April 2018
by Tara M. O’Hanlon, Miller Nash Graham & Dunn, LLP
Over the last 10 years, building information modeling has morphed from a cutting-edge technology to a standard tool increasingly mandated by public and private owners and general contractors. Contractors reported that from 2013 to 2015, the percentage of their work that involved BIM was believed to increase by 50 percent on average.
BIM technology uses a multidimensional computer model to create a virtual project before beginning construction. The use of BIM has expanded from its early focus on planning, design, and construction to include scheduling, cost estimating, sustainability considerations, safety planning, post construction operation and maintenance, and even decommissioning at the end of a building’s life cycle. The bottom line is that efficiencies gained in the process lead to cost and time savings, and thus to increased profits.
Along with the increased use of BIM comes the heightened importance of contract terms addressing BIM. As with many other technological tools, risks increase with the improper use of BIM. Standard documentation that adds BIM language to existing contracts can help ensure that all parties adequately understand and allocate associated risks and responsibilities, while better capturing the tool’s efficiencies. Moreover, a written standard offers participants assurances and protections that may lead to better use of BIM and encourage even broader adoption.
New Contract Terms to Consider
Standard forms are critical to BIM project communications because they help address basic concerns, such as who will own, manage, or run the model. The forms also identify responsible parties for each element and who can rely on the model for what purposes. Once a contractor chooses to incorporate BIM contractually, BIM language must be melded into its standard contract and into a project’s various agreements to ensure that similar BIM-related rights and obligations flow throughout. Factors to consider include the number of models, model management, intellectual property rights, data management, responsibility, and confidentiality. The parties to the contract should also agree on the content and format of each model and the standard language to employ.
ConsensusDocs and the American Institute of Architects have made significant updates to their standard form documents addressing BIM. In 2013, AIA updated its BIM protocol exhibit, AIA E203-2013: BIM and Digital Data Exhibit, which establishes an agreement to implement the use of BIM on a given project. AIA also created new form documents, AIA G201-2013 and G202-2013, that actually spell out the details of a standard protocol, including policies for storing, transmitting, archiving, using, and modifying BIM and other digital data throughout a project. AIA’s 2017 new form contracts now mandate the use of agreed-upon BIM and digital data protocols, whereas the 2007 versions only suggested their use. This change recognizes the increasing use of BIM as the standard technology for construction projects.
Similarly, ConsensusDocs, of which ASA is a founding member, has made recent and significant modifications to its BIM contract addendum, ConsensusDocs 301 BIM Addendum (2015), including expanding terms for risk allocation and insurance coverage, intellectual property rights, and terms that recognize that BIM may be used throughout a building’s entire life cycle. The standard contract forms address the need for the contracts to account for the dynamic nature of BIM and its expanded use beyond design and construction. The new contract changes also encourage additional planning at the outset to develop a BIM execution plan that gives a detailed road map for which BIM software will be used on a project, outlines a schedule for development of the various models and their integration, and identifies responsible persons for each model.
Avoiding Conflicts While Using BIM
Early BIM contract language focused heavily on the need to avoid conflicts between BIM and other contract documents. The new ConsensusDocs BIM Addendum makes a significant change, expressly giving the BIM Addendum precedence over other governing contracts. Regardless of whether a subcontractor chooses that route, its contract language should address the number of models created and the relationship between the models and 2-D drawings. If multiple models are used, the contract should indicate which model takes priority in case of conflict. The contract should also address how the component models (structural, mechanical, plumbing, etc.) will be integrated into a single usable model without losing or altering the component parts.
Subcontractors are critical collaborators in creating and capturing BIM efficiencies, including avoiding conflicts. By inputting information into the model, subcontractors can help evaluate plans and designs, troubleshoot potential conflicts, schedule project elements, and make modifications more efficiently. BIM offers more effective communications among all parties because each one is working from the same model and “speaking” the same language. Having adequate contract language to address BIM becomes even more critical if subcontractors have assumed design-build responsibilities for projects.
Early concerns that BIM would permit one contractor or design professional to alter the BIM inputs of another professional have largely been appeased because the technology itself documents the source of each change to BIM and prevents changes without the original drafter’s consent. Regardless, contract language should address the powers and responsibilities of each involved party and place limits on liability to the contributions that each has made. BIM users should also contract for restrictive rules of access, copying, and transmission, particularly to protect competitive data containing trade secrets and other intellectual property issues.
Conflicts can be further avoided through the use of a BIM manager: a person or entity designated to oversee the BIM process and delegate responsibility for each aspect of the model during a project. To avoid conflict, the manager’s explicit role should include exclusive responsibility and power to issue binding instructions on BIM-related issues. One of the primary challenges for the BIM manager is to coordinate the integration of different BIM software and models into a common single model that can be used by all. BIM managers are responsible for avoiding conflicts and preventing altering or losing data. This can be especially difficult given the various BIM software.
BIM in Litigation
When adopting BIM, parties should carefully consider potential legal issues to minimize adverse legal consequences while facilitating collaboration. On the one hand, BIM’s purpose is to streamline communication and efficiencies to reduce litigation and insurance claims and their associated expenses. The unfortunate reality is that construction disputes on BIM projects do occur, and at least one reported case involves the use of BIM and its risks.
In 2012, an HVAC subcontractor sued a general contractor in a multimillion-dollar action for breach of contract and unpaid change orders relating to a hospital renovation project. The lawsuit included a BIM claim. The HVAC subcontractor alleged that it had submitted significant change orders as a result of BIM. The subcontractor alleged that (1) the architect’s drawings that had initially been used by the subcontractor to create its BIM were incorrect, requiring later modifications and additional labor hours, and (2) coordination problems resulted from other subcontractors not using BIM. For example, the subcontractor incurred additional costs when it was ready to install HVAC equipment in a space that was already occupied by another subcontractor who had not participated in BIM and therefore the use of the space was not reflected in BIM. Ultimately, the court awarded the subcontractor minimal damages on its claims for unrelated reasons.
The case emphasizes the potential pitfalls of new technology and the need for traditional communication and adequate contract language while using BIM. For example, the parties in the case disputed whether BIM was a “Contract Document” or merely a tool used to help coordinate the work. The court also considered that the subcontractor realized that there were issues with BIM and communicated them to the contractor, including noting conflicts and omissions (doors were left out of the model, etc.). These issues highlight the increasing importance of adequate contract language.
The challenge in developing BIM contract language is how to anticipate potential legal issues. For instance, the technology on which BIM is based may create liability issues. Software manufacturers are protected by blanket limitation-of-liability clauses that make it difficult to transfer the risk of BIM errors to them. Therefore, this risk should be contractually allocated and be borne by the party who takes responsibility for the BIM process. The parties should carefully map out the liability between consultants who choose the BIM technology and have expertise, and the owner or manager of the BIM process. The aim should be for the consultants to bear the risks for technology errors that could have been avoided with proper care and diligence, and for the residual risk to lie with the process’s owner.
BIM systems are likely easily converted into a tool that can help recount what happened in a dispute to a mediator, arbitrator, judge, or jury, but it is not yet clear whether parties may use BIM in litigation. Litigation expenses often include the cost of creating expensive, visually appealing models to help outside parties understand a dispute. BIM may be a useful tool in achieving that influential visual at no added cost. Of course, the use of BIM in legal disputes could dampen communication and collaboration between parties, so some project teams may elect to control the use of BIM in litigation through contractual restrictions.
Finally, it is important to ensure that the parties take out appropriate insurance to cover their engagement in the BIM process. Project insurance that includes BIM risks should be adopted if available.
Successful BIM Projects Require Careful Contracting
The construction industry will continue to be driven by technology and the use of BIM. The risks associated with BIM are far outweighed by the benefits, particularly if planning and adoption of contract language are carefully executed. Many issues can be addressed through a standard amendment incorporated into the contract. By laying the proper contractual groundwork, contractors can minimize risks and ensure successful BIM-powered projects.
Tara M. O’Hanlon is an attorney with Miller Nash Graham & Dunn, LLP, in Seattle, Wash. O’Hanlon focuses her practice on construction litigation and contract drafting, condemnation, commercial litigation, and employment litigation. She has second-chaired three multi-week trials and has extensive experience preparing and arguing motions for summary judgment, arbitrating claims, and successfully mediating complex multi-party cases. She can be reached at (206) 777-7442 or Tara.O’Hanlon@MillerNash.com.
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