Womble Carlyle Construction Industry Blog

Following the construction industry and related legal topics in the United States.

Friday, December 21, 2007

North Carolina General Assembly Strives for Efficiency in 2007

As we reflect on the legislation enacted by the North Carolina General Assembly that impacts the construction industry in 2007, the goal of the General Assembly for 2007 can be summarized in a single word: efficiency. The need for energy efficient buildings, efficient cost practices, and efficient review of construction plans that will allow outdated buildings to be renovated and many needed new public buildings to be built more rapidly appears to be the primary objective for 2007. The following is a brief summary of the laws that demonstrate the apparent need identified by the General Assembly for legislation that will promote a more efficient construction process in North Carolina:

  • S.L. 2007-397 (SB 3) - Promote Renewable Energy/Baseload Generation: N.C. Gen. Stat. §62-110.1 was rewritten to address the necessity for an analysis of the future needs for expansion of generating facilities and specified that a certificate would only be granted for a coal or nuclear facility if it meets, among other requirements, the energy efficiency standards adopted by the legislature.
  • S.L. 2007-446 (SB 73) - Improve State Construction Process: N.C. Gen. Stat. §143‑135.26(2) was revised in an effort to “expedite the plan review, approval and permit process” through the development of a “memorandum of understanding” that would state the dates for meetings and plan reviews as well as an estimated plan review time for the reviewing agency. N.C. Gen. Stat. §143‑341(3) was amended to include the requirement of a meeting of the “stakeholders for each State capital improvement project” to review the responsibilities of the project.
  • S.L. 2007-303 (SB 735) - Construction Plan Review: As of October 1, 2007, N.C. Gen. Stat. §58‑31‑40(b) requires that any plan for a building consisting of 20,000 square feet be submitted to and approved by the Commissioner for review of the safety of the building.
  • S.L. 2007-365 (SB 1245) - Retainage Payments/Construction Contracts: As discussed in greater detail in a previous blog, N.C. Gen. Stat. §143-134.1 was rewritten to provide specific requirements for a more efficient release of retainage payments to subcontractors in state construction contracts.

(This entry was published by Culley Carson, a member of Womble Carlyle's construction law practice group.)

Thursday, December 13, 2007

AIA Study: Green Wave

According to an article recently published in AIArchitect for the week of December 7, 2007, the American Institute of Architects recently completed a study of current green building laws and the effectiveness of green building programs in American cities with a population of more than 50,000.

The numbers in the study evidence the green wave that has been flowing over our country. Nearly 15 percent, or 1 in 7 surveyed cities, currently have green building programs. When considering projections based on green programs currently in the advanced stage of development, the percentage increases to 20 percent. Because of urban density living patterns, 39 percent of US citizens or approximately 42 million Americans live in cities with green building programs. Since 2003, the number of cities with green building programs has increased by a factor of four.

Although the green building movement is still fairly new, it is taking root and flourishing. For those readers who prefer keeping their heads buried in the sand, watch out for the wave. (This entry published by Ken Michael, a member of Womble Carlyle's construction law practice group.)

Tuesday, December 11, 2007

Changes to the AIA Owner-Architect Agreement

In November of 2007, the American Institute of Architects ("AIA") released significant revisions to many of its standard form design and construction agreements. The AIA’s Standard Form of Agreement between Owner and Architect (AIA’s B101-2007) varies greatly from its 1997 predecessors (AIA B141 and B151). While everything about it demands scrutiny before it is used, a few of its more notable changes (and non-changes) are discussed below.

Back by popular (architect) demand...

  • Mutual waiver of consequential damages leads the list of significant non-changes. This so-called “mutual waiver” was added for the first time in the 1997. Owners have, however, criticized its practical effect as being anything but “mutual” – claiming that the typical burden of consequential damages falls far more heavily on owners than it does on architects. While acknowledging this controversy, the clause is popular among architects; and so the AIA elected to keep it in the 2007 forms.


  • One contract form. For reasons that baffled many observers, the AIA, in 1997, split its standard form Owner-Architect Agreement into two documents, the first featuring project-specific information and the second containing a description of services common to most projects. In 2007, the two parts were recombined – and a standard form exhibit was added in which to supply much of the project-specific information.

  • Insurance. For more than 100 years, the AIA standard form did not impose an obligation on architects to provide professional liability insurance. That changed with B101-2007, which also requires that the parties specify the amount of coverage for general liability, workers compensation, and automobile liability.

  • Dispute resolution. In previous generations of AIA documents, the architect was given initial decision-making authority in most disputes, and was integrally – if not decisively – involved in resolving them. Doubts were raised, in many cases, as to the architect’s objectivity, especially when the dispute at-hand involved the conduct of the architect. B101-2007 provides the parties with the opportunity to formally appoint an independent “Initial Decision Maker” (“IDM”) – although, if the parties fail to do so, the AIA form designates architect as IDM by default.

  • Litigation v. arbitration. The 1997 Owner-Architect Agreement contained a mandatory arbitration clause. B101-2007, in contrast, allows the parties to designate whether disputes that are not resolved by mediation will be resolved by litigation or arbitration. [Note, however, that the AIA software pre-designates arbitration as the means of binding dispute resolution – but that pre-designation can be overridden.]

  • Standard of Care. Previous generations of AIA Owner-Architect Agreements did not expressly indicate a standard of care. That changes with B101-2007, which states that “[t]he Architect shall perform its services consistent with the professional skill and care ordinarily provided by architects practicing in the same or similar locality under the same or similar circumstances....” This new language suggests, if not imposes, a locality-based standard of care. How this will mesh existing judicially-established and recognized standards of care remains to be seen. Parties may also find this new standard of care challenging to apply or prove, depending on the project and the location.

The 2007 AIA Owner-Architect Agreement is peppered with many other changes and departures from the 1997 form. Close attention must be given to each before the form is employed on a particular project. (This entry published by David Roberts, a member of Womble Carlyle's construction and real estate development practice groups.)

Wednesday, December 5, 2007

Furman University's "Center for Sustainability" - a "green" house stylish enough for Southern Living

Growing interest in sustainable housing and energy-conscious construction is reflected on the campus of Furman University, which is in the midst of building Cliffs Cottage, to be featured in Southern Living magazine next year. As reported in the Buildings & Grounds blog of The Chronicle of Higher Education
"The house will be a showcase green design and construction methods, and it will be certified under the Leadership in Energy and Environmental Design (LEED) program. Ed Marshall, director of special projects at Furman, says the house will feature geothermal heat pumps, water cisterns, tankless water heating, spray-foam insulation, nontoxic building materials, and an array of solar panels from different manufacturers. The house will be used to test some new building technologies."
The project is a partnership between Furman, located in Greenville, South Carolina, and Duke Energy. According to a press release from Furman, Duke Energy has contributed $1.5 million over five years "to highlight the company’s energy efficiency, Utility of the Future and sustainability initiatives. The immediate area around the Cliffs Cottage will be known as Duke Energy Village." (This entry published by Liz Riley, a member of Womble Carlyle's real estate development and construction practice groups.)

Tuesday, December 4, 2007

2007 AIA A201 General Conditions of the Contract for Construction: Proceed with Caution

On November 8, 2007, The American Institute of Architects ("AIA"), released its decennial revisions of the AIA family of documents. For those who may be thinking they will simply insert these brand new documents in future contract negotiations, you may do so at your peril. While many of the changes reflect changes parties have been making for years to the standard form A201, others require a cautionary approach in determining how these changes will impact your organization and the way that it administers its Contract Documents.

For example, the new A201 begins by adding additional detail to the Architect's copyrights or Instruments of Service, which are now defined. Instruments of Service are now defined in new Section 1.1.8 as:
representations, in any medium of expression now known or later developed, of
the tangible creative work performed by the Architect and the Architect's
consultants under their respective professional services agreements.
Instruments of Service may include, without limitation, studies, surveys,
models, sketches, drawings, specifications, and other similar materials.

With respect to the Architect and the Architect's consultant's, the new 2007 A201 also further defines the rights afforded to each of the Architect and its consultant's in Section 1.5.1 and prohibits "[t]he Contractor, Subcontractors, Sub-subcontractors, and material or equipment suppliers" from using the Instruments of Service "on other projects or for additions to this Project outside the scope of Work without the specific written consent of the Owner, Architect and the Architect's consultants."

In the Commentary to the 2007 A201 changes, the drafters indicate that the new language serves to protect "the interests of the owner, architect and architect's consultants, and also serves to protect the public from harm that may result from their misapplication." While no additional insight is provided as to the reasoning for the change, or how specifically the owner, for example, stands to benefit from the prohibition, the new language appears to beg more questions than it answers. While the public policy and safety arguments afford the drafters a convenient explanation, as a practical matter, the new language will likely cause more problems for owners and contractors than it will resolve. For institutional owners who seek to construct an addition on to their existing structure, for example, what happens if the original architect of record or its consultants cannot be located years after an original structure was designed? Does a new owner of the building step into the shoes of the Owner under the Contract who constructed the building such that the new owner may seek and obtain permission to use the drawings? What royalties will an owner or contractor have to pay as part of the Contract Sum to use the Instruments of Service? Can the Owner use the drawings to coordinate with the drawings of a new architect in the design of an addition?

These are but a few of the questions that emerge when reviewing just these few Sections of the new 2007 A201. The lesson in all of this? As parties begin to move towards implementation of the new Contract Documents, they should invest time upfront to understand how the changes made to the 2007 AIA Contract Documents will impact how they enter into and administer the Contract Documents on future projects. Many of the new changes will have to be further revised (or deleted) and companies' internal policies will also have to be changed to be sure that the new changes to the AIA Contract Documents reflect each company's daily contract administration practices.

We will continue to discuss the changes in the AIA documents in future blogs. (This entry published by Culley Carson, a member of Womble Carlyle's construction law practice group.)

Monday, December 3, 2007

Green Building is killing birds at Emory University

Reflective glass on the Mathematics and Science building at Emory University is so attractive that dozens of birds confuse the view, smashing into the panes during migratory season. The problem is not unique to Emory, however. "Turns out, environmentally friendly buildings are often bird killers. Ornithologist Daniel Klem, a professor at Muhlenberg College in Pennsylvania who has studied the problem for decades, said between 100 million and 1 billion birds die in the United States each year in collisions with glass," as reported in the Atlanta Journal-Constitution. The story describes various efforts by Emory (which drapes the windows with netting during migratory season) and other colleges to help the birds out, noting that construction and glass companies may need to be involved in considering ways to address the problem. (This entry published by Liz Riley, a member of Womble Carlyle's construction and real estate devleopment group.)