Surety Bond Quarterly - Fall 2015 - (Page 29)
Feature
ConsensusDocs
Contracts Help
ENSURE
SMOOTH
SAILING
Balanced contracts enhance bottom lines.
BY BRIAN PERLBERG
"FISHERMEN KNOW THAT the sea is
dangerous and the storm is terrible,
but they have never found those dangers sufficient reason for remaining
ashore," stated Ferdinand Magellan,
an explorer from Portugal who
became the first to circumnavigate
the earth. Construction contracting
is also a risky adventure. According
to the results from the Construction
Financial Management Association
(CFMA) Annual Financial Survey of
2013, net income follows a decreasing pattern, falling from 2.4 percent
in 2012 to 2.1 percent in 2013, with
a five-year average of 2.7 percent.
One way to improve project results
for both constructors and owners is
to use fair construction contracts.
ConsensusDocs, a coalition of 40-plus
leading organizations, including
NASBP, is committed to identifying
and using best practice contracts to
improve our industry.
Owner-directed changes
Constructors are in the business
of building projects, not financing
them. One area of particular concern is the way that some contracts
place 100 percent of the financial
burden of changes to the work upon
the constructor. Unique to construction, material changes are actually
expected on almost all projects. In
most business contexts, a material
change is a breach of contract that
gives rise to damages. Owner-directed
changes are customary features of the
construction landscape, and construction contracts permit such changes.
If an owner directs a change but disputes that the work is out of scope, the
constructor can be stuck financing the
NATIONAL ASSOCIATION OF SURETY BOND PRODUCERS | WWW.NASBP.ORG
29
http://WWW.NASBP.ORG
Table of Contents for the Digital Edition of Surety Bond Quarterly - Fall 2015
2015-2016 Executive Committee
NASBP Upcoming Meetings & Events
From the CEO - Resources: Forms, Opinions & Risk Management Practices
Practical Insights: What You Need to Know - Key Takeaways
Alternative Project Delivery, Alternative Risks
Contractors in a New Age of Product Delivery - Sharing Design Liability
DBIA Releases New Bond Forms for Design-Build Projects
AIA’s New Teaming Agreement: AIA Document C102TM–2015
ConsensusDocs Contracts Help Ensure Smooth Sailing
NASBP’s Seven Virtual Seminars on Leadership
Guidance in Addressing Ethical Dilemmas
Web-Exclusive Features
2015 NASBP Resource Directory
Index to Advertisers
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