What Is in the Contract?  

A successful automatic parking system (APS)—and the document that made it happen

Sponsored by Robotic Parking Systems, Inc.

This CE Center article is no longer eligible for receiving credits.

What is in the contract? This important document contains the guiding principles in any project, before, during, and after design and construction. When it comes to an automatic parking system (APS), however, there is no widely accepted standard contract to guide a project from inception to completion.

All images courtesy of Robotic Parking Systems, Inc.

A successful automatic parking system (APS) requires a contract with clauses specific to this unique type of project.

This course provides elements from such a contract. The model contract demonstrates the importance of providing neutral, comprehensive, and industry contract specifics and specs that—in the interest of all involved from users, owners, planners, and providers—are vital for the success of automatic parking in general. In addition, the course presents a comprehensive case study of the largest APS in the world that was successfully executed—manufactured in the United States, delivered overseas, and installed—using the model contract expanded upon here.

What Is an Automatic Parking System (APS)?

In the 1990s, automatic parking was still largely just a discussion about possibilities. While there were some old mechanical garages and systems in New York and New Jersey, to most people in the parking industry, a robotic garage was one where the entry and exit gates went up and down automatically. The concept of a software system running a garage was still futuristic.

This was the environment in 1994, when one company coined the term ‘robotic parking’ and established the Florida-based company that designed, built, transported, and installed what would be certified as the largest robotic parking garage in the world. This company developed the lift-and-run system, a software-controlled system that ran three separate sets of machines for the X, Y, and Z axis motions to take a car from an entry bay terminal to an upper level, park it, and bring it back to the terminal on demand.

The lift-and-run system, integrating mechanical capability with software control, was a monumental breakthrough in the parking industry because it can handle 20, 30, or more simultaneous car transactions inside the system and thus drastically increase peak traffic performance. As the New York Times mentioned in a 2000 article, this company’s working garage in Hoboken, New Jersey, was the country's first fully automatic garage.

Standard of Care

In the standard of care directive, a design professional has the responsibility or duty that anything that is designed needs to “fit for the intended purpose of use.” This is a very general and broad definition. However, it becomes more and more important as it has been implemented by the courts during the past 10 to 15 years. In the automatic parking industry, it means that if an architect, engineer, or an automatic parking engineer knows that 400 parking spaces, for example, are needed for a residential development, s/he then has the obligation to make sure the associated required peak traffic capacity for a specified APS is designed in accordance with industry standards. It has to move the vehicles in and out of the system in a timely manner consistent with standards.

Here is an example where the standard of care (sometimes referred to as “fit for purpose”) was not applied. A company installed an APS in south Florida for 230 parking spaces designed for a high-end apartment building at the beach.

As per a table designed by the National Parking Association (NPA), a throughput requirement of 50 percent of parking capacity was needed, which would be 115 cars per hour, which means about two cars per minute. However, the actual installed system took 15 minutes to retrieve only one car, so it was not designed nor installed to fit the purpose of serving the residents. Legal action ensued, and at the end, the APS company had to pay for not achieving the design standard.

According to the NPA, “The most important factor for designing the access requirements for any parking facility is to determine the peak-hour arrival and departure traffic volume.” This in turn determines the layout and design of the APS. If a design professional does not adhere to this industry standard, s/he can be held liable by the developer or owner.

In addition, it is extremely important at the very beginning of the planning process to determine the support-system grid layout of an automatic parking facility. This affects the efficiency of any layout of the facility and will optimize the footprint. This is exactly how planners start the layout of any building with a conventional concrete-ramp parking structure. First, the column layout is determined for the parking facility. Then, the upper floors of the building are based on this column layout. This process also should be followed with an automatic parking facility in the very early planning stage.

Contract Elements Specific to Automatic Parking

The elements of the model contract presented here are based on 25 years of international contract experience in APSs. It is based on appropriate forms of International Federation of Consulting Engineers (FIDIC) contracts.

Note that only the contract clauses specific to APSs are shown here. General contract clauses as covered in other AIA contract formats, such as General Notes, Languages and Law, General Obligations of Parties, Risk and Responsibility, Commencement and Delays, Variations/Changes, Suspension and Termination, Claims, Disputes, and Arbitration, Changes in Legislation, as well as Miscellaneous, are not covered here, as they are elsewhere described in detail in standard contracts.

This table from the National Parking Association shows the peak traffic volume for each type of facility.

What is in the contract? This important document contains the guiding principles in any project, before, during, and after design and construction. When it comes to an automatic parking system (APS), however, there is no widely accepted standard contract to guide a project from inception to completion.

All images courtesy of Robotic Parking Systems, Inc.

A successful automatic parking system (APS) requires a contract with clauses specific to this unique type of project.

This course provides elements from such a contract. The model contract demonstrates the importance of providing neutral, comprehensive, and industry contract specifics and specs that—in the interest of all involved from users, owners, planners, and providers—are vital for the success of automatic parking in general. In addition, the course presents a comprehensive case study of the largest APS in the world that was successfully executed—manufactured in the United States, delivered overseas, and installed—using the model contract expanded upon here.

What Is an Automatic Parking System (APS)?

In the 1990s, automatic parking was still largely just a discussion about possibilities. While there were some old mechanical garages and systems in New York and New Jersey, to most people in the parking industry, a robotic garage was one where the entry and exit gates went up and down automatically. The concept of a software system running a garage was still futuristic.

This was the environment in 1994, when one company coined the term ‘robotic parking’ and established the Florida-based company that designed, built, transported, and installed what would be certified as the largest robotic parking garage in the world. This company developed the lift-and-run system, a software-controlled system that ran three separate sets of machines for the X, Y, and Z axis motions to take a car from an entry bay terminal to an upper level, park it, and bring it back to the terminal on demand.

The lift-and-run system, integrating mechanical capability with software control, was a monumental breakthrough in the parking industry because it can handle 20, 30, or more simultaneous car transactions inside the system and thus drastically increase peak traffic performance. As the New York Times mentioned in a 2000 article, this company’s working garage in Hoboken, New Jersey, was the country's first fully automatic garage.

Standard of Care

In the standard of care directive, a design professional has the responsibility or duty that anything that is designed needs to “fit for the intended purpose of use.” This is a very general and broad definition. However, it becomes more and more important as it has been implemented by the courts during the past 10 to 15 years. In the automatic parking industry, it means that if an architect, engineer, or an automatic parking engineer knows that 400 parking spaces, for example, are needed for a residential development, s/he then has the obligation to make sure the associated required peak traffic capacity for a specified APS is designed in accordance with industry standards. It has to move the vehicles in and out of the system in a timely manner consistent with standards.

Here is an example where the standard of care (sometimes referred to as “fit for purpose”) was not applied. A company installed an APS in south Florida for 230 parking spaces designed for a high-end apartment building at the beach.

As per a table designed by the National Parking Association (NPA), a throughput requirement of 50 percent of parking capacity was needed, which would be 115 cars per hour, which means about two cars per minute. However, the actual installed system took 15 minutes to retrieve only one car, so it was not designed nor installed to fit the purpose of serving the residents. Legal action ensued, and at the end, the APS company had to pay for not achieving the design standard.

According to the NPA, “The most important factor for designing the access requirements for any parking facility is to determine the peak-hour arrival and departure traffic volume.” This in turn determines the layout and design of the APS. If a design professional does not adhere to this industry standard, s/he can be held liable by the developer or owner.

In addition, it is extremely important at the very beginning of the planning process to determine the support-system grid layout of an automatic parking facility. This affects the efficiency of any layout of the facility and will optimize the footprint. This is exactly how planners start the layout of any building with a conventional concrete-ramp parking structure. First, the column layout is determined for the parking facility. Then, the upper floors of the building are based on this column layout. This process also should be followed with an automatic parking facility in the very early planning stage.

Contract Elements Specific to Automatic Parking

The elements of the model contract presented here are based on 25 years of international contract experience in APSs. It is based on appropriate forms of International Federation of Consulting Engineers (FIDIC) contracts.

Note that only the contract clauses specific to APSs are shown here. General contract clauses as covered in other AIA contract formats, such as General Notes, Languages and Law, General Obligations of Parties, Risk and Responsibility, Commencement and Delays, Variations/Changes, Suspension and Termination, Claims, Disputes, and Arbitration, Changes in Legislation, as well as Miscellaneous, are not covered here, as they are elsewhere described in detail in standard contracts.

This table from the National Parking Association shows the peak traffic volume for each type of facility.

Planning and Understandings

Scope of Work: Partial Supply versus Turnkey

In the case study presented here, which represents the largest APS in the world, the contract called for a turnkey scope of work. This means that the supplier, based in Florida, took on the complete design and organized the local building permits, manufacturing, shipping, installation, and testing of the parking system, including 15 years of maintenance and operations. While there might be some temptation to shop around for a number of suppliers to provide various elements, such as the manufacturing, support structure, installation and software—presumably to save money or channel work toward regular suppliers—the potential for error and failure increases to an unacceptable level. In such a large and sophisticated project, choosing a turnkey scope of work from a trusted, experienced, and proven supplier is by far the best path forward.

Sequence of Documents Pertaining to Contract

The several documents forming the contract are to be taken together, with each explaining the others. But in the case of discrepancies and ambiguities, the priority of the documents should be spelled out. Here is an example of priorities of documents:

  1. Agreement
  2. Owner letter of acceptance, if any
  3. Conditions of contract
  4. Supplier proposal signed and accepted by owner (including cover letter, if any)
  5. Attachments and all related correspondences
  6. Any other document forming part of the contract

Contractual Relations Between Parties

The APS contract should be prepared in accordance with sound international practice for the design and execution of special installation and automation work. It should consider the general practices and customs prevailing in the market. Of course, care should be taken to maintain a balanced contract, giving due consideration to both owner’s and supplier’s rights and obligations.

A clear chain of command is necessary. In addition to the owner, the supplier should be responsible to report and take orders only from one entity, namely the consultant or owner’s representative, project manager, or engineer, as spelled out in writing.

Plans and Boundaries Clearly Defined

The contract needs to specify who does what. The supplier should be responsible only for the assembly and installation of the APS, including associated trades inside the confines of the actual parking building.

Specific Quality Standards Need to be Spelled Out

However, the supplier should be responsible for preparing all of the submittals in compliance with the standards that apply to APSs. The include NFPA 13/ NFPA 88A-2019, ASME B30.13, as well as the “Guide to the Design and Operation of Automatic Parking Facilities,” as published by NPA and the Automated and Mechanical Parking Association (AMPA).

Insurance

The APS supplier, using the example of the case study presented here, should offer these insurance protections:

  • Factory general liability insurance for a period of one year covering bodily injury and property damage (could include a combined single limit of $1 million and an aggregate of $2 million)
  • Workers’ compensation insurance according to the laws of the state that the supplier is in.
  • Professional indemnity insurance covering the design responsibilities for an amount of $1 million each occurrence and $2 million aggregate

However, the supplier and the project should be covered on-site under the owner’s general liability or umbrella insurance covering bodily injury and property damage.

Software License and Escrow

All APSs require software to operate. Many contract agreements do not include a clause by which the owner has a recourse in case the system supplier defaults on its obligations, effectively rendering the system compromised or, even worse, useless. The solution for this is to enter into a software licensing agreement combined with an escrow agreement in which the source code is put into safekeeping of a third-party escrow agent. The code would then be released to the owner upon manufacturer’s default. This then provides a remedy for the owner in case of supplier default. The same applies principally also to all other components of the APS.

Patent Coverage

It is desirable for the owner to ensure that the supplier has the rights for the technology applied for the project. This prevents possible stops through patent-infringement processes.

Performance Bonds

In the construction industry, it is common to request performance bonds to secure the contracted work being performed per contract. However, bonding companies do not generally cover, for example, elevators or HVAC systems. These mechanisms are typically built in a factory and merely installed on-site. This applies also to APSs if the building portion is excluded (which in itself can fall into the typical construction industry performance bond requirements).

Therefore, another method of securing the owner’s down payment and progress payments needs to be established. In the case study project and other projects by the same supplier, a method was found that satisfied the owner’s requirements by introducing the following procedures.

First and foremost, the owner investigated the past performance of the supplier and was satisfied with it.

Next, because substantial majority work was to be performed in the factory, the contract was split into a delivery portion and an installation portion. For the delivery contract, a substantial down payment was agreed upon because about 80 percent of the elements needed for fabrication must be ordered at issuance of the delivery contract in order to comply with scheduled product delivery. This down payment was secured by a company guarantee in the same amount.

Then, when the machines were completed for a factory acceptance test (FAT), the owner was invited to witness the production completion. Upon a successful FAT, the remaining portion of the delivery contract was paid, and goods were shipped to the site.

The installation contract was oriented to on-site progress with a retainer of 5 percent—half of it to be released upon issuance of substantial completion certificate and the other half after completion of the defects liability period. The completion of installation and startup operation was concluded with the site acceptance test (SAT), with its main part being the performance certification of the system’s peak traffic capacity through an accredited third party.

Following the successful SAT, the “substantial completion certificate” was issued, which then entered the one-year defects liability period.

Timing, Approvals, and Getting Started

The supplier should start the design and execution of the project on the date specified in the letter of acceptance or on the date mutually agreed. The maximum duration for commencement of the system should be within 30 days of the date of the letter of acceptance, unless otherwise mutually agreed later.

Approvals

The APS supplier, in cooperation with the owner/consultant, should provide all of the required drawings and system specifications under the scope of work. However, the owner/consultant should incorporate supplier drawings and system specifications into the owner’s design documents at no cost to the supplier.

Timetable

Provisions need to be in place in case the approvals for the project are delayed. Any delays in getting the approval due to delays from the statutory authorities should entitle the supplier to an extension of time for completion, as well as reimbursement of any additional cost actually expended by the supplier.

Visas for International Travel

Because the equipment for an APS may be shipped across international borders, it makes sense for the building owner or contractor to obtain the necessary permissions. The owner or consultant should obtain site work permits, visas, or other documents required by authorities, if needed, for the supplier and its staff to install the APS.

Setting Plan and Site Conditions

Before the supplier takes over the site and begins the installation, the owner or consultant should mark site boundaries, gridlines, and levels in accordance with the plans.

Storage of Supplier Equipment

An APS involves a tremendous amount of equipment to be delivered and stored on-site. This is unlike a conventional parking system that involves mainly poured concrete for various floors and ramps. In case the owner/contractor is not ready to accept delivery of the equipment on the date indicated in the contract for any reason, another delivery spot needs to be specified. Otherwise, the supplier may store the materials at an arranged warehouse at the owner’s risk and cost. The owner should reimburse the supplier for additional costs due to extra handling, transfer and warehousing, and extra insurance costs.

Adverse Physical Conditions and Artificial Obstructions

The owner or consultant needs to alert the supplier in writing of any physical obstructions or physical conditions on the site, other than climatic conditions, that will impede the delivery and installation of the equipment. Otherwise, the supplier will be entitled to an extension of time and compensation.

Safety Precautions

The contract should spell out who is responsible for safety precautions. Here is the recommended breakdown. The supplier should:

  • Comply with all applicable safety regulations.
  • Take care for the safety of their persons entitled to be on the site.

The owner’s appointed general contractor or others should:

  • Keep the site and APS equipment and installation area clear of unnecessary obstruction.
  • Provide fencing, lighting, guarding, and watching of the APS until completion and taking over.
  • Provide any temporary elements (including roadways, footways, guards, and fences) that may be necessary because of the execution of the system for the use and protection of the public as well as the owners and occupiers of adjacent land.

Force Majeure

Provisions need to be spelled out for force majeure. According to Merriam-Webster, force majeure means “an event that could not be reasonably anticipated or controlled.” It translates literally from French as “superior force.”

Force majeure should be spelled out explicitly and may include:

  • War, hostilities (whether war be declared or not), invasion, act of foreign enemies
  • Rebellion, terrorism, revolution, insurrection, military or usurped power, or civil war
  • Riot, commotion, disorder, strike, or lockout by persons other than the contractor’s personnel and other employees of the contractor and subcontractors
  • Munitions of war, explosive materials, ionizing radiation, or contamination by radioactivity, except as may be attributable to the contractor’s use of such munitions, explosives, radiation, or radioactivity
  • Natural catastrophes such as earthquake, hurricane, typhoon, volcanic activity, or flooding
  • Such events with consequential delays, like delays in shipment on sea, delays in custom houses/clearances, delays in permitting or approval procedures, etc.
  • Acts of government

If the supplier is prevented from performing any of its obligations under the contract by force majeure, the supplier should be entitled to an extension of time for any such delay, if completion is or will be delayed, and if the event or circumstance is of the kind described above, payment of any such additional cost incurred to supplier.

Optional Termination, Payment, and Release

Every project needs an optional “out.” If the execution of substantially all of the APS in progress is prevented for a continuous period of a certain number of days (84 days in the case study presented here) by reason of force majeure of which notice has been given, then either party could give to the other party a notice of termination of the contract.

Quality Assurance

The supplier should demonstrate compliance with the requirements of the contract and in accordance with the procedures required by the statutory authorities. The owner or consultant should be entitled to audit any aspect of the quality assurance system. Details of all procedures and compliance documents should be submitted to the owner or consultant for information before each execution stage is started by the supplier.

Contract Sum and Payments

The owner should pay the supplier, in consideration of the construction, commissioning, completion of the system, and the remedying of any defects, the contract sum as set forth in the contract documents.

When the Owner Takes Over

Tests on Completion

Following installation, the supplier will conduct testing of the APS. The mechanical peak-traffic capacity should be demonstrated by testing 10 percent of the peak traffic successfully. If the testing cannot be completed due to delays in other parts of the building project that are not completed, the supplier will need extra time to do the testing. This testing is typically a prerequisite of the owner taking possession and should be verified by a trusted and technically accredited third party.

However, if the testing of car parking is delayed more than 30 days due to no fault of supplier, the “taking-over certificate” may be issued, and the supplier may demobilize form the site. When the conditions are right, the owner may request and compensate the supplier to remobilize to conduct the testing.

Owner or Consultant Taking-Over Certificate

When installation has been substantially completed and has satisfactorily passed the required tests on completion, the supplier may give a notice to that effect to the owner or consultant, accompanied by a written undertaking to finish with due expedition any outstanding work during the defects liability period. The owner then issues the supplier a “taking-over certificate” stating the date on which, in his/her opinion, the work was substantially completed in accordance with the contract, or provide a punch list of items based on contract requirements that must be completed during defects liability period. Or, if the owner uses the system for parking, the owner is deemed to have issued a taking over.

Completion of Outstanding Work and Remedying Defects

For an APS, the defects liability period is typically one year from the date of the taking-over certificate, excepting normal wear and tear. If a defect appears or damage occurs, the supplier should be notified accordingly, by (or on behalf of) the owner.

The supplier should be responsible to remedy defects or damage only if defects are attributable to items for which the supplier is directly responsible for under the contract. Of course, the supplier should not be responsible for any defects as a result of improper operation and maintenance of the parking system.

The owner or consultant should issue a performance certificate or defects liability certificate within 28 days after the expiration date of the defects liability period, or as soon thereafter as supplier has completed the system, including remedying any defects.

Guarantees and Warrantees

Guarantees and warranties need to be spelled out clearly. For the case study presented here, the supplier warranted to the owner that materials and equipment furnished under the contract were of good quality and new, that the system and installation was in accordance with the norms of industry standard, and that the APS conformed to the contract and was fit for the intended purpose. The latter included that the system is fit for the intended purpose of parking 425 cars per hour.

However, this warranty excluded remedy for damage or defect caused by abuse, fire, or water originating outside of the APS, modifications not executed by the supplier, improper operation, force majeure, and wear and tear under normal use. Also, the supplier assigned to the owner all warranties and guaranties received from the original manufacturers and distributors of equipment components and programs incorporated into the APS.

The main electrical supplier provided an extended warranty of two years from the delivery date of parts. A 10-year warranty applied to all steel structural elements as well as all machine frames with welded elements. For any project, if a maintenance and service contract is executed, complete system warranty is covered for the life of the agreement. This is a very vital point for the owner.

Conclusion

APSs are the future. They offer up to three-and-a-half times as many parking spots as conventional parking garages in the same volume. This saved space can be used for more profitable uses or even green space. Automatic parking is safer for users and is a more pleasant experience. These systems offer a “wow factor” for buildings to attract tenants. While these innovative and proven systems bring multitudes of benefits and are increasingly specified, there is not yet a standard contract to guide a successful project from inception to completion, and which protects both the owner and the supplier. This course demonstrates how the largest automatic parking garage in the world came into being, plus elements of the contract that made it happen.

Kathy Price-Robinson writes about building and design. Her remodeling series “Pardon Our Dust” ran 12 years in the Los Angeles Times. She specializes in buildings that are durable and resilient to climate disruptions, as well as products and designs that provide shade in hot climates. www.kathyprice.com

Originally published in ASSEMBLY

Originally published in July 2021

LEARNING OBJECTIVES
  • Identify important points when contracting an automatic parking system (APS).
  • Explain the principle of standard of care: design responsibilities and fit for purpose.
  • Provide reasonable ways to secure performance.
  • Demonstrate performance measurements for APSs.
  • Share as an example the case study of a 2,314-space APS, certified by Guinness World Records as the largest in the world, that was successfully manufactured, delivered, and installed using this model contract.