Acknowledgments xiii About the Author xv Preface xvii Disclaimer xix Introduction xxi The Goals of This Book xxi What Are the Benefits of This Book xxi Contractor & Owner Conventions xxii Private Contracts or Government Contracts? xxii Key Contracting Concepts xxii Two Types of Commercial Terms & Conditions xxiii The Most Important Commercial Terms & Conditions xxiv The Contracting Process xxv Excuses for Not Negotiating Better Commercial Terms & Conditions xxv The Concept of Risk Transfer xxvi This is a Book Developed Just for Contractors xxvi Chapter 1: Contracts: Basic Training 1 What Is a Contract? 1 The Steps to a Contract 1 Coming to the Party? 2 The Starting Point 2 "Here''s My Proposal" 3 "Consideration," or Something of Value 5 The "Happy Test" 5 "Can That Person Sign This Contract?" 5 Call in the Enforcer to Close the Breach 6 A Contract Example 7 Strange Words & Long Paragraphs 9 Contracting Myths 10 Contract Negotiations 11 Chapter 2: Types & Forms of Contracts 13 Fixed Price & Fixed Schedule Contracts 13 Reimbursable Type Contracts 14 Combined Fixed Price & Reimbursable Contracts 16 Cost Plus Fee Contracts 17 Guaranteed Maximum Price Contracts 18 Target Price Contracts 19 Contracts with Performance Incentives 19 Form of Contracts 20 Some Final Contract Housekeeping--Definitions 25 Conclusion 27 Chapter 3: Scope of Work 29 The Scope of Work Matrix 33 Scoping Drawings 34 Conclusion 35 Chapter 4: Terms of Payment & Cash Flow 37 Cash Flow 37 Interest Rates 40 Periodic Progress & Milestone Payments 40 Conclusion 53 Chapter 5: The Schedule 55 Float 56 Time Is of the Essence 57 Extra Time, but No Money 59 Conclusion 61 Chapter 6: Assurances of Performance 63 Guaranties & Bonds 63 What Does "Failure to Perform" Mean? 65 What Is a Bond? 66 Forms of Assurances of Performance 66 Surety Companies 73 Some Language Considerations on Guaranties & Bonds 75 Types of Performance Assurances 75 Conclusion 92 Chapter 7: Insurance 93 What Is Insurance? 94 Claims Made vs. Occurrence 95 Types of Insurance 95 Important Issues Associated with Insurance 101 Additional Insured Status 107 Additional Insurance Basics 109 A Typical Insurance Clause in a Construction Contract 119 Safety 124 Chapter 8: Indemnity 125 Insurance & Indemnity 125 Indemnity Definitions 126 Transferring the Owner''s Risks to Contractors 127 Fairness Is Not a Consideration 127 Is an Indemnity Required in a Construction Contract? 127 Anti-Indemnity Legislation 128 Examples of Indemnification Clauses 131 Indemnification, Additional Insured Status, & Contractual Liability Insurance 137 Owners Love CLAIMS! 140 Negotiating Indemnity Clauses 141 Knock-for-Knock Indemnities 144 Conclusion 145 Chapter 9: Changes 147 Some Ground Rules 148 Protecting the Project Manager 148 Owners'' Directives 149 Constructive Changes 149 Payment for Changes 149 Sample Change Clauses 150 Major Contract Changes 155 Negotiating Change Clauses 156 Conclusion 157 Chapter 10: Disputes & Their Resolution 159 What''s a Project Manager To Do? A Short Story to Start With 159 Disputes--The Construction Contract''s Bad Actor 160 An Ounce of Prevention 161 Dispute Resolution Options 162 The Folks Who Negotiate, Mediate, Arbitrate, & Litigate 163 Dispute Resolution Clauses 164 Conclusion 166 Chapter 11: Damages 167 Breach of Contract/Failure to Perform 167 Contractors'' Financial Exposure 168 Actual Damages--A Silent Risk? 168 Liquidated Damages 170 Consequential Damages 176 Conclusion 179 Chapter 12: Warranties 181 A Workable Definition of Warranty 181 Warranty Issues 182 The Uniform Commercial Code 187 When Is No Warranty Appropriate? 189 Extended Duration Warranties 191 Limiting Provisions in Warranties 193 Pass-Through Warranties 194 Latent Defects & Warranties 195 A Sample Warranty 195 Conclusion 195 Chapter 13: Termination & Suspension 197 Termination for Cause 197 Termination for Convenience 199 Suspension 202 Cancellation 205 Conclusion 205 Chapter 14: Force Majeure 207 Negotiating Clauses 207 Sample Contract Language 208 Conclusion 212 Chapter 15: Other Contract Clauses 213 Site Conditions 214 Use of Completed Portions of the Work 219 Patent Indemnity 220 Secrecy & Confidentiality Clauses & Agreements 220 Owner''s Right To Inspect 222 Independent Contractors 224 Assignment 225 Acceptance & the Punch List 226 Advance & Partial Waiver of Liens 229 Final Waiver of Liens 231 Audit Rights 233 Severability or Validity Clauses 235 Venue & Applicable Law 235 Some Interesting Clauses to Close 237 Chapter 16: International Contracting 239 International Contracts 240 The U.S. Foreign Corrupt Practices Act 241 Letters of Credit 242 Split Contracts: Onshore & Offshore Contracts 243 Political, Religious, & Economic Risks 244 Overseas Private Investment Corporation (OPIC) 245 Legal Systems in Foreign Countries 245 Local Employees, Partners, & Agents 246 Offshore Companies 247 Currency Risks 248 Applicable Law 251 Joint Ventures 253 Joint Operations 254 Import & Export Considerations 254 Understanding INCOTERMS 256 The Export-Import Bank of the United States 258 Where to Get Some Help--Ask the U.S. Government 259 Lastly, Use the Right Paper Size! 260 Conclusion 260 Chapter 17: Some Final Thoughts on Negotiating Contracts 261 Why Negotiate? 261 The Concept of Standard Terms & Conditions 262 Risk Transfer Item 1: Get Rid of the Indemnity Clause! 264 Risk Transfer Item 2: Don''t Provide Additional Insured Status 264 Risk Transfer Clauses, Insurance, & Safety 265 How to Say No Without Aggravating the Owner 265 The Worst Contracting Word: "Reasonable" 266 The Best Contracting Word: "Notwithstanding" 266 Win-Win & Lose-Lose in Contract Negotiations--Fairy Tales? 267 Is There a Price for Bad Commercial Terms & Conditions? 268 Terms of Payment 268 Some Tips on Successful Negotiating 269 Three First (and Final) Suggestions 269 Resources 271 Glossary 273 Index 287.