The Role Of Strategic Legal Advice In Successful College And University Capital Planning

Thursday, March 1, 2007 - 01:00

Colleges and universities are consistently building and renovating to upgrade classrooms, laboratories, conference centers, athletic complexes, and to add adequate levels of student and faculty housing to attract high caliber faculty and students. Even with all of the real estate, capital planning, design and construction taking place on college and university campuses throughout the country, the core business is still academics, research and education. Accordingly, higher education institutions are often at a great disadvantage in carrying out a capital plan as they most often do not have an in-house staff with a depth of knowledge in real estate, capital planning, design and construction. At the same time, colleges and universities are not always in a position to be effective in selecting, communicating with, and managing architects, construction managers, and construction contractors. As a result, colleges and universities tend to spend more and get less for their money, while suffering through project delays and construction defects and design errors which are not caught in time to hold appropriate project participants accountable.

This article examines a number of key questions, asked by colleges and universities as they embark upon carrying out major capital planning endeavors.

In Planning a Large Construction or Renovation Project, What Method of Project Delivery is Best for the College or University?

According to Dana Peterson, Associate Architect for the University of New Hampshire, "It is clear that no one delivery method suits all institutions, for all projects, under all conditions, and each method has its pro's and con's, strengths and weaknesses."

John E. Osborn PC, from the perspective of university construction counsel, participated in the ERAPPA Education Committee's "Project Delivery System Rationale Program" which carried out an in depth examination of the critical parameters an institution of higher education should examine when analyzing and selecting a project delivery system for its construction or renovation project. Dana Peterson, Associate Architect for the University of New Hampshire, chaired the study; others participating included Paul Choquette, Gilbane Building Company, Cara Hanson, Pizzagalli Construction Company, Cynthia Linz and Fred Mulligan from Cutler Associates, Darryl Boyce, Carleton University, and Scott Merrill, College of Holy Cross.

It is clear that the choice of an appropriate method of project delivery goes a long way toward construction or renovation project success. Higher education institutions have recently brought innovation to the traditional design, bid, build method, under which the owner chooses an architect to capture the project concept, design the project and prepare a bid package to be bid out to the lowest construction contractor bidder.

An alternative to that method is design-build, under which the owner chooses a contractor-architect team to design and build for a negotiated price. Under this method, the design build entity takes the risk of cost overruns, design or construction defects. In some circumstances, this method has been heralded as a method to provide stability in price and certainty that the design and construction project participants will not be at odds. Critics complain of instances of inferior workmanship and of a diminishment of the architect's role as design considerations becomes subservient to a concern for project costs on the project.

Many universities have favored a method under which the university hires a construction manager at the outset of the planning process at the same time the architect is engaged. Under this method, the construction manager works during the pre-construction phase of the project as a consultant to the institution, is known as "a construction manager as agent for the owner," and works with the architect in reviewing the buildability and cost of the construction. Quite often, the construction manager provides "value engineering" suggestions to the owner and architect. Following the role as a pre-con consultant to the owner, the construction manager may enter a contract to continue as a consultant and advisor to the owner during the construction phase and assist the owner and architect in assembling the bid package and selecting construction trade contractors to carry out the project. Another alternative is that the construction manager may be asked to provide the owner with an overall bid to complete the whole project. Once this role is taken on, the construction manager is in a role analogous to a general contractor, and the construction manager is called "a construction manager at risk."

What are Some of the Factors or Criterion Which Assist In Choosing the Project Delivery Method?

The ERAPPA committee recognized that both external and internal criteria must be considered in choosing the most appropriate project delivery method.

External Project Delivery Criteria

Current volatility in the construction market making pricing highly unpredictable. Desire to 'lock in' price may lead to choosing construction manager at risk or design-bid-build.

Area contractors and subcontractors currently or projected to be extremely busy or slow and looking for work. When contractors are busy, this may lead to locking in early with design/build or construction manager at risk methods.

Location of institution or project in a remote area where access to design and construction expertise is limited. Far away projects most often use the traditional design-bid-build method.

Owner or lender pre-disposition or restriction on project delivery method.

Internal Project Delivery Criteria

Relative importance of quality of materials, equipment and long term allowance for reduced life cycle costs. Greatest control over quality is with design-bid-build and construction manger at risk.

Extent of the owner's project management staff's workload.

Extent of the owner's project management staff's expertise.

Owner's pre-disposition on delivery method?

Owner's tolerance for risk of disputes or litigation problems arising with or associated with a project. Although the traditional design-bid-build method promotes an adversarial rather than collaborative effort, use of innovative partnering concepts can promote smoother communications and reduce likelihood of disputes or litigation.

Owner's preference to either consolidate or diversify project responsibility.

Owner's ability to deliver prompt and reliable decisions. Design-bid-build and construction manager at risk both call for the owner's involvement in day to day decisions, while design-build minimizes these owner decisions to truly important ones, while placing day to day decision making in the hands of the design-builder.

What are the Most Important Considerations in Entering The Owner-Architect Contract?

When it comes to running a long term capital program, the contract terms can make all of the difference; the following are a few of the most important clauses in the architect contract:

The description of pre-existing conditions must be clear; existing owner-furnished information such as 'as built' drawings must be spelled out.

The architect's role in making decisions and resolving disputes with contractors during the project, must be spelled out clearly.

Timing of architect action during the project must be clearly delineated; time limits must be set for the architect's review of shop drawings, revisions and RFI responses.

Spelling out the architect's role in reaching an estimate of the construction cost is important to avoid suffering overruns from the outset.

The architect's errors and omissions insurance requirements must be spelled out and compliance verified.

Clear delineation of responsibilities for each phase of the project must be made; spelling out the architect's role for planning, design and construction administration is essential.

If a construction manager is being utilized, spell out the distinction in roles between architect and construction manager.

What are the Essential Clauses Which Must be Included in the Contractor's Agreement to Protect the Owner?

Spell out the schedule and the method and critierion for adjusting the schedule.

Include a clause which precludes the contractor for recovering delay damages.

Provide that the owner has the right to take away work from the contractor in the event of contractor default.

Provide that the owner can terminate the contractor for convenience.

Spell out a mold prevention and management plan to satisfy practical concerns and insurance requirements.

Set a method for resolving changed conditions (i.e. conditions not anticipated by the parties when the contract was signed).

Allow for the owner to terminate, suspend or accelerate without paying a significant price to do so.

Clearly set out insurance requirements to eliminate gaps and overlaps.

What is the Best Method of Dispute Resolution to Specify in the Contract with the Contractor or Architect? Which Method Works Best for the Owner?

The three basic methods for resolving construction disputes are mediation, arbitration and litigation. Both litigation and arbitration are binding, while mediation is non-binding. When it comes down to it, mediation has a lot to commend it: over 90% of cases which go into mediation settle; it allows the parties, and especially the owner, to control the outcome, and it limits attorney and expert costs and cuts down on "hard ball" tactics which are often associated with a court proceeding.


The role of strategic legal advice in achieving success in college and university capital planning is clear: upfront legal planning provides the institution great advantages from the outset as the most appropriate project delivery method and the most appropriate design professional and contractor are chosen and design and construction contracts incorporate protections for the owner. During the project, legal strategy allows for troubleshooting to accomplish effective outcomes. At project completion, with legal guidance, vexing claims can be favorably resolved and close-out obligations of design professionals and contractors to the owner can be enforced.

John E. Osborn, Esq . is a Partner of the New York City and Westchester construction litigation and environmental law firm, John E. Osborn PC. Mr. Osborn is an active participant in ERAPPA where he has delivered numerous presentations, seminars and workshops. Mr. Osborn is the General Counsel of the Greater New York Construction User Council and is the Professional Member representative on the Board of Directors of Building Owners' and Managers' Association of Greater New York.

Please email the author at with questions about this article.