While success in construction relies upon teamwork, cooperation, and coordination more than any other industry in the United States, it is unfortunately this reliance which leads to the industry being among the most adversarial and litigious. According to the U.S. Department of Labor Bureau of Labor Statistics, the construction industry is the only industry in the United States to be less efficient since 1964. Resources expended for transactional costs to arbitrate, litigate, or even mitigate potential claims are inefficient waste in the eyes of construction productivity because they do not direct contribute to putting construction work in place.
Standard construction contracts written by various trade associations play a critical role, perhaps a fundamental role, in driving the construction industry down the adversarial and inefficient path. You literally cannot write the word “General Contractor” or “Subcontractor” without including the word “contract.” A construction contract sets the foundation for the parties’ relationship and a construction project’s overall success. Traditionally, a trade association representing a single segment, i.e. architects, engineers, writes and publishes a standard contract from the perspective of that individual segment of the industry. Consequently, industry standard contracts are typically perceived as unfairly favoring one segment of the industry over another. This perception leads to the non-favored party feeling slighted, often justifiably, which leads to a poor relationship between the parties and affects many aspects of the project holistically.