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Form Contracts (Including the
New AIA Forms)
Phil Beck & Steve Reams
PRESENTED BY:
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2017 AIA Documents: Introduction The AIA revises its Contract Documents every ten years.
Although new documents may be introduced in odd years, the major review to the family of documents takes place in years ending in “7.”
The last changes were in 2007.
This presentation looks at some of the more substantive changes made in the 2017 documents.
Soon, everyone must move to the 2017 documents because the 2007 versions will expire.
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Documents Retiring for 2017 versionsA101™-2007 Agreement Between Owner and Contractor where the basis of payment is a Stipulated Sum
A101™–2007 SP Agreement Between Owner and Contractor for use on a Sustainable Project where the basis of payment is a Stipulated Sum
A102™–2007 Agreement Between Owner and Contractor where the basis of payment is the Cost of the Work Plus a Fee with a Guaranteed Maximum Price
A103™–2007 Agreement Between Owner and Contractor where the basis of payment is the Cost of the Work plus a fee without a Guaranteed Maximum Price
A105™–2007 Agreement Between Owner and Contractor for a Residential or Small Commercial Project
A107™–2007 Agreement Between Owner and Contractor for a Project of Limited Scope
A201™–2007 General Conditions of the Contract for Construction
A201™–2007 SP General Conditions of the Contract for Construction for use on a Sustainable Project
A401™–2007 Agreement Between Contractor and Subcontractor
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Documents Retiring for 2017 versionsA401™-2007 SP Agreement Between Contractor and Subcontractor for use on a Sustainable Project
B101™–2007 Agreement Between Owner and Architect
B101™–2007 SP Agreement Between Owner and Architect for use on a Sustainable Project
B102™–2007 Agreement Between Owner and Architect without a Predefined Scope of Architect's Services
B103™–2007 Agreement Between Owner and Architect for a Large or Complex Project
B103™–2007 SP Agreement Between Owner and Architect for a Large or Complex Sustainable Project
B104™–2007 Agreement Between Owner and Architect for a Project of Limited Scope
B105™–2007 Agreement Between Owner and Architect for a Residential or Small Commercial Project
C401™–2007 Agreement Between Architect and Consultant
C401™–2007 SP Agreement Between Architect and Consultant for use on a Sustainable Project
All Expire on October 31, 2018
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AGENDA
A. The B101™-2017 Standard Form Agreement Between Owner and Architect
B. Major moves, restructuring and new documents
C. The AIA A101™-2017 Standard Form Agreement Between Owner and Contractor (Stipulated Sum)
D. The AIA A201™-2017 General Conditions of the Contract for Construction
The AIA A102™-2017 Standard Form Agreement Between Owner and Contractor (Cost-plus with a GMP)E.
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Changes in The B101™-2017
The Initial Information for the Project is no longer covered in the separate Exhibit A. It has been moved to Article 1 of the Agreement.
§1.1.6 – Elevates the possibility of having a Sustainable Objective from a parenthetical to its own subsection.
§1.1.6.1 – Instructs the Owner and Architect to use the AIA Document E204™-2017 Sustainable Projects Exhibit if the Owner identifies a Sustainable Objective.
§1.1.9 – Owner is presumed to engage the Geotechnical and Civil Engineers.
§1.1.11.1 – Architect is presumed to engage the Structural and Mechanical Engineers.
§1.3.1 – Instructs the Owner and Architect to agree upon protocols for transmission and use of the Instruments of Service and to use the AIA Document E203™-2017, Building Information Modeling and Digital Data Exhibit, for protocols for the development, use, transmission and exchange of digital data
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Changes in The B101™-2017Art. 2 Architect’s Responsibilities
§2.1 – Expressly requires the Architect to be properly licensed in the jurisdiction where the Project is located.
Art. 3 Scope of Basic Services §3.1.4 – Architect is not responsible for the Owner’s directive or substitution or for Owner’s
acceptance of non-conforming work without the Architect’s written approvals.
§3.5.2.3 – Architect’s services related to requests for substitutions are treated as Additional Services.
§3.5.3.2.1 – Architect no longer pays for reproduction of Proposal Documents, but must facilitate the distribution of them.
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Changes in The B101™-2017
Art. 5 Owner’s Responsibilities
§5.12 – The Owner only needs to include the Architect on communications with the Contractor. The Owner is no longer required to communicate with the Contractor through the Architect.
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Changes in The B101™-2017Art. 9 Termination or Suspension
§9.6 – Architect may recover the costs attributable to termination if the Owner terminates for convenience or if the Architect terminates due to a 90 day or longer suspension.
§9.7 – Architect no longer recovers lost anticipated profits on services not performed in the event of termination for convenience. The Architect instead recovers Termination and Licensing Fees agreed upon when the contract is signed. Also applies to Architect’s termination for suspension of 90 days or more.
§9.7 – The Agreement terminates one year from Substantial Completion.
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Major Moves, Restructuring and New Documents
Insurance
New Insurance and Bonds Exhibit
A101™-2017 Exhibit A
A102™-2017 Exhibit A
A103™-2017 Exhibit A
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Major Moves, Restructuring and New Documents
Exhibit A – Insurance and Bonds Exhibit Owner to purchase “all-risks” builder’s risk (unless obligation is
passed to the Contractor).
Sub-limit for specific causes of loss are an option.
Owner responsible for losses within the deductible or SIR.
Optional insurance (business interruption, law insurance, cyber security, etc.).
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Major Moves, Restructuring and New Documents
Exhibit A – Insurance and Bonds Exhibit
Requirements for certificates
Disclosed deductibles and SIR
Limits (fill in the blank)
Additional types of insurance
Penal sum of the bonds
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Major Moves, Restructuring and New Documents
Insurance The new Exhibit A moves most of the insurance and bond requirements from Article
11 to the Insurance Exhibit.
The Insurance Exhibit provides flexibility by allowing the parties to set forth the various insurance coverages and policy limits.
Can be easily transmitted for review by brokers.
The Insurance Exhibit applies to the requirements of both the owner and contractor.
Article 11 still exists.
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Major Moves, Restructuring and New Documents
Insurance
§11.2.3 (A201™) – Notice of Cancellation or Expiration of Owner’s Required Property Insurance
Owner must notify contractor within 3 business days of becoming aware of an impending or cancellation of property insurance.
Contractor may suspend work until the lapse is cured and recover additional time and money for the delay.
Contractor may purchase replacement coverage.
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Major Moves, Restructuring and New Documents
E204™-2017 Sustainable Projects Exhibit
Optional exhibit to establish the services of the Architect, the Work of the Contractor and the obligations of the Owner on Project with a Sustainable Objective. (check the box to include)
§1.2.1 Sustainable Objective – The goal of incorporating Sustainable Measures to achieve a Sustainability Certification.
§1.2.2 Sustainable Measure – A specific design, construction element, post occupancy use, operation, maintenance or monitoring requirement that must be completed to achieve the Sustainable Objective.
§1.2.3 Sustainability Plan – A Contract Document to identify and describe the Sustainable Objective, the Sustainable Measures, the strategies, roles and responsibilities for achieving the Sustainable Measures.
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Major Moves, Restructuring and New Documents
E204™-2017 Sustainable Projects Exhibit
§1.2.4 – Sustainability Certification – The chosen rating system such as LEED®, Green Globes™, Energy Star.
§2.9.2 – The parties agree to limits on various services of the Architect, after which the services are considered Additional Services.
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Major Moves, Restructuring and New Documents
E204™-2017 Sustainable Projects Exhibit
Article 4 – Mutual waiver of claims by all parties for consequential damages “resulting from failure of the Project to achieve the Sustainable Objective or one or more of the Sustainable Measures.”
§6.1 – No guaranty by any of the parties that the Sustainable Objective will be achieved.
§6.2 – No contractual relationship created between Contractor and the Architect (or the Architect’s consultants); between Owner and any entity working under the Contractor; or between the Owner and any consultant of the Architect.
Article 7 – Special Terms and Conditions – To be agreed upon between the parties.
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Changes in The A101™-2017Art. 3 Date of Commencement and Substantial Completion
§3.1 – Check the box format to establish date of commencement (default to date of agreement if no date provided).
§3.3.2 – Expressly provides for interim completion dates.
§3.3.3 – Expressly provides for liquidated damages for failure to achieve substantial completion.
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Changes in The A101™-2017Art. 4 Contract Sum
§4.2.2 – Provides for alternates to be accepted after the agreement is signed and establishes the price and conditions for acceptance.
§4.5 – Space for terms and conditions for liquidated damages.
§4.6 – Space for bonuses or other incentives.
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Changes in The A101™-2017Art. 5 Payments
§5.1.6.2.3 – Reduces the amount of a progress payment by any amount for which the Contractor does not intend to pay a Subcontractor or material supplier.
§5.1.7.1 – Space for the amount of retainage (reminder that retainage may be limited by governing law, e.g., Tennessee).
§5.1.7.1.1 – Space to establish items that are not subject to retainage.
§5.1.7.3 – Addresses the release of retainage upon substantial completion.
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Changes in The A101™-2017
Art. 7 Termination or Suspension
§7.1.1 – Space for the parties to include a termination fee in the event the Owner terminates the contract for the Owner’s convenience.
§7.1.1 – Used in conjunction with Article 14 of the A201™-2017.
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Changes in The A101™-2017
Art. 8 Misc. and Art. 9 Enumeration of Contract Documents §8.5.1 – Obligates the parties to purchase and maintain the insurance in the Exhibit A.
§8.5.2 – Obligates the Contractor to furnish bonds as set forth in the Exhibit A.
§8.6 – Provides for notice in electronic format to be made in accordance with the requirements of AIA Document E203™-2013, Building Information Modeling Digital Data Exhibit (if completed).
§9.1.8 – Check the box option to use the AIA Document E204™-2017 Sustainable Projects Exhibit.
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Changes in The A201™-2017Art. 1 General Provisions
§1.1.8 – Requires the Initial Decision Maker to act impartially and in good faith.
§1.2.1.1 – Adds a savings clause in the event a provision of the Contract Documents violates a law.
§1.6.1 – Permits electronic notices if a method for electronic transmission is included in the Agreement.
§1.6.2 – Notices of Claims must be delivered by Certified or Registered Mail, or by courier providing proof of delivery.
§1.8 – Relieves all parties from liability if another party uses or relies upon BIM without having agreed to the E203™-2013.
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Changes in The A201™-2017Art. 2 Owner
§2.2.2 – After commencement of the work, the Contractor may only request and the Owner is only required to furnish reasonable evidence of adequate financial arrangements if (1) the Owner fails to make payments to the Contractor in accordance with the Contract Documents, (2) the Contractor identifies a reasonable concern in writing, or (3) a change in the work materially changes the contract sum.
§2.2.4 – Addresses “confidential” information. Allows the Contractor to disclose “confidential” information to others who need to know the information and agree to maintain confidentiality.
§2.5 – Permits the Contractor to file a Claim if Contractor disagrees with the amount of a backcharge for Owner-performed work.
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Changes in The A201™-2017Art. 3 Contractor
§3.5.2 – Requires all warranties to be issued in the name of the Owner, be transferable to the Owner, and commence on the date of substantial completion.
§3.7.4 – Reduces the time for the Contractor to provide notice of differing site conditions from 21 to 14 days.
§3.10.1 – Mandates additional details to be included in the Contractor’s schedule.
§3.10.2 – Requires the Contractor to provide submittals in accordance with the approved submittal schedule.
§3.12.10.1 – Expressly permits the Contractor to rely upon the adequacy and the accuracy of any performance or design criteria provided in the Contract Documents.
§3.12.10.2 – Addresses certifications by Contractor’s Design Professionals.
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Changes in The A201™-2017Art. 9 Payments and Completion
§9.2 – Requires the Contractor to submit any changes to the schedule of values to the Architect.
§9.3.1 – Expressly contemplates lien waivers as part of pay applications.
§9.6.8 – Requires the Contractor to indemnify the Owner for any losses resulting from liens, provided that the Owner has fulfilled its payment obligations.
§9.10.2 – Drops the requirement that the Contractor’s certificate of insurance mandate notice to the Owner of cancellation.
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Changes in The A201™-2017Art. 13 Misc. Provisions and Art. 15 Claims and Disputes
§13.1 – Modifies the governing law provision to exclude the jurisdiction’s choice of law rules.
§15.1.3.1 – Limits the Initial Decision Maker’s role to Claims.
§15.1.3.2 – Eliminates the role of the Initial Decision Maker for Claims discovered after expiration of the period for correction of Work.
§15.2.6.1 – Modifies the process for initiating claims.
§15.4.1 – Establishes the place where the Project is located as the place for arbitration.
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Changes in The A102™-2017Art. 7 Costs to be Reimbursed
§7.2.2.1 – Wages and salaries of supervisors and administrators away from the Project site now a Cost of the Work and not just a suggestion.
§7.2.5 and §8.1.2 – Incentive compensation no longer a Cost of the Work.
§7.5.2 – Cost of equipment and related expenses subject to Owner’s prior approval if from the Contractor or a related party.
§7.5.4 – Onsite office costs enter the modern era (general office equipment and supplies rather than copy, fax and long distance charges).
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Changes in The A102™-2017Art. 12 Payments
§12.1.5 – Progress payments are based upon the approved schedule of values.
§12.1.5.1 – The schedule of values must include supporting data to substantiate the accuracy as required by the Architect.
§12.1.5.2 – No line item guarantees.
§12.1.5.3 – Contractor must submit supporting documentation to the Architect to move costs from a contingency to another line item.
§12.1.8 – Clarification on retainage (clearly applies to the entire amount requested in the application).
§12.1.8.1.1 – The parties can exempt items from retainage.
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2017 AIA Documents: Conclusion
A lot of changes to a lot of form documents.
Not all changes are substantive, but all must be understood to coordinate related documents and modifications.
Many changes are substantive and should be carefully reviewed for appropriate risk shifting for the parties and the Project.
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ConsensusDocs: “The New Kid In Town”
ConsensusDocs: What is it?
ConsensusDocs’ participating organizations.
ConsensusDocs turned 10 in 2017 and is gaining traction.
Reasons some view ConsensusDocs as an attractive alternative to AIA.
Recent changes to the ConsensusDocs forms.
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ConsensusDocs Organizations = 20 in 07
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The ConsensusDocs Coalition:40 Construction Industry Associations
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100+ ConsensusDocs Forms200 Series – General Contracting
300 Series – Collaborative
400 Series – Design-Build
500 Series – Construction Management
700 Series – Subcontracting
800 Series – Program Management
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Advantages of ConsensusDocs Input and buy-in from organizations representing all industry participants.
Fair allocation of risk (e.g., financial assurance, changes, termination).
Promotes best interests of the project, rather than an individual participant.
More flexible role for Design Professional.
Promotes collaboration and technology.
More frequent revisions than AIA.
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ConsensusDocs 200 – Owner/Constructor Agreement & General Conditions
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Recent Changes to ConsensusDocs 200 Payment
Termination for Cause
Termination for Convenience
Indemnification
Insurance
Changes
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Recent Changes to ConsensusDocs 200 (cont’d)
Schedule
Dispute Resolution
Bond: Penal Sum
Notice
Miscellaneous changes for clarity, brevity, and consistency
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ConsensusDocs: Conclusion
For more information and free sample: www.consensusdocs.org
Free red-lined documents: https://www.consensusdocs.org/2016-2017updatedcontracts
Coming attractions.
