Overview of the Revisions to AIA Owner-Contractor Construction Documents
by Robert J. Burvant
Just as it did in 2007, when it issued a new set of construction contract documents to replace the existing 1997 set, the American Institute of Architects (“AIA”) recently issued its series of revised construction contracts. This article highlights a number of the key revisions to two of the more utilized Owner-Contractor agreements, namely the A101 (Payment of Stipulated Sum) and A102 (Payment of Cost Plus Fee and Guaranteed Maximum Price), and also the A201 General Conditions of the Contract for Construction agreement, which is customarily utilized in conjunction with the A101 and A102 contract forms.
In a general sense the 2017 revisions address contract provisions where the lack of precise language led to confusion or friction between the parties and/or a higher likelihood of disputes. In other cases, revisions to the documents simply provide a cleaner, better organized version. Here are some of the more notable revisions to each of the above-mentioned contract forms.
The A101 Form – Payment is a Stipulated Sum
While the wording and organization of a number of provisions is different, in large measure the revisions are simply for purposes of a providing a clearer, better structured document, cleaning up some ambiguities from the 2007 version. One example of these efforts is "Article 9 Enumeration of Contract Documents," which more clearly defines what documents can comprise the totality of contract documents between the parties. Another example is "Article 5 Payments," which streamlines and therefore clarifies the payment provisions in that form. One new provision (Section 8.6) introduces the concept of electronic notice and references AIA Document E203-2013, which provides a mechanism for the electronic delivery of digital data.
The A102 Form – Payment is Cost Plus Fee with Guaranteed Maximum Price
Similarly, many of the revisions to the A102 contract form reflect the intent to provide a clearer, better structured agreement. The same changes to "Payments" and "Enumeration of Contract Documents" referenced above are reflected in this form, but found in Articles 12 and 16, respectively. There are a few substantive revisions to the A102 form worth mentioning. In "Article 11 Accounting Records," the list of records that the Contractor must make available to the Owner now includes job cost reports and Subcontractor invoices, thereby providing the Owner with further access to information. In "Article 12 Payments," the section on Final Payments now gives the Owner ten days after completion of an audit to provide a written report of same to the Architect. (See Section 18.104.22.168.) The other periods relating to the Owner’s audit and final payment are unchanged.
The A201 Form – General Conditions of the Contract
Most of the revisions addressed herein are found in the A201 document, which is customarily a companion contract document to the A101, A102 or like other agreement between Owner and Contractor. Some of the more interesting revisions to the A201 form are addressed below.
Perhaps the most readily discernible set of revisions to the A201 and A101/102 forms relates to insurance and payment/performance bonds. In the 2007 versions, the A101 and A102 forms simply stated that the Contractor would purchase and maintain insurance and provide bonds as set forth in Article 11 of the A201 form. The A101 and 102 forms then provided spacing whereby the types of insurance or bond and limits could be included. Article 11 of the A201 form laid out in detail the specific types of insurance to be furnished by the Contractor and the Owner, and also addressed related issues like subrogation.
The A201 2017 Revisions maintain many of the general provisions relating to insurance and bonds, but delete the provisions relating to the specific types of insurance required. Instead, the AIA provides a separate, six-page contract form, entitled “Exhibit A” to the A101 and A102 forms. This Exhibit is divided into four sections, A-1 General, A-2 Owner’s Insurance, A-3 Contractor’s Insurance and Bonds, and A-4 Special Terms and Conditions. The Exhibit A form more clearly articulates the responsibilities of the parties and, by means of blanks and boxes to be checked, allows the parties to clearly identify the agreed-upon types of insurance and limits.
Evidence of Owner’s Financial Arrangements
The 2017 Revisions to the A201 form provide additional protection to the Contractor regarding the Owner’s financial wherewithal to pay for the Project Work. (See Section 2.2) The previous version only required that the Owner provide reasonable evidence of its ability to pay for the work upon a written request made by the Contractor before commencement of the Work. The 2017 Revisions make clear that the Contractor is not required to commence the Work until receipt of a satisfactory response. The revisions also make clear that the Contractor may stop the Work following commencement under certain scenarios which indicate that the Owner cannot fulfill its payment obligations.
There are several notable revisions to the A201 form regarding contract administration. For example, Section 1.1.8, in addressing the role of the contract’s “Initial Decision Maker” (which is most often the Project Architect), now includes the statement that “[t]he Initial Decision Maker shall not show partiality to the Owner or Contractor and shall not be liable for results of interpretations or decisions made in good faith.” While perhaps these concepts were understood, their articulation is meaningful to refute the notion that the Architect (as Initial Decision Maker) is considered aligned with the Project Owner, which would suggest bias against the Contractor. Further, the Initial Decision Maker is provided express absolution from liability for decisions made in good faith.
Another example is Section 1.7, where the revised A201 form states that the parties will use AIA Document E203-2013 to establish protocols for the development, use and exchange of digital data.
Another example is Section 4.2.4. Whereas the 2007 version required the Owner and Architect to communicate through the Architect, the 2017 Revisions simply require that the Owner and Architect include the Architect in all communications which affect its services or responsibilities, with the Owner to notify the Architect as to the substance of any other Owner/Contractor communications.
Another example regards minor changes to the work (Section 7.4). In the 2017 Revisions, if the Contractor believes that such minor changes will affect the Contract Sum or Contract Time, the Contractor must notify the Architect and not proceed with the changed work. If the Contractor fails to do so, it waives any adjustment to the Contract Sum or extension of Contract Time.
Payment provisions (A201 Article 9)
There are a few noteworthy revisions to "Article 9 Payments and Completion." Section 9.4 clarifies that the Architect has three options upon receipt of the Contractor’s Application for Payment: (1) issue a Certificate for Payment in the full amount; (2) issue a Certificate for Payment for a lessor amount that the Architect deems due, with an explanation of its reasoning; or (3) withhold certification of the entire Application and provide reasons for same. Section 9.6.8 is a new provision which states that if the Owner has fulfilled its payment obligations, the Contractor shall defend and indemnify the Owner regarding any lien claim from any subcontractor or supplier. While new, this provision is consistent with Section 9.10.2 (under both the 2007 and 2017 versions), which states that if a lien or security interest remains on the Property after final payment is made to the Contractor, then the Contractor shall refund to the Owner all money that the Owner may be compelled to pay to discharge such a lien.
Termination provisions (A201 Article 14)
In the 2007 versions, both the A101 and A102 forms primarily referred to Article 14 of the A201 form for the provisions relating to contract termination. Regarding termination for convenience, the 2007 version of the A201 allowed for the contractor to receive, in addition to costs relating to termination and all amounts already due, “reasonable overhead and profit on the work not executed.” This measure of recovery has been replaced with the concept of a negotiated “termination fee.” The termination fee is not only referenced in Section 14.4.3 of the 2017 A201 form, but is also specifically referenced in the 2017 versions of the A101 (Article 7) and A102 (Article 14) forms.
Claims provisions (A201 Article 15)
The 2017 Revisions to the A201 form provide certain noteworthy clarifications regarding Claims. (See generally, Article 15.) For example, Section 15.1.1 states that an Owner does not have to initiate a Claim (as defined in the document) in order to impose liquidated damages – an issue that was arguably unclear in the previous version. Further, the 2017 Revisions delineate between a Claim discovered before the period for correction of work expires (Section 22.214.171.124), and a Claim discovered after expiration (Section 126.96.36.199). In the latter instance, the claimant provides notice to the other party rather than involve the Initial Decision Maker.