How to Improve the AIA Standard Form Contracts
Payment of IDM related costs has to be dealt with head on.
Currently, it is not clear who pays the cost of the IDM. But the implication is, if the IDM is the architect, then the owner pays. So, the AIA needs to specify that the IDM fees are paid for equally by the parties. Any expert fees required by the IDM and any conference room fees should also be shared equally. The parties must feel the process is impartial and both parties should be equally motivated to not run up expenses by submitting frivolous claims. Both parties must pay equally.
There should be a format for hearings. Not all evidence can be submitted in a written claim. The IDM may want to hear from the parties or witnesses, including trade contractors. The parties may want to tell their story. And, most importantly, once the parties have had an opportunity to discuss and hear the views of the other side, the IDM may suggest a compromise and the hearing may morph into a mediation.
There should be no exception for claims that are outside the IDM purview. Currently, for unknown reasons, the AIA has excluded claims related to emergencies, insurance claims settlements, and hazardous material from the IDM jurisdiction. The IDM jurisdiction should include any claim or dispute arising out of or related to the agreement, including termination.
There is also the open question of at what point does the IDM become involved in the process. If the IDM is the architect, then obviously the architect is already involved and quite aware of the project, and possibly the contentious issues. However, if the parties choose a third party, that third party will only know what the parties have told them.
The parties may consider keeping the non-architect IDM in the loop early with copies of monthly reports or periodic site visits. Or the parties may choose, primarily for cost reasons, just to activate the IDM when an issue arises. The current AIA boilerplate defaults to the latter approach.
Selecting the Right Third-Party
The selection of the right third-party IDM is critical.
The parties must respect the opinion and judgment of the IDM. Often, just the presence of a respected third party will mitigate claims propagation since sophisticated parties will not want to burn credibility on frivolous claims at the expense of more serious claims that may develop later in the project.
As discussed above, the resounding characteristic cited when polling lawyers for desired IDM or neutral attributes is perceived impartiality. Since it is critical that the IDM possess the technical ability to understand the claims and the legal issues, the parties should consider a lawyer with an architecture or engineering background.
It is critical to have a strong IDM that keeps a good handle on administrative issues, such as enforcing deadlines, scheduling, and process. Upon selection, the parties should consider a separate three party agreement with the IDM that requires the IDM to comply with the IDM rules, especially the deadline to produce the reasoned decision.
Although there appears to have been very little use of the IDM procedure with a non-architect IDM in the past seven years, the reality is that the IDM procedure, with a non-architect IDM, is very similar to a single person DRB. The DRB process has been around for almost 30 years.
Popularity of the DRB process in the U.S. has been explosive and courts are embracing the process. Perhaps we will see an increase of the IDM process soon, as contractors have the opportunity now, in the up part of the business cycle, to insist on the non-architect IDM.
Joel Sciascia is general counsel at Pavarini McGovern LLC and an adjunct professor at New York University. He can be reached at firstname.lastname@example.org.