Transcript No Slide Title

Protecting the
City’s Interests in
Construction
Contracts
2014 NLC-RISC Staff Conference
St. Paul, Minnesota
October 20, 2014
Agenda
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Construction contract forms
AIA revisions
Insurance requirements
Indemnification
New AI endorsements
Game
 “Are You Smarter than a
Pool Administrator?”
Families of Construction
Contract Forms
 American Institute of Architects (AIA) -- 1857
 Engineers Joint Contract Documents Committee
(EJCDC) – 1975
 Design Build Institute of America (DBIA) -- 1993
 Associated General Contractors of America
(AGC) – ConsensusDOCS -- 2007
What Group is Missing?
Owners
Beware of “Form” Agreements
Beware of “Form” Agreements
IMLA Working Group
AIA Documents
A201™ — 207 (General Conditions of
the Contract for Construction)
A201™ — 207
 § 1.5.1 (Ownership and Use of Drawings,
Specifications)
 Drawings should be the property of the city,
not the Architect
 § 3.2 (Review of Contract Documents and
Field Conditions by Contractor)
 Impose more stringent requirements on the
Contractor before and during construction
 § 3.5 (Warranty)
 Strengthen contractor’s warranty obligations
A201™ — 207
 § 7.2 (Change Orders)
 Detailed information to city with costs
 § 8.2 (Progress and Completion)
 Require contractor to meet progress schedule
 § 8.3 (Delays and Extensions of Time)
 Adds requirements if project delayed
 § 9.8 (Substantial Completion)
 Further defines what is substantial completion
A201™ — 207
 § 10.2 (Safety of Persons and Property)
 Impose more stringent safety obligations on
contractor
 § 14.2 (Termination By Owner for Cause)
 Add reasons why owner can terminate
 § 15.1.6 (Claims for Consequential
Damages)
 Remove waiver of consequential damages
 § 15.4 (Arbitration)
 Remove arbitration provisions
Copyright Issues
 AIA Contract Documents
 Copyright works owned by the AIA
 You must purchase individual documents
or a license
Copyright Issues
 IMLA has a copyright on the revised AIA
Document A201
 IMLA had a temporary educational license to
use the underlying AIA documents
 IMLA launching web platform to allow
members to use revised A201
Insurance Requirements
of Contractor
Insurance Requirements
of Contractor
 Workers’ compensation
 Include employers’ liability
 Commercial general liability
 Get specific AI endorsements for products
and completed operations
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Business automobile liability
Builders risk
Professional liability (sometimes)
Specialized coverage (sometimes)
How Much Insurance?
Hold Harmless and
Indemnification Provisions
 Hold harmless
 A party agrees not to hold the other party
responsible for any loss, damage, or legal
liability
 Indemnification
 A party agrees to compensate the other
party for any harm, liability, or loss arising
out of the contract.
 Include a duty to defend
Indemnification
Who will be indemnified?
Scope of indemnification?
Broad, intermediate, limited
Indemnity is only as valuable as financial
strength of indemnitor
 Without insurance, it may be difficult to
collect
 Problem areas: railroads
and engineers
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Out-of-Date Insurance Requirements
Antiquated/Incorrect Terminology
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Comprehensive general liability
Public liability
Broad form property coverage
Blanket XCU
Coinsured
Additional named insured
Independent contractors coverage
Cross-liability
Borrowed servant endorsement
Get a Certificate of Insurance
 Document that verifies the existence of
insurance
 Information only
 Not a contract
 Does not give any rights
to the certificate holder
 Does not change the policy
 Additional insured info.
 Endorsements should be shown
Anti-Indemnification in
Construction Contracts
 1984 Minnesota Legislation
 Indemnification prohibited unless insurance
purchased for the benefit of others
 2013 Minnesota Legislation
 A provision requiring a party to provide
insurance for the benefit of another is void
 Some exceptions
New Additional Insured
Endorsements
 ISO filed changes to CGL coverage forms
effective April 2013
 Coverage provided to an additional insured:
 Only to the extent permitted by law
 Not broader than the coverage required by the
contract
 For no more than the limit required by the
contract or the policy limit,
whichever is less
Are You Smarter than
a Pool Administrator?
Questions/Comments
Contact Information
Chris Smith
Risk Management Attorney
League of Minnesota Cities Insurance Trust
145 University Ave. West
St. Paul, MN 55103
(651) 281 -1269
[email protected]
Protecting the
City’s Interests in
Construction
Contracts
2014 NLC-RISC Staff Conference
St. Paul, Minnesota
October 20, 2014