As discussed in a May blog article, the American Association of Architects (AIA) revise their form agreements between owner and contractor approximately every 10 years, and these form documents were recently revised by the AIA a couple of months ago.
This article focuses on comparing the changes from the 2007 version to the 2017 version of the following documents: AIA-A101 (standard form agreement between owner and contractor where the basis of payment is a stipulated sum); AIA-A102 (standard form agreement between owner and contractor where the basis of payment is the cost of the work plus a fee with a guaranteed maximum price); and AIA-A103 (standard form agreement between owner and contractor where the basis of payment is cost of the work plus a fee without a guaranteed maximum price). These documents (collectively referred to as the “Standard Form Agreement”) should be read in conjunction with the AIA-A201 (general conditions between owner and contractor). The May blog article provides an analysis of the 2017 revisions to the AIA-A201.
In its 2017 revisions, AIA makes many of the same changes across all three of the Standard Form Agreements. Also, similar to the changes to the AIA-A201, many of the changes to the Standard Form Agreements are minor clarifications and improvements or create new “check the box” features. Some of the substantive changes to the Standard Form Agreements are highlighted below:
- As is the case with the AIA-A201, the most significant change to the Standard Form Agreements is the creation of the insurance and bonds exhibit. The 2007 Standard Form Agreements contained only a cross-reference to the insurance requirements in the AIA-A201. Under the 2017 version, much of the insurance and bonds information has been removed from the AIA-A201 and placed into an exhibit that is attached to the Standard Form Agreements. This change allows for greater flexibility and easier customization of the insurance requirements.
- The Standard Form Agreements include a new method for calculating the amount that an owner must pay to a contractor for termination for convenience. Specifically, the parties are now prompted to agree upon a fee that the owner must pay to the contractor if it is terminated for the owner’s convenience. This termination fee is in addition to payments that the owner must make to the contractor for (i) work properly performed and (ii) costs incurred by reason of the termination, including costs attributable to termination of subcontracts.
- The progress payment calculation has been simplified across the Standard Form Agreements and now includes, among other minor adjustments, a provision adding change directive amounts to the progress payment calculation and a provision subtracting amounts that the contractor does not intend to pay to subcontractors. The Standard Form Agreements also include a much more thorough procedure for withholding retainage.
- The AIA-A102 and AIA-A103 are occasionally executed before the contract documents are finalized and the guaranteed maximum price or control estimate may contain certain assumptions. The AIA has added a paragraph to both form documents allowing for revisions to the contract documents that are consistent with the stated assumptions contained in the guaranteed maximum price or control estimate. The contractor is required to notify the owner and architect about any inconsistencies.
- AIA-A103 now includes a section regarding procurement of long-lead items. This new section requires the contractor to prepare a list of long-lead items and allows the owner to procure such items on terms acceptable to the contractor. The contract for the long-lead items are later assigned to the contractor and the contractor must accept full responsibility for those contracts.
- The AIA-A102 and AIA-A103 also include a new section forbidding the contractor from making advance payments to suppliers for materials that have not been delivered to the project site without the prior approval of the owner.
As indicated above, AIA made other minor revisions to the Standard Form Agreements, and the list above is not comprehensive of all revisions. Anyone attempting to use the 2017 form documents should carefully examine and compare the 2017 version with the 2007 form. If you have any other questions about the recent AIA revisions or drafting a contract for your particular project, please do not hesitate to contact us.