The 2024 窪蹋勛圖厙/FMI Study highlights key risks in the construction industry. Based on responses from 窪蹋勛圖厙's in-house risk managers workgroup (collected Dec. 2023 Jan. 2024), the top concerns include labor shortages, design issues, changes in insurance terms and costs, project delays or cancellations, and changes in contract language. However, one of the most alarming trends highlighted by the study is the uptick in subcontractor defaults. Seventy percent of respondents are seeing an increase in subcontractor defaults compared to one year ago, with nearly half reporting firsthand experience of project disruptions due to subcontractor defaults. Root causes behind subcontractor distress include financial instability, lack of skilled labor, and quality issues -- especially affecting electrical, plumbing, and concrete trades. In response, construction risk managers are enhancing subcontractor prequalification measures, including more thorough financial and staffing evaluations, seeking out new subcontractors, and increasing review frequency.
Change can be difficult. Newly added guidance available from the 窪蹋勛圖厙 Contract Documents Forum helps members navigate change in design-build construction contracts and beyond.
ConsensusDocs is about to publish an updated standard ConsensusDocs 235 Owner/Constructor Standard Agreement. The ConsensusDocs 235 provides a short form standard prime contract. Construction work payment is based upon cost-of-the-work plus a fee. This type of cost/plus contract increased in popularity amid the post-pandemic breakout price uncertainty that led to price escalation and supply chain disruptions that were highlighted in this article. The ConsensusDocs 235 cost/plus agreement does not include a guaranteed maximum price (GMP) (as compared to the ConsensusDocs 230). The ConsensusDocs 235 is a great choice for projects that want greater collaboration and transparency by avoiding the potential hard edge of a GMP.
Progressive Design Build (PDB) differs from traditional design-build and has grown in popularity, especially for bigger projects. PDB allows an Owner to quickly select a design-builder based upon qualifications or best value. Design plans progress to completion after award selection. Consequently, the cost for design-builders to compete is significantly less. The project price is fixed when more uncertainties become known. Also, predetermined contractual off-ramps potentially allow the parties to exit the project. This webinar will help you decide if PDB helps balance risk, increase transparency, and reduce budget busts.
ConsensusDocs publishes a monthly construction law newsletter that you can sign up for free at the bottom of this page here. ConsensusDocs compiles the top five most-read articles of the year in January as an interesting way to reflect on the previous year as well as indicate some of the trending topics that lie ahead. For 2023, the most-read articles were:
A takeaway from this years Construction Superconference was a growing apprehension regarding the risk associated with design-build projects, especially for large mega projects. In four key sessions, concerns surfaced about the project delivery methods efficacy in fairly allocating risk. Concerns about risk in design-build have previously been reported in ENR. The debate continues over how to share risk and reward among all the parties to the construction process. Amidst these concerns, progressive design-build emerged as a promising variation to the traditional design-build approach. Progressive design-build emphasizes a qualifications-based selection to expedite decision-making and reduce costs. This article explores the pivotal discussions at the Construction Superconference, revealing the industry's quest for a more balanced and efficient approach to risk allocation in design-build projects.
Together, 窪蹋勛圖厙 of America and its Illinois Chapters have achieved a major breakthrough as to commercial general liability insurance (CGL) coverage for construction defects under Illinois law. The Illinois Supreme Court issued its opinion in Acuity v. M/I Homes of Chicago, LLC, Docket No. 129087 on Nov. 30, 2023. The case involved CGL coverage for construction defects resulting in water damage to a townhome project. In that context, the Supreme Court clarified the law to agree with many state supreme courts that such property damage is an occurrence in Illinois. The Supreme Courts clarification is extremely favorable to the construction industry and was supported by an amici curiae brief sponsored by 窪蹋勛圖厙 of America, National Association of Home Builders, American Subcontractors Association and local chapters in Illinois.
ConsensusDocs recently introduced noteworthy updates to its most used prime and subcontract agreements, detailed here. In this article, well take a closer look at the revisions made to the short forms, which are more frequently used than the long forms. These streamlined documents, particularly the ConsensusDocs 205 Agreement Between Owner and Constructor & General Conditions (Short Form), have undergone strategic changes to enhance clarity and efficiency while maintaining the integrity of essential terms and conditions.
Help Us Generate a Comprehensive Outlook for 2024 by Taking the Survey Each year around this time, 窪蹋勛圖厙 asks you our members to predict what next year will be like for your business. 窪蹋勛圖厙 has partnered with Sage to prepare questions that focus on expectations for market performance, hiring, labor market conditions, etc. Please take a moment to complete the survey here. 窪蹋勛圖厙 of America will use the survey results to help make the case with elected and appointed officials in support of key member priorities. The more people who complete the survey by Thursday, December 7, the more effective the results will be in supporting our work on your behalf.
State construction laws and case law interpreting those laws dramatically impact your contract and, thereby, your risk profile on a project. Before you sign or bid on your next construction contract, it is wise to have a system to navigate these laws. ConsensusDocs is presenting a webinar on November 9th (Register here), providing a systematic approach to navigating critical construction laws and the latest trends. Specific laws covered will include hot-button state construction laws, such as pay-if-paid, indemnification, prompt pay, and notice requirements.