Sutter's Improved Relational Contract on Its Way
Sutter Health, a pioneer in integrated project delivery, will soon release a revamped relational-contract form. The Sacramento-based non-profit healthcare system, in the midst of a $5.5-billion capital program, is culling lessons learned from its IPD projects to improve the form, making it more user-friendly. The form will also integrate building information modeling into the main agreement.
The basic underlying philosophy of the integrated form of agreement (IFOA) will stay the same, says Howard W. Ashcraft, a partner in Hanson Bridgett LLP, San Francisco, which is Sutter's outside counsel. “The core theory is for a fully integrated and lean team.”
Sutter will continue to pay direct costs and separate out partners' potential profits.
Sutter's IFOA includes a limitation of liability. Signatories do not sign away their right to sue. “If you are going to assert a claim, you can't waive the right to sue or insurance won't apply,” says Ashcraft.
In the IFOA, first released in 2005 and updated in 2007, Sutter agrees to limit liability to signatories' profit-at-risk, with exceptions: cases where a claim can be covered by insurance, cases arising from fraud or willful misconduct, cases arising from claims directly against non-signatory subs or suppliers for fines or penalties assessed against signatories in connection with the project or cases arising from any party abandoning completion of the project.
The IFOA, currently 85 pages long, may even be shortened. People are more familiar with it, so “we don't have to explain as much anymore,” says Ashcraft.