Module 1 - Module Based, Bonus Content Test 2-Module_1_Resource_Risk_Mgmt_Constructon_Docs_APWA

Module_1_Resource_Risk_Mgmt_Constructon_Docs_APWA_2014

Pdf Summary

The article argues that construction contracts should allocate risk fairly rather than shifting excessive burden to contractors. Fairness benefits everyone: contractors can price work more accurately, owners receive more competitive bids and lower long-term costs, and design professionals face fewer claims and conflicts.<br /><br />It identifies common contract clauses that allocate risk, including differing site conditions, indemnification, insurance, contract time, safety, control of work, and payment terms. The author warns that owners and designers often unintentionally create unfair terms, especially when they modify standard forms or rely on non-specialist legal drafting.<br /><br />Several real contract examples are cited, such as clauses that favor the owner in ambiguities, make the contractor responsible for all site conditions, impose extremely short claim notice deadlines, and require contractors to indemnify owners for the owners’ own negligence. These provisions may discourage bids, raise prices, reduce competition, and increase disputes. In some cases, such clauses are unenforceable.<br /><br />The author recommends that risk be assigned to the party best able to control it. For uncontrollable events, such as force majeure, risk should be shared equitably. Standard documents from organizations like EJCDC, AIA, and DBIA generally do a better job of balanced risk allocation because they are developed by stakeholders from multiple perspectives.<br /><br />The conclusion is that overly one-sided contracts create hidden costs and tension. Fair contracts lead to better pricing, fewer disputes, and more successful projects.

Keywords

construction contracts

risk allocation

contract fairness

differing site conditions

indemnification

insurance clauses

claim deadlines

force majeure

standard contract forms

dispute prevention