GUC – German University in Cairo
Architecture and Urban Design
ARCH 702 Legislation, Professional Practice and Contracts Fall 2017 Instructor: Dr. Yasser Mahgoub
Contracts 1
The Contract! The Most Important Document That You’ll Never Ever Use… Hopefully
The Contract! A legal agreement between owner and architect that clearly communicates a project’s terms and conditions, determine responsibilities of each party and set expectations for schedule and payment for services.
Contract Basics
Contract Basics • Why have a written contract? – Mutual understanding • Better understanding promotes better relationships
– Establishing your own rules • Law will govern over silent issues
– Sizing up your client • Understand your clients attitudes and motivations
– Identifying and allocating risk • Candid discussion of risk fosters agreement between parties
Contract Types • • • • •
Oral Agreements Letter Agreements Consultant-Drafted Agreements Client-Generated Agreements Professional Associations Standard Agreements • Continuing Service Agreements
Contract Basics • First Comes the Proposal – Following an initial meeting to discuss the basics of the project, the architect will follow up with a Letter of Proposal. – a letter – identifies each party – location of the property involved – brief description of the project – scope of services to be performed – proposed compensation structure – a call-to-action for what’s next in the process
Contract Basics • The Handshake – simplest agreement – Verbal – no written documents! – no legal contract – no legal protection – should be avoided at all costs!
Contract Basics • Letter of Intent – prepared by the architect – forwarded to the owner – thoroughly defines the services – signed by the architect – requires no signature or written confirmation from the owner – minimal legal protection – followed up with more formal legal agreements
Contract Basics • Letter of Agreement – one or two page document outlining: • • • •
the project description the basic terms and conditions of the agreement defined responsibilities for each party basic compensation structure
– prepared by the architect and signed by both parties – offers limited protection
Contract Basics • Architect-Prepared Contract – prepared in-house by the architect – reviewed by an attorney – more beneficial to the relationship between owner and architect – fully developed legal contract – thoroughly developed terms and conditions – provides adequate legal protection for both parties
Contract Basics • Contract Documents – legal documents prepared by architectural profession organizations – very formal legal format – very formal legal format of the documents may be intimidating to some residential and small commercial clients, often resulting in additional review by the owner’s attorney
Contract Basics • Elements of a Contract – Agreement - offer is accepted – Consideration - the inducement or motive – Legal form - neither illegal nor against public policy – Competent parties - legal age, mentally competent and have authority – Legal purpose
Project Delivery Methods
Project Delivery Methods • Traditional Methods – Design-Bid-Build • Traditional form of project delivery characterized by its three phases, dual contracts and linear sequencing of the work.
– Negotiated Design Team • Sometimes referred to as design-assist, it brings the contractor into the design process.
Project Delivery Methods • Construction Management – Construction Manager as Advisor • A construction manager is brought to the design team who acts as advisor to the owner.
– Construction Manager as Agent • The construction manager is given the authority to act on the owner’s behalf.
– Construction Manager as Constructor • The construction manager is hired to act as project coordinator and general contractor.
Project Delivery Methods • Design-Build – Design-Build • Single point of responsibility for the project.
– Design-Build as Developer • Design-build entity takes on some responsibilities of real estate development.
Methods of Compensation
Methods of Compensation • Time-based Methods – Multiple of Direct Salary Expense – Multiple of Direct Personnel Expense – Professional Fee plus Expenses – Hourly Billing Rates
• Other Methods – Stipulated Sum – Percentage of the Cost of the Work – Square Footage, Unit Cost, Royalty
Design Contract Administration • Agreements influence internal methods of contract document preparation – Bidding and Negotiating – Fast-track projects – Specifications and drawings – Multiple prime contracts – Work by owner
Construction Contract Administration • Agreements influence construction administration duties – Lump sum vs. cost plus (with or without guaranteed maximum price) – Construction observation responsibilities – Division of responsibility with construction administrator – Payment schedules and procedures – Project closeout requirements
END