Volume 42, Issue 4 - April 2007
BEC Conference Sessions Focus on Risk Management for Contract Glaziers
Risk management was an appropriate discussion topic for the Glass Association of North America’s Building Envelope Contractors Conference that took place last month in Las Vegas (turn to page 72 for full-conference coverage).
Colette Nelson of the American Subcontractors Association (ASA) spoke about new versions of the American Institute of Architects (AIA) A201—General Conditions and A401–Model Subcontract documents. Both will be available later this year. For years, contractors and glazing subcontractors have looked to AIA as having the most accurate documents. ASA has concerns, though, about the new versions.
“Immediately, for your own protection, if you’re using any documents that reference AIA documents you need to be very sure that it specifically references the 1997 AIA documents,” Nelson said. “The new set [may not have] the provisions that protect you now.”
A group called the Construction Industry Contracts Coalition (CICC) has been formed to represent the interests of the construction industry in developing and publishing consensus contract documents based on best practices and proper risk allocation.
“The participants truly believe that this will stabilize industry transactions,” said Nelson. “It gives an alternative to contractors, designers, etc. who are no longer comfortable with the AIA documents.” She explained that the CICC believes the new documents [on which it is working] will decrease individual transaction costs. “When you reach a stalemate you have something in the industry to point to on which everyone agrees.”
In addition, ASA will be modifying its subcontract addendums to reflect the new contract documents.
“The new ASA bid proposal will urge you to condition your bids on the new construction industry’s subcontract form,” she said. “We are also issuing a broad, comprehensive education process to enter this new era of construction documents through webinars, teleconferences and regional conferences.”
Richard Usher, of insurance and surety agency Hill & Usher LLC, also spoke during the conference. His focus was on contractor insurance, indemnity and risk transfer. He explained that when people are jointly responsible for something in tort, they are jointly or proportionately libel; most have the notion that liability should be in proportion to the contribution of their liability.
“In absence of tort liability, we put together contracts and decide how we are going to allocate risk,” he said. “I like to think that in construction, contract control and liability should be connected. ASA is on a mission to apply more comparative negligence standards across the states—we call it the Pottery Barn explanation; if you broke it you own it.”
Usher talked about different indemnity provisions, beginning with broad form indemnity. “This essentially stands for the proposition that if I am an owner and I want to hire a sub, if something goes wrong, even if it’s my fault, I am not going to be responsible for it,” he said. “That’s a pretty tough situation for trade contractors to find themselves in—to take on the responsibilities of a much larger consequence of their work.”
Intermediate form is another type of indemnity. Usher said that it is intended for the purpose that so long as the entity asked to be indemnified, there does not need to be fault on the part of the subcontractor.
General indemnity, Usher explained, is a limited indemnity. “You can supplement the tort with a contract indemnity where you are only responsible to the extent of the party’s fault or cost,” he said.
Usher also reviewed ASA’s subcontract chart of anti-indemnity statutes by state. “You need to know when you work in one state or another that the laws may change,” he said. www.glasswebsite.com