GUC – German University in Cairo Architecture and Urban Design ARCH 702 Legislation, Professional Practice and Contracts Fall 2017 Instructor: Dr. Yasser Mahgoub Contracts 1
GUC – German University in Cairo
Architecture and Urban Design
ARCH 702 Legislation, Professional Practice and Contracts
Fall 2017
Instructor: Dr. Yasser Mahgoub
Contracts
1
The Contract!
The Most Important Document That You’ll Never Ever Use…
Hopefully
The Contract!
A legal agreement between owner and architect that clearly
communicates a project’s terms and conditions, determine
responsibilities of each party and set expectations for schedule and
payment for services.
Contract Basics
Contract Basics
• Why have a written contract? – Mutual understanding
• Better understanding promotes better relationships
– Establishing your own rules • Law will govern over silent issues
– Sizing up your client • Understand your clients attitudes and motivations
– Identifying and allocating risk • Candid discussion of risk fosters agreement between
parties
Contract Types
• Oral Agreements
• Letter Agreements
• Consultant-Drafted Agreements
• Client-Generated Agreements
• Professional Associations Standard Agreements
• Continuing Service Agreements
Contract Basics
• First Comes the Proposal – Following an initial meeting to discuss the basics of
the project, the architect will follow up with a Letter of Proposal.
– a letter – identifies each party – location of the property involved – brief description of the project – scope of services to be performed – proposed compensation structure – a call-to-action for what’s next in the process
Contract Basics
• The Handshake
– simplest agreement
– Verbal
– no written documents!
– no legal contract
– no legal protection
– should be avoided at all costs!
Contract Basics
• Letter of Intent – prepared by the architect
– forwarded to the owner
– thoroughly defines the services
– signed by the architect
– requires no signature or written confirmation from the owner
– minimal legal protection
– followed up with more formal legal agreements
Contract Basics
• Letter of Agreement
– one or two page document outlining:
• the project description
• the basic terms and conditions of the agreement
• defined responsibilities for each party
• basic compensation structure
– prepared by the architect and signed by both parties
– offers limited protection
Contract Basics
• Architect-Prepared Contract
– prepared in-house by the architect
– reviewed by an attorney
– more beneficial to the relationship between owner and architect
– fully developed legal contract
– thoroughly developed terms and conditions
– provides adequate legal protection for both parties
Contract Basics
• Contract Documents
– legal documents prepared by architectural profession organizations
– very formal legal format
– very formal legal format of the documents may be intimidating to some residential and small commercial clients, often resulting in additional review by the owner’s attorney
Contract Basics
• Elements of a Contract
– Agreement - offer is accepted
– Consideration - the inducement or motive
– Legal form - neither illegal nor against public policy
– Competent parties - legal age, mentally competent and have authority
– Legal purpose
Project Delivery Methods
Project Delivery Methods
• Traditional Methods
– Design-Bid-Build
• Traditional form of project delivery characterized by its three phases, dual contracts and linear sequencing of the work.
– Negotiated Design Team
• Sometimes referred to as design-assist, it brings the contractor into the design process.
Project Delivery Methods
• Construction Management – Construction Manager as Advisor
• A construction manager is brought to the design team who acts as advisor to the owner.
– Construction Manager as Agent • The construction manager is given the authority to act
on the owner’s behalf.
– Construction Manager as Constructor • The construction manager is hired to act as project
coordinator and general contractor.
Project Delivery Methods
• Design-Build
– Design-Build
• Single point of responsibility for the project.
– Design-Build as Developer
• Design-build entity takes on some responsibilities of real estate development.
Methods of Compensation
Methods of Compensation
• Time-based Methods – Multiple of Direct Salary Expense
– Multiple of Direct Personnel Expense
– Professional Fee plus Expenses
– Hourly Billing Rates
• Other Methods – Stipulated Sum
– Percentage of the Cost of the Work
– Square Footage, Unit Cost, Royalty
Design Contract Administration
• Agreements influence internal methods of contract document preparation
– Bidding and Negotiating
– Fast-track projects
– Specifications and drawings
– Multiple prime contracts
– Work by owner
Construction Contract Administration
• Agreements influence construction administration duties
– Lump sum vs. cost plus (with or without guaranteed maximum price)
– Construction observation responsibilities
– Division of responsibility with construction administrator
– Payment schedules and procedures
– Project closeout requirements
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