USA – IOWA Law and Practice Contributed by: David M. Erickson, Christopher S. Talcott, Amy S. Montgomery and Shannon M.H. Hasse, Dentons Davis Brown PC
whereas in the commercial context are only limited by agreement of the parties. Commercial leases are frequently secured by security deposits, which may be commingled with a landlord’s personal funds, and by personal guaranties. 7. Construction 7.1 Common Structures Used to Price Construction Projects Myriad types of construction contracts are used in Iowa. However, the most prevalent types of construc - tion agreements in the residential construction context are generally the cost-plus agreement, with or without a guaranteed maximum price, the time and materials agreement and the stipulated sum agreement (as well as combinations thereof). 7.2 Assigning Responsibility for the Design and Construction of a Project The most common project delivery methods are as follows. Design-Bid-Build/Traditional Method The owner contracts separately with a design profes - sional, who handles all design responsibilities, and a general contractor, who handles all construction responsibilities. Design-Build Method The owner hires a single entity, termed the design- builder, to perform both design and construction responsibilities under a single contract with the owner. Construction Management Methods The owner separately contracts with a design profes - sional to develop the design of the project and with a construction manager. The construction manager as adviser (CMa) method The construction manager contracts with an owner to act as its consultant/adviser in the pre-construction/ design phases and to provide construction manage - ment services during the construction phases. Under this method, the owner holds the subcontracts and
assumes the risk of delivery of the project regarding cost and schedule. The construction manager at risk (CMAR) method The construction manager contracts with an owner to act as its consultant in the pre-construction/design phases, to generally provide for the actual construc - tion of the project ordinarily through use of a general contractor, and to otherwise perform construction management services. Importantly, under this meth - od, the construction manager guarantees the cost of the work such that the construction manager assumes the risk with the owner of exceeding such cost. The cost of the work is generally cost-plus with a guar - anteed maximum price, but can also be a stipulated sum price. 7.3 Management of Construction Risk The primary method for management and allocation of risk between contractor and owner is through warran - ties and indemnifications provided in the construction agreement. Contractors will often provide express lim - ited warranties (usually of one to two years in length) and some may otherwise attempt to have the owner waive all other warranties, implied or express. Contractors will often additionally affirmatively dis - claim any knowledge of certain aspects of the con - struction (eg, soil composition on the construction site). However, Iowa courts have long held that all construc - tion contracts are subject to an implied warranty of workmanlike construction. In certain circumstances, a construction contract may also be subject to the implied warranty for a particular purpose. 7.4 Management of Schedule-Related Risk Timing and deadlines are important aspects of con - struction agreements, with contractors generally attempting to remove any firm deadlines from the con - struction agreement, and owners generally attempt - ing to include more firm deadlines along with a per diem liquidated damages amount to be imposed for a contractor not meeting the deadlines. An important caveat is that certain contractors will include mile - stone billing in their agreements. To the extent that the contract includes deadlines, however, damages
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