The 7 Key BIM Topics in Design Contracts
- By Tarek Ghazzaoui, Eng. (senior BIM manager)
- on
Overview
Contracts are one of the most important yet most underestimated aspects of AEC projects. Many AEC companies are interested in doing the actual production work instead of all the fluff that goes around it, including sales, marketing, accounting and legal aspects. This is especially true for design firms, and more so for architectural firms, where the creative aspect is prioritized by all internal stakeholders.
In this article, I would like to discuss the 7 most important topics about BIM that should be addressed in contracts. I came up with this list and it is by no means a comprehensive list; it is a simplified version of all you need to know on what to address in design contracts and what the talking points are, without going into legal jargon or complicating things to the detriment of your understanding.
Table of contents
Note: Click to go to a specific section.
Disclaimer
Before we get started on this very interesting topic, Tarek Ghazzaoui would like to disclose that he is not a lawyer and does not posses any legal qualification to provide legal advice on any topic, including Building Information Modeling (BIM). All information contained in the present article does not constitute legal advice and cannot be used on any active projects. Any use of the information presented is done solely based on your choice and it is done at your own risk. Tarek Ghazzaoui strongly recommends retaining the services of professionals for legal advice.
Definition
Before we get started, let’s define a contract. Wikipedia defines a contract as follows:
“A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more mutually agreeing parties. A contract typically involves the transfer of goods, services, money, or a promise to transfer any of those at a future date, and the activities and intentions of the parties entering into a contract may be referred to as contracting.” (source: Wikipedia, 2023)
Oboloo, a procurement software company, defines a contract as follows:
“A contract is an agreement between two or more parties that creates obligations that are enforceable by law. A contract can be either written or oral, and it can be either express or implied. The essential elements of a contract are offer, acceptance, consideration, and intention to create legal relations.” (source: The oboloo, 2023)
Types of contracts
There are different types of contacts, but they can be summarized in the following ones:
Verbal
Written
Bilateral
Unilateral
Let’s explore a short definition of each.
Verbal contract
“A verbal contract is an agreement that is not written down, but is instead spoken about and agreed upon orally. This type of contract can be difficult to enforce because there is no physical evidence of the agreement.” (source: The oboloo, 2023)
Written contract
“A written contract is a more formal type of agreement that is put into writing. This makes it easier to enforce, because both parties have a document to refer back to in case there is a disagreement about what was agreed upon.” (source: The oboloo, 2023)
Bilateral contract
“A bilateral contract is an agreement between two parties, where each party agrees to do something in exchange for the other party doing something else. For example, a bilateral contract could be between a company and a customer, where the company agrees to provide a product or service in exchange for the customer agreeing to pay for it.” (source: The oboloo, 2023)
Unilateral contract
“A unilateral contract is an agreement where only one party makes a promise. The other party does not make any promises in return. An example of this would be if someone offers a reward for finding their lost dog – the person who finds the dog would be under no obligation to return it, but would still be eligible for the reward.” (source: The oboloo, 2023)
For the purposes of the present article, the type of contract of interest is the “written” contract, since it is the most prevalent in the AEC industry.
Why contracts are important
This may seem like it’s very self evident, but one would be appalled at the AEC industry’s lack of understanding of the repercussions of not having a legal mandate to complete project work. This is definitely more pronounced on the side of architects, because they are the first to deal with clients usually, their field is more competitive with more and more architects opting to do work for free to win projects, and a general low emphasis on the administrative side of the business.
Written contracts are important because they are the ultimate explicit and verifiable source of legally binding agreements between parties. The alternative is to have non-written agreements, which are usually verbal in person or over the phone. “One of the biggest problems encountered with non-written contracts is that each party’s respective memory of the agreement changes over time, especially if a dispute arises.” (source: JD Supra, 2023) And if a dispute does arise, it’s one’s word against another.
This situation can be totally alleviated if a written contract exists before the business relationship is established or operating. Contracts, when done in writing, provide legal recourse to parties to establish and defend their interests inside or outside a court of law. This is particularly important for AEC projects, where the stakes are higher than other fields in some cases.
Contracts, when done in writing, provide legal recourse to parties to establish and defend their interests inside or outside a court of law.
What contracts to sign
I referred to contracts a few times so far in this blog article, but I would like to be more specific about what kinds of contracts I’m referring to in the AEC industry, with a specific focus on the BIM scope of those contracts.
- Proposals to clients - Proposals are usually focused on marketing firms and their capabilities, but sometimes they “are” the contract award and the contract itself, if they are accepted in writing. In this case, the proposals made by design consultants to clients must include legal language that addresses all BIM topics discussed in this article.
- Contract with clients - In most cases, contracts are separate documents that follow the proposal. They usually stipulate all BIM terms and conditions of the contract, with outside references that may potentially be used as an integral part of the contract (i.e. BIM Execution Plan, an annex or some sections of the proposal related to BIM, etc.) These are contracts between design consultants and the clients.
- Request for proposals (RFP) from consultants - These are contracts between a prime consultant and other consultants. Much like the proposal to clients, an RFP from consultants by a consultant can before “the” contract upon acceptance and award by the party requesting proposals. It is important to outline all BIM requirements in these proposals in this case.
- Contract with consultants - These are contracts with consultants, where one hires another to complete a project, as opposed to having a direct relationship with the clients. Much like contracts with clients, the contracts with consultants can refer to outside documents to make them an integral part of the contract, such as a BIM Execution Plan or an LOD matrix.
It is important to tailor proposal and contracts based on the specific use and application of BIM for each of these cases, while taking into consideration the firm’s needs, mode of operation and industry practices.
When to sign contracts
The short answer is, “before you start”. In an ideal world, a proposal is made with clients, it is accepted, a contract is signed, then the work begins. However, based on my observation in the AEC industry, this is not always the case. Sometimes, consultants start working on projects before being officially awarded the mandate, and they bill the client without being paid as the project progresses in the initial stages. This is very risky because if the client decides not to award the contract to the consultant, all that work is lost, and it is up to the client’s discretion to pay the outstanding balance or not.
That’s why it’s important to sign a contract in writing and ensure that the client is “legally bound” to compensate the consultant for the work before any work begins. A small period with minimal work can be excused, but a long period with major work totalling tens of thousands of dollars in accrued fees cannot be.
One other thing to consider is dealing with a recurring client, where there is an established relationship. In this case, clients sometimes do not wish to sign contracts per project due to their high volume, but would rather sign a contract of “general understanding” between the firms, much like a joint venture in spirit. This is fine as long as the BIM scope in contracts does address the topics that should be addressed, and any specific changes per project are amended on a needs basis with the client.
The 7 key BIM topics in contracts
Now that we got the basics out of the way, let’s discuss the 7 key BIM topics that AEC firms should include in contracts.
1. BIM responsibilities
Oh yes… Responsibilities. We’re all adults, aren’t we?
It’s very important to define who’s doing what on the project in terms of BIM, especially for general project tasks that no one is interested in. One example of such a case is which firm (or representative of the firm) will be publishing BIM models regularly, doing quality control, running BIM coordination meetings, etc.
We can break down responsibilities in the following categories:
- Project-related - Such as building permits, submissions, general meetings, etc.
- Consultants-related - Such as quality control, appending sheet sets, coordination, etc.
- Client-related - Such as presenting updates, dispute resolution, budget tracking, etc.
In all cases, it’s important to be clear and detailed enough so as to avoid any confusion, miscommunication or misunderstanding, but not every single responsibility needs to be listed in the contract; finding the right balance is definitely an art.
2. BIM collaboration
BIM collaboration is great, but it needs to be defined clearly and in writing in terms of what, when, where, how and why. A lot of times, AEC consultants engage in “BIM washing” their will and capacity to collaborate on BIM projects, but when the rubber hits the ground, their position shifts. Therefore, it is imperative to “enforce” collaboration under the umbrella of the law by including it in the legal scope of BIM in contracts.
In the interested of a successful project completion, the following BIM collaboration stipulations should be addressed in contracts between all stakeholders:
- Sharing BIM-related project information
- Sharing BIM processes and procedures (and related knowledge)
- Sharing BIM tools
- Sharing BIM files
3. BIM coordination
BIM coordination is a tricky one, because very frequently, AEC consultants have either not defined BIM coordination due to a lack of experience or internal expertise, or they have never convened on a common understanding of what is coordination and how to conduct it.
That said, contracts should stipulate which of the two workflows a project will select:
- Design-based coordination - Which is largely based on design review by red marking PDFs and iterating new prints or exports with other consultants until the project is sufficiently coordinated
- Model-based coordination - Which is based on an model clash detection (also called interference verification or similar terms) using a dedicated software such as Navisworks, BIM360 or ACC.
In both cases, coordination should be conducted as design progresses with the contextual rest of the project (i.e. the structural consultant should coordinate with the architect as the structure is being designed.)
4. BIM confidentiality
Confidentiality about BIM-related topics is extremely important, because the field of BIM and design technology is definitely a competitive advantage for any service provider in the AEC industry. Therefore, it is important to ensure that whatever information, knowledge or tools are shared between project stakeholders remains that closed circle only.
Stipulations in contracts should clearly outline:
- What is confidential (i.e. standards and processes related to BIM, certain tools or documents, etc.)
- With whom it is confidential (i.e. with project stakeholders and all subconsultants or third parties, direct client and not a sister company, etc.)
- What the consequences of a breach are (i.e. damages in the form of a monetary sum, firing of concerned parties, etc.)
5. Intellectual property
In Canada, intellectual property (IP) usually consists of “copyrights, trademarks, patents and industrial designs.” (source: Government of Canada, 2023) This list can be expanded to include “franchises, trade secrets and digital assets.” (source: Investopedia, 2023) This is definitely relevant to the AEC industry, where all files exchanged could potentially count as “digital assets”, and all processes and procedures used and shared could potentially count as “trade secrets”.
Based on my experience, the same major concerns for sharing intellectual property are expressed on most projects. These can be outlined as follows, which must be addressed in contracts if necessary:
- The ownership of content assets - This addresses elements in the models that were developed with labour hours or bought by consultants for a fee, then shared with other consultants for free in the spirit of collaboration (ex. a catalog of couches from a manufacturer that were developed and optimized as BIM content.)
- The ownership of BIM models - This addresses who ultimately owns the BIM models during development as well as handover, which will be discussed in a further point below (ex. Client owns all BIM models of consultants and their price is factored in the fees of the consultants).
- The exposure of consultants to a trade secret - Although consultants can minimize this exposure or eliminate it altogether in some cases, it is not possible in others in order to complete the mandate. This means that other consultants must have knowledge of a trade secret in the form of an in-house BIM tool (i.e. Rhino plugin), BIM process (i.e. quality control process in Revit and PowerBI) or BIM documents that are considered corporate standards (i.e. BIM execution plan template).
In all cases, it’s important to clearly stipulate in contracts:
- What consists of an Intellectual Property
- What the sharing and use permissions are
- What the consequences are in case of a breach of contract
6. BIM model uses (professional responsibility and liability)
In my personal opinion, this is by far the most important BIM stipulation that must exist in contracts and the most important BIM topic, legally speaking. Permitted uses of the BIM model should discuss how the shared BIM models ought to be used by project stakeholders. For example, a design BIM model cannot be used for construction purposes or considerations unless otherwise explicitly expressed in writing by respective design stakeholders.
The absence of such a clause has far-reaching implications on professional liability on projects, primarily because architecture and engineering are regulated professions. On top of errors and omissions risk, there is a risk for public safety, budget overruns and a chain of litigation between project stakeholders.
Therefore, it is important to outline in contracts:
- What BIM models are to used for
- What the permitted uses are
- How long they are to be used for a specific purpose (this is optional)
- Exoneration in case of breach, neglect or abuse
7. BIM models handover
The last topic of interest in BIM contracts is what happens when the project is over. This usually represents a BIM models handover due to the completion of construction and a transition to the operation phase of the project, but in some cases, it could be a handover from the design phase to the construction phase. This happens if AEC consultants are not involved in construction and must hand over the model at the end of the design phase.
The main topics to include in contracts are:
- Who owns the models at handover
- The mechanism by which they must be handed over
- The file format of the BIM models at handover
This file format discussion seems mundane, but it could cause huge headaches if the client and consultants are not on the same page. I’ve lived through it before, where the consultants consider that there is a price tag attached to the BIM models and they are not willing to simply “hand it over” to the client for free…
8. Bonus topics
Of course, there are many bonus topics that could be added to contracts based on many factors, such as the project type, scale, location, stakeholders involved, etc. The following is a basic list that outlines some of the additional BIM topics that could be addressed in contracts:
- Level of Development (LOD) - Level to which BIM models should be developed.
- Level of Information (LOI) - Extent to extent the models should have information in them (i.e. parameters and meta data).
- Non-solicitation of staff - Consultants cannot influence or directly poach employees or other staff to join their firm due to their high competence or expertise.
- Conflict of interest - Stakeholders must make others aware of any corporate changes such as mergers or acquisitions that may pose conflicts of interest.
- Non-divulgence of specific topic - Although the general confidentiality topic covers most cases, a specific clause can address the high importance of not divulging information that is deemed sensitive.
- Change management - Any topic that addresses planned BIM tools upgrades, BIM files migration, BIM staff or leadership changes, or similar changes, can be stipulated contractually to explicitly outline how it will be managed.
Final thoughts
There you have it! The 7 most important topics that you should think about for AEC contracts regarding Building Information Modeling (BIM). As a recap, they are BIM responsibilities, BIM collaboration, BIM coordination, BIM confidentiality, Intellectual property, BIM model uses and BIM models handover.
I have seen time and time again lawyers, industry professionals, architects, engineers, technicians, etc. talk about this topic in events and in person without clearly outlining what the topics are; you either get a very vague and diluted answer that doesn’t list the topics, or you a get an extremely detailed answer that digs right into specific contracts clauses, while diluting the point in legal jargon that only a few understand.
On this matter, my takeaway for you is to always be upfront about your intentions with all project parties, to express yourself explicitly and clearly when making or responding to requests, to always get things in writing so you have a legal recourse, to complete the right steps at the right time, and to always hire professionals to do the required job.
That’s all for now. Good luck signing all those contracts!
Thank you for taking the time to read my blog article and I’ll see you again soon.
Tarek Ghazzaoui, Eng.
Senior BIM Manager
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Resources
- Introducing AIA Contract Documents’ 2022 BIM Documents
- Contract Language Documents Package
- Organization and digitization of information about buildings and civil engineering works, including building information modelling (BIM) — Information management using building information modelling — Part 1: Concepts and principles
Works cited
“Contract.” Wikipedia, Wikimedia Foundation, 10 Oct. 2023, en.wikipedia.org/wiki/Contract.
Team, The oboloo. “What Is Contract Importance? Definition.” Oboloo, 24 Jan. 2023, oboloo.com/blog/what-is-contract-importance-definition/.
“The Importance of Construction Contracts and Items to Consider When Preparing Construction Contracts.” JD Supra, www.jdsupra.com/legalnews/the-importance-of-construction-35239/. Accessed 5 Oct. 2023.
Office, Canadian Intellectual Property. “Government of Canada.” Government of Canada, Innovation, Science and Economic Development Canada, Office of the Deputy Minister, Canadian Intellectual Property Office, / Gouvernement du Canada, 2 Oct. 2023, ised-isde.canada.ca/site/canadian-intellectual-property-office/en.
Kenton, Will. “What Is Intellectual Property, and What Are Some Types?” Investopedia, Investopedia, www.investopedia.com/terms/i/intellectualproperty.asp. Accessed 6 Oct. 2023.
About the author
Tarek Ghazzaoui, Eng. (senior BIM manager)
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