Steven Beattie, AOD's executive director, said the group's goals are to educate owners and equip them to operate more successfully. Beattie cites the Business Roundtable as an organization with a similar focus. But other owner-related organizations have different perspectives. For example, the Building Owners and Managers Association deals primarily with management and operational issues, while the National Realty Committee addresses legislative matters that affect building owners.

AOD recently sponsored a seminar in Washington, D.C., that drew 132 attendees. "Mastering the Art of Affordable, On-Time Delivery" was the seminar theme. Topics discussed covered a broad array of subjects, including privatization, delivery methods, project financing, contractual terms and conditions, allocation of risk and dispute avoidance.

Speakers and panelists included representatives of the U.S. General Services Administration, the Army Corps of Engineers, the Naval Facilities Engineering Command, construction companies, public agencies, educational institutions, real estate managers and manufacturers. Walt Disney, Mobil Oil and Georgia-Pacific were among the companies represented.

Issues discussed included the use of public-private partnerships for development purposes rather than as a dispute-avoidance mechanism; the pros and cons of design/build as a project delivery system; the use of construction management on an "at risk" basis rather than as an agent of the owner; and the qualifications upon which construction managers should be evaluated.

Risk allocation and the reduction of conflicts among building team members were subjects that generated spirited debate. Although meeting attendees did not come away with solutions that pleased all segments of the industry, general agreement on common goals was evident. These included a well-defined scope of work, fair contract terms, willingness to seek nonadversarial solutions to problems and greater use of mediation before resorting to arbitration or litigation.

Revised AIA documents analyzed

The 1997 editions of AIA's owner-designer agreement (B141) and owner-contractor agreement (A201) were a subject of major interest. Frank Baltz, a Washington, D.C. attorney who specializes in construction law, compared differences between the latest edition and the 1987 edition with regard to the owner's role in developing the project program. He also discussed the definition of the architect's services, and cautioned owners to be wary of arrangements that permit the architect to specify the number of hours he will spend reviewing shop drawings and making site inspections. He stressed the importance of clearly providing that if the initial architect does not complete the project, the owner's replacement architect may make modifications to the original drawings. He said "mandatory mediation," which B141 suggests as a precondition to arbitration, is unenforceable.

While these discussions represented only part of the total commentary about contract clauses in the revised A201, they nevertheless indicated that owners are more likely now than in the past to critically review specific provisions of today's more complex contracts.

Comments on the changes made in the 1997 edition of B141 were particularly far-reaching, and covered issues such as the requirement that the contractor provide Project Management Protective Liability Insurance. This is a new coverage, paid for by the owner, that is intended to eliminate third-party bodily injury and property damage claims against owners, designers and contractors. However, some attendees suggested that the requirement should be eliminated from the contract because it is unclear that such policies are available in all states or that the concept has been sufficiently analyzed to know how it will work.

Other comments about the 1997 AIA documents urged that the waiver of consequential damages provisions of A201 be revised to permit owners to waive damages to the contractor as well as permit the contractor to waive such damages to the owner. It was argued that the much-debated A201 provision of delegating design work to the contractor should be deleted entirely. "In promulgating this provision, AIA is clearly attempting to shed itself of traditional professional responsibility. One possible unintended by-product may be that contractors will be forced to develop further in-house design/build capability, thereby supplanting the need for an independent design professional," Baltz said.

Comments made at the meeting do not necessarily represent consensus views, nor those of the AOD. But they are a clear indication that debates will continue about the relationships between owners and other members of the building team.

The concept for AOD is about five years old, but the organization was not truly launched until last year, according to Beattie. The McLean, VA-based group has 1,500 owner/developer members organized on a regional basis. This allows an owner who enters a new market to learn about design and construction firms, business opportunities, environmental considerations and possible investors in the area.

Milton F. Lunch is former general counsel of the National Society of Professional Engineers, and presently is a consultant on architect/engineer legal matters. No statement in this article should be acted upon until your attorney assures you that it applies to your situation.

Reproduced With Permission By
Building Design & Construction Magazine
Vol. 39 #10 page 35, October 1998