a hundred. Who is more likely to have a contract form available when the talking gets serious?

Language in standard form agreements represents compromises that have been made between unknown entities who are often committee members of organizations. The committees assigned to develop the form's language consider legal precedent when interpreting language of other contract forms in order to predict how the language in the standard form for the committee they are developing will probably be interpreted and applied by courts in the future.

This is an inexact science. No committee can accurately predict which court will review the language of their form, when it will be reviewed, or the factual circumstances of the project. The result is language which may reflect general principles of intent but does not fit to a specific project in a specific jurisdiction. Owners should understand that their feelings of comfort in seeing familiar language in an agreement provided by...