Revised Standard Cost-of-the-Work Agreement Adds to Recent ConsensusDocs Updates

ConsensusDocs is about to publish an updated standard ConsensusDocs 235 Owner/Constructor Standard Agreement. The ConsensusDocs 235 provides a short form standard prime contract. Construction work payment is based upon cost-of-the-work plus a fee. This type of “cost/plus” contract increased in popularity amid the post-pandemic breakout price uncertainty that led to price escalation and supply chain disruptions that were highlighted in this article. The ConsensusDocs 235 cost/plus agreement does not include a guaranteed maximum price (GMP) (as compared to the ConsensusDocs 230). The ConsensusDocs 235 is a great choice for projects that want greater collaboration and transparency by avoiding the potential hard edge of a GMP.

Some highlights of the revisions to the 235 include:

• Section 11.3. The requirement for “existing structures” in the Builder’s Risk policy requirements for property insurance was removed. This change acknowledges that obtaining existing structure insurance through a Builder’s Risk policy with reasonable deductibles may not be feasible.
• Subsection 11.3.10. Regarding the Constructor’s comprehensive general liability, instead of saying to the extent of the limits of the CGL Policy, it now reads “to the extent of proceeds paid.”
• Subsection 15.5.3. A reference to the statute of repose was added to time bar claims or causes heard in an arbitration. Some state caselaw has questioned if such time bars apply to arbitration. By addressing this explicitly in the contract, this confusion is avoided and makes it clear that the time bar should apply to arbitration as well as litigation.
• Definition of Days and Business Days. Days and Business days are now defined terms and capitalized terms throughout the document. This avoids potential confusion for timing requirements.

ConsensusDocs 235 is a short form standard agreement. Short form are quite popular within the ConsensusDocs catalog of over 110 standard construction contracts. Short forms are written with “smaller” as well as medium-sized construction projects, they are certainly used on medium-sized projects as well. This article here, explains some of the differences between standard “long” and short-form agreements. Revisions made to the 235 were consistent with the other ConsensusDocs 205 short form prime agreement, which were highlighted in this article here. Additionally, revisions to the most used ConsensusDocs standard document have been highlighted here.

Comments or questions about this article can be directed to Brian Perlberg, Executive Director and Senior Counsel, ConsensusDocs Coalition, perlberg@ConsensusDocs.org.