Friday // September 8, 2017

How recent changes to AIA Contract Documents will impact your project

Every 10 years, the American Institute of Architects (AIA) releases an updated version of the A201 family of contract documents, which are developed for the design-bid-build construction delivery model. Prepared by the AIA with input from owners, contractors, attorneys, architects, engineers and others, the nearly 200 forms and contracts define relationships and terms involved in design and construction projects and are widely recognized as the industry standard.

In April, the AIA released the 2017 edition of the A201 General Conditions which establishes the responsibilities of the owner, contractor, architect, subcontractors and suppliers on construction projects. Colby Cox, EMJ’s General Counsel, summed up the most substantial changes to these terms and conditions and their impact to your team.

1. Creation of Insurance & Bond Exhibit (A101, Exhibit A)

Historically, the most heavily modified section in the A201 is the insurance section, so the AIA moved this section to a separate exhibit to help address this issue. A standard structure in many prime contracts already, the AIA made this adjustment to simplify the contracting process.

“A separate exhibit allows greater freedom for parties to tailor insurance and bond requirements to address the needs of a particular project,” Cox says.

 
 
2. Electronic Notices (A201, 1.6)
The A201 received a much-needed push into the 21st century—project teams may allow for notices to be sent via email, though notices for a Claim must still be personally delivered or sent through certified or registered mail. Still, this brings the industry documents up to speed and allows for quicker and easier communication between parties.
 
 
3. BIM/Digital Data (A201, § 1.7)
By default, the parties are now required to use AIA’s BIM and digital data exhibit to govern the development, use and transmission of digital data. Typically, architects use separate releases with contractors when providing digital data like BIM models, lessening the importance of this valuable information.

“This is powerful because it formalizes the use of digital data that is typically restricted by architects in separate agreements,” says Cox.

 

 

4. Evidence of Owner’s Financial Arrangements (A201, 2.2)
In response to funding issues during the recession, the AIA enhanced proof of funding requirements for project owners. In addition to the owners’ ongoing requirement to provide evidence of funding, contractors now have a clearer right to refuse or suspend work if “reasonable” financial proof is not provided which could be open to interpretation. However, project teams must keep the owner’s financial information confidential, but can share with subcontractors and other members of the team.
 
 
5. Means and Methods (A201, § 3)
Contractors are now responsible for performing their own due diligence regarding the safety of construction means and methods dictated in the Contract Documents.

“In the past, contractors could rely on the designer or architect’s direction stated in the Contract Documents. This addition protects the design team from legal action as safety associated with all means and method is now in the hands of the builder,” says Cox.

 

6. Warranty (A201, § 3.5)
Written warranties are now to be issued in the name of the owner or transferred to the owner, rather than to the contractor. This requirement has been commonly required in prime contracts for years, as it simplifies warranty obligations since the majority of work is performed by subcontractors and suppliers.
 
 
7. Owner and Contractor Communication (A201, § 4.2.4))

A simple but important change for project teams—direct communication between the owner and contractor is now permitted.

“In year’s past, communication between the owner and contractor was required to go through the architect. This change more accurately reflects the way most teams interact today—collaboratively and transparently,” says Cox.

 

8. Minor Changes (A201, § 7.4)
“As defined, a minor change should not have a price or timeline impact,” Cox explains. The revision to this section states that contractors should not proceed with a minor change if they believe the change will impact the contract sum or time—or risk waiving their right to claim resulting costs.

“Contractors are no longer required to take the architect’s word that their request is a minor change. Contractors have the right to stop work, protecting them from additional costs and delays that accompany true changes in the work.”

 
 
9. Schedule of Value (A201, § 9.2)
Any change to the schedule of value must now have supporting data to substantiate its accuracy.

“Before this revision, the contractor could adjust the schedule of values as needed. The Contractor can still adjust the schedule of values but now must provide documentation to support the change, which provides more protection for the owner.”

 
 
10. Lien Indemnification (A201, § 9.6.8)
This change encompasses what many owners already require in their contracts: contractors must provide lien waivers and are obligated to indemnify the owner for costs and damages associated with mechanics liens filed by subcontractors and suppliers.
 
 
11. Termination for Convenience Fees (A201, § 14.4.3)
Instead of the owner being obligated to pay reasonable overhead and profit for work not executed after the contract has been terminated for convenience, the owner will now negotiate a termination fee. This approach has been commonplace within the industry for some time, and the AIA took note.
 
 
12. Dispute Resolution (A201, § 15.3)
The AIA has defined a timeline for disputes between owner and contractor through mediation. Either party can demand in writing that the other party file for binding dispute resolution within 30 days from the date that mediation has been concluded or 60 days after mediation has been demanded without resolution of the dispute.

If the party receiving the demand does not file for binding dispute resolution within 30 days, then both parties waive their rights and must respect the independent decision maker’s initial decision.

“This will ensure that disputes don’t stall through or after mediation; all parties must be proactive with moving claims to the binding dispute resolution phase,” Cox says.

 
Given the short timeframe and closure of claims, we anticipate this modification being changed often to address this risk. 

 

Generally, these changes should improve efficiency and promote collaboration as many of the updates reflect the way project teams are currently interacting on projects. For more information and to view side-by-side comparisons of the 2007 and 2017 Contract Documents, visit www.aiacontracts.org/learn.

 

Colby Cox has more than 20 years of experience in the legal and construction fields. He graduated from the Oklahoma State University with a degree in civil engineering before earning his Juris Doctor at the University of Kansas. He is a member of the state bars of Georgia, Kansas and Missouri and a member of the American Bar Association.

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