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10 Reasons Why Subcontractors Should Love ConsensusDocs
American Subcontractors Association
June 7th, 2018
Where should contract negotiations start? According to ASA and 39 other leading construction associations, the answer is “ConsensusDocs.”
During the 10 years since its founding, ConsensusDocs has developed a comprehensive catalogue of more than 100 documents that protect the best interests of the project rather than a singular party, yielding better project results and fewer disputes. “Consensus is about much more than just producing model documents,” said ASA Chief Advocacy Officer E. Colette Nelson. “It’s about changing the way that the construction industry thinks about contracts and contract negotiation.” A starting point for a subcontractor is to condition its bids on the ConsensusDocs Form 750, Standard Agreement Between Constructor and Subcontractor. Nelson reminds members that the ASA Subcontractor Bid Proposal, one of the model documents in the ASA Subcontract Documents Suite, conditions the user’s bid on the ConsensusDocs Form 750. Nelson suggests there are least 10 additional reasons why subcontractors should love ConsensusDocs:
- Subcontractor Input. ConsensusDocs documents are the result of a collaborative effort by representatives of all the members of the construction team—owners, design professionals, contractors, subcontractors, suppliers and the surety industry. ASA makes sure subcontractors are represented in all negotiations on documents that directly impact subcontractors, as well as those with provisions in which risks and rewards are likely to flow to or otherwise impact subcontractors.
- Fair Allocation of Risk. ConsensusDocs documents offer a fair and reasoned allocation of the rights, responsibilities, risks and rewards in the relationships among the members of the construction team. Projects that have used these documents have experienced more collaboration and fewer disputes.
- Up-to-Date. Each ConsensusDocs document is reviewed and, if necessary, updated every five years. When interim changes are needed because of the rapid evolution in the construction industry, ConsensusDocs can and has updated documents more frequently.
- Assurance of Project Funding. ConsensusDocs documents give the prime contractor the right to require the owner to demonstrate its ability to fund the project. The subcontractor has a right to that information, too.
- Right to Information. ConsensusDocs documents make clear that a subcontractor cannot be bound by any document with which it has not been provided a copy. The documents also provide that the subcontractor can easily obtain copies of the prime contractor’s payment bond, insurance policies and other documents a subcontractor needs to exercise its rights.
- No Pay-if-Paid Clause. ConsensusDocs documents require a prime contractor to pay its subcontractor within seven days of being paid by the owner. It also makes clear that if the prime contractor fails to pay the subcontractor through no fault of the subcontractor, the prime contractor must pay the subcontractor “within a reasonable time.”
- Right to Suspend Work for Nonpayment. If a prime contractor or subcontractor does not receive payment for properly performed work, it may suspend work after providing appropriate written notice. The slow payer is responsible for the cost of demobilization and remobilization.
- Limited Retainage. ConsensusDocs limits the amount a prime contractor can retain from a subcontractor to no more than the amount the owner retains from the prime contractor. The documents also encourage line-item release of retainage.
- Dispute Resolution. ConsensusDocs documents encourage the parties to resolve disputes on their own, through direct negotiation, before involving any third parties.
- Easy to Use. Whether working at the office, from the road or even at home, the ConsensusDocs cloud-based platform provides instant access to the user’s contract documents from any computer. A personalized dashboard makes it easy to locate recent projects, edit contracts, review changes made by collaborators or start a new contract. The Microsoft Word-based application makes editing easy.