Page 246 - Urban Construction Project Management

Contracts 201
5. Liquidated damages or consequential damages
• The contractor is usually better off with a specified sum for each day lost than
having to determine what the cost expenses might be at some future date.
• The schedule has to be clearly defined.
• Achange initiated by the owner must be detailed as to the possible extension of time.
• Never agree to any consequential damages. They may include items by the owner
that would be completely out of the scope of the project. If it cannot be avoided,
then a list of all the consequential damages (with the costs) must be enumerated.
The contractor should review this and unreasonable items should be eliminated.
6. Force majeure
• Events or circumstances beyond the control of the parties. Examples could be
war, flooding, earthquakes, tornados, hurricanes, and volcano eruption.
• Force majeure clause must be part of the contract. Thus, weather information
history for the area in question must be analyzed.
7. No damages for delay (by the owner)
• This is an onerous contract provision and should be deleted. It typically states
that the contractor’s sole and exclusive remedy, if delayed, is a time extension.
The CM/GC should be paid for any event precipitated by the owner that will
cause the project schedule to extend beyond the original agreed upon date.
• Any delay caused by the owner will cause extensive costs to the CM/GC. This
could be additional general conditions, subcontractor costs, and potential infla-
tionary costs for material and labor.
8. Warranty
• Warranty for construction is usually for 1 year (except for certain work and equip-
ment that may have an extended warranty).
• When does the warranty period start? AIA documents state that the warranty
period will start from substantial completion of the project.
• Substantial completion as defined by the AIA is the period when the facility can
be occupied for the owner’s beneficial use.
• If the owner should occupy the space prior to substantial completion, then the
responsibility of the owner must be detailed in writing as to the owner’s obliga-
tion for non-completed areas. This could include protection of the walls, ceiling,
and flooring; rebalancing of the mechanical systems; and early start-up costs for
all systems.
• Make sure that any warranty does not include maintenance of the equipment dur-
ing the period unless expressly requested in the design documents.
• If the owner wants the CM/GC to attend any meetings after the warranty period,
then define the meetings and how the CM/GC will be paid.
9. Allowances
• When documents are presented that are not complete, an allowance must be
indicated.
• Make sure that any allowance is based on as much information as possible pro-
vided by the design team.