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

Surety Bond Quarterly - Fall 2015