CEO Comments

EJCDC Celebrates 40 years of Contributions to the Risk Environment of Horizontal Construction!

NASBP actively engages with organizations that develop standardized form agreements and bond forms for the construction industry. To that end, NASBP maintains a liaison relationship with a number of trade associations, professional societies, and other entities, including the Engineers Joint Contract Documents Committee (EJCDC), a coalition group comprised of dedicated volunteer engineers drawn from the three principal engineering organizations focusing on quality construction documents for engineering design and construction projects: The American Council of Engineering Companies (ACEC), The National Society of Professional Engineers (NSPE), and The American Society of Civil Engineers–Construction Institute (ASCE-CI). Other interested groups also participate in the development and revision process of EJCDC forms. NASBP is among that group of interested observer organizations. 

Several weeks ago, EJCDC met in Reston, Virginia at the Headquarters of ASCE-CI to continue its work in developing and in revising EJCDC standard form documents and to celebrate its 40th Anniversary of existence. I had the pleasure to attend the first day of the EJCDC working meetings and its 40th Anniversary reception. Over the years, EJCDC has made countless contributions toward an equitable risk environment for engineer-designed and lead construction and infrastructure projects. You may recall that EJCDC developed the first standard P3 contract document, EJCDC P3-508, in the United States prepared by an impartial, non-profit organization. NASBP profiled that document in an article in the winter 2014 issue of Surety Bond Quarterly. I always am pleased to see that bonding requirements are ubiquitous features in EJCDC forms, as bonding is considered a best practice by EJCDC, and EJCDC typically treats the subject of bonding, particularly the credentials of the surety, very thoroughly for standardized forms. 

EJCDC continues to maintain an astounding work ethic; they are putting the finishing touches on a revised set of design-build documents, their D-Series of documents, and are beginning the major undertaking of revising their signature set of construction documents, the C-Series of documents. The EJCDC, through its outside counsel Hugh N. Anderson, Attorney at Law, keeps abreast of legal developments impacting the engineering and construction communities. One of the highlights for me of attending the EJCDC working meeting is hearing Anderson summarize salient legal case developments, two of which particularly struck me as of note to the NASBP community, as they underscored the importance of precise contract language in relation to contractual requirements for additional insured status. 

For the meeting, Anderson identified two recent decisions of the Illinois Appellate Court, Old Republic Insurance Co. v. Gilbane Building Co. (2014) and West Bend Mutual Insurance v. Athens Construction Co. (2015), which construed the meaning of contract language intended to ensure that other parties be added as additional insureds on subcontractors’ commercial general liability policies. In both cases, the subcontracts apparently included requirements for certificates listing additional insureds but fell short of stating that other parties must be added to the insurance policies as additional insureds. Consequently, the Illinois Appellate Court ruled that mere requirements to evidence certificates of insurance noting additional insureds are not equivalent to the insurance policies’ specific requirements that the subcontracts require that a specific party be added as an additional insured. The court also noted the limited legal force of certificates of insurance, which state that they are solely for informational purposes and that they confer no rights on recipients. Though likely the parties’ intent for certain parties to be added to policies as additional insureds, by not stating so specifically in relation to the policies, the court viewed the contract language couched only in terms of the certificates as not establishing the desired insurance coverage. This is not an issue if EJCDC agreements are used, as they clearly state that identified additional insureds must be added to the policies.

These cases are prime illustrations of the need to exercise proper risk management—that is, why it is so important to choose contract language carefully and, in the context of insurance requirements, to have knowledgeable parties review insurance language before contract execution. They also illustrate the importance of well-crafted industry standard form agreements. The surety industry certainly can be thankful for the considerable efforts of EJCDC over the last 40 years!