The Right Front End Documents Can Make
or Break a School Construction Project

By: Sylvia Lynn Gillis and Ben Hyden, Bricker & Eckler Construction Fellow

Reprinted from August 2006 ohioconstructionlaw.com

Highlights. Every project should have them—the legal documents that guide construction from the bidding stage to closeout and payment of retainage. But often form documents are used without thought, and even when these documents are prepared for a specific project and for specific owner needs, they may be tucked away on a shelf and largely ignored once contracts are awarded. The drawings and specifications get all the attention when a construction issue arises. What is worse, on some projects the bidding documents did not even include contract requirements. This article explains what Front End Documents are, why they merit more attention than they are often given, and how they can help your project to come in on time and under budget, or can provide appropriate remedies if it does not. And who doesn’t want that?

Understanding the Contract Documents
During the life of a construction project most owners, architects, construction managers, and contractors know the cabinet or shelf where they store their copy of the drawings and specifications. Many of the parties involved with the construction project review the drawings and specifications on a daily basis. The drawings and specifications are important components of the Contract Documents.

What if we told you that the front section of the project manual that you flip through to reach the specifications when researching an issue on your project is just as important to your project as the specifications? The section of the project manual that we are talking about is often referred to as the Front End Documents. For construction projects included in an Ohio School Facilities Commission classroom facilities assistance program, these documents are called the Standard Conditions of the Contract for Construction.

The Front End Documents usually contain the bidding requirements, contractor forms, and the conditions of the contract—things other than the specifications. Once a construction project has gotten out of the ground and is moving towards completion, it is important that the owner, architect, construction manager and contractor refer back to these documents to confirm that they are following the contract conditions as written for the specific project they are building. It could turn into an expensive mistake for both the owner and the contractor if the project were to go bad and the procedures spelled out in this section were not being followed.

The Contract Documents define the responsibilities of the parties, processes to follow, and contractual obligations. The items included in the Contract Documents are normally defined in the general conditions document. Together, the Contract Documents define the agreement between the owner and contractor. Typically, the Contract Documents include the contract, general conditions, drawings, specifications, and any modifications to the contract.

Owners are familiar with the drawings, specifications, addenda and modifications. However, the most important section for the owner may be the section the owner is the least familiar with—the general requirements and the rest of the Front End Documents.

What Are Front End Documents?
Typically, Front End Documents include these items:

1. Notice to Bidders
2. Instructions to Bidders
3. Bid Form
4. Contractor Qualification Information Form
5. Contract
6. Bid Guarantee & Contract Bond Form or Contract Bond Form
7. General Conditions
8. Special Conditions

For publicly bid construction contracts, the contractor must also complete a personal property tax affidavit and a declaration regarding material assistance/nonassistance to a terrorist organization. Specific projects and types of owners may include other documents, such as EDGE participation forms or equal employment opportunity information and requirements. Depending upon the definition of “Contract Documents” in the General Conditions documents, some or all of the Front End Documents may become Contract Documents.

The contract between the owner and the contractor is just one of the Contract Documents. The contract defines the scope of work, usually by incorporating or referencing all the relevant documents. The contract also provides the time of completion, schedule for liquidated damages, and the contract amount. The contract is the document that the owner and the contractor sign to evidence the entire contract and the organization of the project.

The general requirements section of the specifications is not strictly part of the Front End Documents. However, the general requirements section and the Front End documents often overlap; it is critical to be sure there are no conflicts in how the requirements and processes are stated in each, just as it is important to be sure there are no inconsistencies between the specifications and the drawings. 

Why Are Front End Documents Important?
The Front End Documents are important for several reasons. First, they provide information about what is required to bid on the construction contract and the process for submitting a bid. The Front End Documents also provide bidders with information regarding the owner, any pre-bid meetings, scope of the bid documents, contract requirements, instructions on how to complete the bid form, and the standard for awarding contracts. 

Second, the Front End Documents include the conditions of the contract that will be enforced after the contract is awarded. If these contractual obligations are not included with the bidding documents, the owner cannot require contract provisions that vary from an industry-standard, basic contract. It is important that the form of contract and conditions of the contract be included with the bidding document. These significant, project-specific rules are called the General Conditions of the Contract for Construction, if the project documents are basic AIA form documents.

Finally, other documents and provisions included in the Front End Documents fulfill statutory requirements applicable to school districts. For example, in Ohio, RC §§ 153.54-.571 require a Bid Guarantee and Contract Bond for every competitively bid public contract. The Front End Documents on a competitively bid public contract should state the bond requirements and include acceptable forms. 

What Are the General Conditions?
The General Conditions are a lengthy document that addresses such topics as notice, changes, payment, insurance, warranty, dispute resolution, and many other aspects of a construction project. The General Conditions also contain the risk allocation provisions of the Contract. They are very important for all parties involved in a construction project because they spell out how a project is to proceed and inform each party of its rights and responsibilities.

If written properly, the General Conditions can address and minimize claims and disputes, protect the parties, and provide guidance for resolving the inevitable claim or dispute.

Who should prepare the contract and General Conditions documents? Most owners assume that a standard form agreement written by the American Institute of Architects (called the “AIA”), the Engineers Joint Contract Documents Committee (known as the “EJCDC”) or a variation on the State of Ohio documents is sufficient for their project. Unfortunately, this is rarely the case. Each state has its own body of statutory and case law applicable to public and private construction contracts and projects. These state project-specific requirements are not addressed in standard form documents. 

Therefore, while the standard form agreements have been around for years, are updated regularly and are generally good documents, they do not address or foresee the specific concerns of specific owners in specific locales. School district construction requirements in Ohio are not addressed in standard documents. 

Why is it important to review and modify the General Conditions? One obvious answer is to allocate risk more appropriately. Owners who use boilerplate documents or use the same documents they have always used are probably missing out on changes in the law that could save them money or headaches. 

Modifying contract provisions also enables the owner to include provisions to manage the project and to resolve potential problems before they occur. Modifications, however, must be consistent throughout the Contract Documents. The contract between the owner and contractor must be consistent with the General Conditions, which also must be consistent with the general requirements section of the specifications. An owner should work with an experienced construction attorney to prepare General Conditions that are appropriate to the project.

Specific Provisions in the General Conditions
Standard language in the General Conditions document may not be appropriate or be defined as the owner anticipates. Consider the following:

Insurance. When defining insurance requirements, the owner should be sure the insurance coverages described in the Contract Documents are appropriate for the project by consulting with its insurance adviser and defining the insurance coverage requirements in detail. Builder’s risk coverage, commercial general liability (CGL), and worker’s compensation are all relevant to a construction project. The General Conditions should address, among other things, who should purchase and maintain the insurance, amounts of coverage, waiver of subrogation, additional insureds, types of coverage, and deductibles. When a wall falls down, the owner does not want to discover—too late—that here is no builder’s risk coverage and that the responsibility for purchasing builder’s risk insurance was the owner’s.

Warranty. The warranty and guarantee provision might be the most important provision in the General Conditions. This provision is the contractor’s promise that all the work performed will be in accordance with the Contract Documents and shall not be defective. The warranty and guarantee provision also provides that the contractor must repair any defective work during the warranty period. The owner should review the warranty period and notice requirements to be sure they are appropriate for the nature of the work and consistent with the owner’s expectations. For example, an owner may assume that it has a 25-year roof warranty, but the documents define a shorter period, and the actual warranty given includes exclusions and exceptions that make it meaningless. 

Indemnification. The standard AIA indemnification provision is very limited. An indemnification provision should require a contractor to indemnify and hold harmless the owner against claims, costs and damages arising out of the performance of the work. This means that the owner will not have additional expenses caused by something the contractor did or did not do. This clause allows the owner to avoid exposure for the acts or omissions of the contractor. An experienced construction lawyer can advise the owner about the specific language to include. 

Contract Bond. School construction contracts, in general, must be competitively bid. Ohio law requires that the successful bidder must provide a contract bond. Standard language must be revised to match statutory requirements. A surety bond will protect the owner if a contractor is in default, refuses to correct defective work, or has suppliers or subcontractors who file claims on the project. Contract language can be revised to define the length of the investigation and repair period and any procedures that the surety may use to replace a contractor. 

Termination. The termination of a contractor is not easy in any circumstance, but the owner can address the difficulties in advance by tailoring the General Conditions to spell out what events justify termination for cause. The owner can create procedures in advance to terminate for cause or to terminate for convenience. Provisions should also be made for payment of costs related to the termination and completion of the work.

Claims. Another section of the General Conditions deals with contractor claims against the owner. A contractor claim can be a request for additional time because of a delay on the project caused by the owner or other prime contractors. A contractor may also have a claim for additional compensation for work performed beyond the scope of the contract. Some claims are for both time and money.

The typical claim provision under the AIA family of documents requires that the contractor provide notice to the owner within 21 days after the event causing the claim. Then the contractor may be given additional time to provide supporting documentation. The owner or its agent (usually the architect) reviews the claim and either approves or denies it. 

An owner may decide that the risk of having potential delay claims outstanding for 21 days is not in the best interests of the project. The owner can modify the procedure and time required for the contractor to submit any claims. If the contractor fails to follow the procedure established in the contract, there is Ohio case law that finds that the contractor has forfeited its claim. 

How Do the Courts Enforce the General Conditions?
The Ohio Supreme Court has said it will give effect to the intent of the parties to the contract. One well known case making that clear was Foster Wheeler Enviresponse, Inc. v. Franklin County Convention Facilities Authority (1997), 78 Ohio St.3d 361. Further, the Ohio Supreme Court said, in Kelly v. Med. Life Ins. Co. (1987), 31 Ohio St.3d 130, that the intent of the parties to a contract is presumed to reside in the language they chose to employ in the agreement. 

What does this mean for an owner? The language employed in the agreement generally includes many of the individual Front End Documents. When the language is clear and unambiguous, a court will probably enforce the procedures provided in the Front End Documents, unless these terms have been invalidated by statute or are unenforceable for some other reason. 

There are many examples of a court holding a contractor to the language of an agreement. One recent example occurred in Dugan & Meyers Construction v. State of Ohio Department of Administrative Services (2005), 162 Ohio App. 3d 491, a decision currently on appeal to the Ohio Supreme Court. The General Conditions for the project required that Dugan & Meyers provide notice of any requests for time extensions in writing no more than 10 days after the initial occurrence of any condition that, in the contractor’s opinion, entitled the contractor to an extension of time. 

During the project there were multiple Requests For Information, fieldwork orders, and architect’s supplemental instructions. Dugan & Meyers submitted a delay claim that exceeded 2.5 million dollars in delay damages or “cumulative impact” damages. The claim included delays that allegedly occurred over the entire project, not just those within the past 10 days, as the contract permitted. 

The court held that the contractor was obligated by the General Conditions to request an extension of time for completion of the project within 10 days following its formation of a belief that a particular condition would entitle it to an extension. Since the contractor had not done so, it had no right to challenge the assessment of liquidated damages by the owner, as permitted by another provision of the contract. The Court of Appeals enforced the contract provisions.

A Lesson for Owners and Contractors Alike
Everyone knows the importance of the agreement between the owner and the contractor, but it is easy to forget that the Contract Documents define the complete obligations and responsibilities of the parties, and the Contract Documents include all or some of the Front End Documents. These contain significant provisions that may be worth thousands or even millions of dollars to an owner or a contractor if problems on the project eventually wind up in dispute resolution. 

The owner should not rely totally on its architect or construction manager to prepare the Front End Documents. It is important that these documents conform to applicable statutory requirements and also contain appropriate project-specific provisions. Recognizing the role these documents play in the construction process and in the success of a project, it is important for owners to pay close attention to and actively participate in the development of the Front End Documents for their construction projects.