New York City construction activity has seen a re-birth with the city accounting for nearly half of the country’s commercial construction activity. A major part of that is the World Trade Center construction but there are other major projects being undertaken such as the renovation of Madison Square Garden and the 10 and 20 year capital construction programs of Columbia University and NYU.
The industry standard in construction documents is the American Institute of Architects (AIA) produced construction agreements. While the AIA forms are certainly an excellent starting place, the trend has been to create owners proprietary agreements for large projects. Some but not all of the major concepts owners need to focus on and negotiate are:
- Timely Completion of Work
- Liquidated Damages
- Keeping within Budget
- Terms of Payment
- Delay Costs
- Warranties
- Dispute Resolution and
- Contract Termination.
While there is no substitute for sound business and construction practices, in addition to the aforementioned concepts, the owner’s success on a project also hinges on sound risk mitigation. Among the most important risk mitigation tools are the contracts governing various parties’ rights and obligations. Some of the key risk management contractual concepts to consider are the indemnity provision, tailoring the insurance requirements to each discipline (design professionals, construction manager, contractors, and subcontractors), builders risk and professional liability insurance, additional insured requirements, waivers of subrogation and how the insurance required has been confirmed or evidenced.
The ALS Group has many years of experience acting as construction risk management advisors for Owners. We act as an “outsourced advisor” for clients in construction in formulating risk management strategies, developing contractual insurance requirements and obtaining appropriate insurance cover.
If you would like to find out more about how to deal with Construction Risk Management issues, please feel free to contact Albert L. Sica, at 732.395-4251 or at [email protected].
