USA - FLORIDA Law and Practice Contributed by: Jeffrey R Margolis, Marc S Shuster, James L Berger and Evan Rosenberg, Berger Singerman LLP
7. Construction 7.1 Common Structures Used to Price Construction Projects Florida construction law practitioners typically use the American Institute of Architects (AIA) suite of documents for construction projects, with modifications to the base forms based upon the terms of the transaction. The price structures that are used for construc - tion projects include the following: • fixed price or lump sum; • guaranteed maximum price (with savings either retained by the owner or shared with the general contractor, as negotiated); and • reimbursable based upon various calculation methods, including unit price and cost-plus fixed fee. 7.2 Assigning Responsibility for the Design and Construction of a Project There are several ways to organise the contract - ing of a construction project, including the fol - The owner engages the design team directly and the design team produces a set of construction documents that are used as the basis for a com - petitive bidding process. Construction Manager as Agent The owner engages a contractor when it engag - es the design team so that the owner/construc - tion manager/design team work together in col - laboration. Construction Manager at Risk The owner engages the contractor when it engages the design team so that the owner/ lowing methods. Design-Bid-Build
construction manager-contractor/design team work together in collaboration for the project. Design/Build The owner retains a contractor to provide a turn - key completed project; the contractor retains the architect and is responsible for designing and building the project based upon the owner’s design criteria and budget. 7.3 Management of Construction Risk Construction risk is allocated by several meth - ods, depending upon the structure of the trans - action and the terms of the negotiated agree - ments. Accordingly, the initial construction risk-shifting method used by owners is to select the contracting structure that best suits the risk tolerance of the owner for the proposed project. These methods include indemnification by con - tractor, warranties, liquidated damages for delay, and waivers of certain types of damages. 7.4 Management of Schedule-Related Risk Owners typically address this issue by negotiat - ing a “per day” liquidated damages amount in the event the project is not substantially com - plete as of a certain date set forth in the agree - ment. Contractors may negotiate a fee plus amount if certain construction milestones are met ahead of schedule. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance Typically, the cost of the payment and perfor - mance bond is paid by the owner, either directly or by inclusion of such costs in the contract sum payable to the contractor. In lieu of a payment and performance bond, an owner may require the contractor to post a letter of credit to secure their performance.
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