DPLE 110 — Contract Preparation, Negotiation, and Checklists

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DPLE 110 — Contract Preparation, Negotiation, and Checklists

Contract Preparation, Negotiation, and

Checklists

RLI Design Professionals

Design Professional Learning Events

DPLE-110


RLI Design Professionals is a Registered Provider with The

American Institute of Architects Continuing Education

Systems. Credit earned on completion of this program will be

reported to CES Records for AIA members. Certificates of

Completion for non-AIA members are available on request.

This program is registered with the AIA/CES for continuing

professional education. As such, it does not include content

that may be deemed or construed to be an approval or

endorsement by the AIA of any material of construction or

any method or manner of handling, using, distributing, or

dealing in any material or product. Questions related to

specific materials, methods, and services will be addressed

at the conclusion of this presentation.


Copyright Materials

This presentation is protected by US and International

Copyright laws. Reproduction, distribution, display and

use of the presentation without written permission of

the speaker is prohibited.

© RLI Design Professionals


Course Description

This course provides

specific procedures for

all project personnel regarding the

review, preparation, and negotiation

of professional service contracts.

4


Learning Objectives

Participants will:

• Gain knowledge of some basic fundamentals to develop your

own contracts and address nonstandard contracts.

• Learn guidelines and techniques to develop standard terms

and conditions for your own firm.

• Review techniques for successful contract negotiation,

including techniques for negotiating onerous provisions found

in non-standard contracts.

• Develop a checklist to help guide you through the contract

preparation and negotiation process.

5


Preparing for the Contracting Process

It’s not ALL about liability and risk

6


What are the Goals of the Contracting Process?

‣Create trust and respect

‣Facilitate a rapport

‣Create an agreement

‣Identify expectations

‣Confirm roles and responsibilities

‣Allocate risks and rewards

7


Preparing for the Contracting Process

Written

Contract

Verbal

Contract

8


Preparing for the Contracting Process

Why do we Need Written Contracts??

Meets some legal requirements

Communication

Evidence of agreement

9


Preparing for the Contracting Process

Why else do we Need Written Contracts??

Fee collection

Documentation

Preservation of

the

record

10


Preparing for the Contracting Process

Components of the Contract Documents

The Owner/Client

– Design

Professional

Agreement

The Contractor –

Subcontractor

Agreement

Agreement

Between Design

Professional and

Subconsultants

The General

Conditions of the

Contract for

Construction

The Owner –

Contractor

Agreement for

Construction

Supplementary

General

Conditions

11


Components of a Contract

The Scope of Services

The Schedule

Payment Terms

General Terms & Conditions

12


Types of Written Agreements

Standard Forms

of Agreement –

e.g., AIA; EJCDC

Your Firm’s

Terms &

Conditions

Owner/Client

Drafted

Contracts

Purchase

Orders

Letter

Agreements

13


Examples of Standard Agreements

14


Standard Forms of Agreement–Benefits

• Case law

• Documents are coordinated

• Modifications to one are easy to

make to others

15


Terms and Conditions

16


Terms and Conditions–Provisions

Entire Agreement

Changes

Payment Terms

Owner Responsibilities

Standard of Care

Termination

Dispute Resolution

17


Terms and Conditions–Additional Provisions

Ownership and Use of Documents

Factors beyond your control

Hazardous Materials

Cost Estimates

Governing Law

18


Types of Owner-Drafted Contracts

Owner / Client

Drafted Contract

Owner Drafted

Specific to the

Project

Owner Standard

Form of Agreement

for all of their

Projects – including

Master Agreements

Modifications to the

AIA or other

Professional Society

Standard Forms of

Agreement

Owner Drafted

Modifications to your

Contract

Purchase Order

19


Owner-Drafted Contracts

Among the pitfalls to watch for:

‣ Onerous requirements

‣ Unbalanced, favoring the Owner

‣ Allocating more risk to the design professional

‣ Overly broad definition of basic services

‣ Aggressive schedules

‣ Creating unreasonable, unrealistic expectations

‣ Potential to perform services for no fee

‣ Most rights granted to the Owner

20


Purchase Orders

These warranties shall be in addition to any

other warranties, express, implied, or

statutory. All warranties shall run to Buyer,

its customers and subsequent owners of

goods or products to which they relate.

There are no exclusions, limitations, or

disclaimers of warranty other than those

that may be expressly recited therein or in

the Purchase Order. All warranties shall be

construed liberally in favor of Buyer….

21


Letter Agreements - Provisions

Detailed project description

Identification of the Owner/Client

Project specific scope of services

Additional services

Excluded services

Owner/client responsibilities

Payment terms

•Compensation

•Method and frequency of payments

Schedule

22


Negotiations – It’s Just Business

23


Negotiations - The Preparation Process

‣ Develop the goals of the process

‣ Align your negotiating team with the goals

‣ Negotiate your own contract

‣ Review the contract beforehand

‣ Use available contract review resources

‣ Internal

‣ External

‣ Develop a list of the most difficult questions

‣ Who, what, where, when, why, and how

‣ Find common ground

‣ Have a plan B, C, D, etc.

‣ Know your deal breakers and compromises

‣ Do some homework about the other party

24


Negotiation - The Preparation Process

Identify and

define goals

and

expectations

Develop a

foundation

of trust and

respect

Identify

potential

risks

Create a fair

and

balanced

agreement

25


Negotiation - The Preparation Process

Your Negotiating Team

Negotiate Your Own Contract

26


Negotiation – The Contract Review

Use available contract review resources –

internal and external

Your attorney

Your insurance broker

Your insurance company

Your principal

Project manager

27


Negotiations – Develop List of Questions

Who

How

What

Why

Where

When

28


Negotiation - The Preparation Process

Find common ground

Have a plan B and a plan C

and a plan D

Know your deal breakers

and compromises

29


Negotiations – Research the Other Party

30


Negotiations - Useful Tips

Keep in mind that your firm is a trusted

resource

Remember that yours is the right firm

for this project

Seek common ground

Be firm but considerate of the needs and

goals of both parties

Negotiate with the intent to create a

mutually agreeable contract

31


This concludes The American Institute of Architects

Continuing Education Systems Program

Laurel Tenuto, Client Risk Management Coordinator

Laurel.Tenuto@rlicorp.com

Barbara Sable, Director, Professional Enterprise Risk Solutions

Barbara.Sable@rlicorp.com

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