The New AIA Forms, Explained
By Jeremy P. Brummond and Patrick J. Thornton
The American Institute of Architecture (AIA) published its first integrated set of standardized contract documents for construction projects in 1911. The AIA A201 General Conditions – the AIA’s key contract documents – are now the most commonly used general conditions on building projects in the United States using the design, bid, build model. Typically, the AIA typically revises the A201 every ten years. In fall 2017, the AIA released its seventeenth version of the General Conditions: the AIA A201-2017. Some changes are significant and materially change risk allocation among the owner and contractor.
Owner’s Financial Information
In the AIA A201, a contractor has a right to make a written request that the owner provide “reasonable evidence” of its ability to pay for the work after commencement when the owner fails to make a payment or there is other reasonable concern about the ability to pay. Under the prior version of the forms, if the owner refused to provide the information, the contractor could suspend work immediately. With the 2017 revisions, the contractor must wait at least 14 days from the date of its request before it can suspend work. In a two-week period, a contractor could incur significant cost in prosecuting its work. If, ultimately, the owner cannot pay, this could be a significant burden on the contractor.
Building Information Modeling
Building information modeling (BIM) has advanced dramatically over the past 10 years. BIM is broadly defined as “a digital representation of the building process to facilitate the exchange and interoperability of project information.”
Revisions in A201-2017 address responsibility for transmitting BIM data and liability for failing to accurately transmit data in two ways. First, the A201 now requires the parties to agree at the time of contracting upon the protocols governing the transmission and use of BIM information. As a default, A201-2017 states the parties will use another AIA Document (E203-2013) to establish these protocols.
Second, the A201 provides that if the parties do not agree on the protocols governing the use of and reliance on BIM, then any use or reliance on BIM by either party shall be at that party’s “sole risk and without liability to the other party and its contractors or consultants,” as well as without liability to the authors and contributors to the BIM.
Indemnification for Liens
The AIA Document A201 has also been revised so now the standard form provides that the contractor must indemnify the owner from any loss caused by any lien claim or claim by a subcontractor, provided the owner has fully complied with its payment obligations to the contractor. Notably, this was an alteration that many parties would make to the prior versions of the AIA Document A201. Presumably, the drafters of the AIA A201-2017 were altering the form to comport with this trend.
Termination for Convenience
One of the most significant revisions to the AIA Document A201 relates to the owner’s right to terminate the contract for convenience. In the prior version of AIA Document A201, the owner had a right to terminate the contract but the contractor had the right to collect reasonable overhead and profit on the portion of work not executed. The revisions to the A201 dispense with the contractor’s right to profit and overhead and, instead, provide the contractor shall receive a termination fee (to be negotiated by the parties) in the event of such termination among other expenses.
AIA Document A201 imposes certain obligations pertaining to the assertion of a “claim” by either owner or contractor. These obligations include a 21-day window from the occurrence giving rise to a claim to provide written notice of that claim to the other party. Under prior versions of the AIA A201, parties disagreed regarding whether an owner’s claim for liquidated damages arising out of schedule delay was meant to be a “claim” that required a 21-day written notice. Revisions to AIA Document A201 change this dynamic. The AIA added language to narrow the definition of a claim and remove liquidated damages from otherwise applicable “claim” requirements. Under the revised AIA A201, then, an owner preserves its claim for liquidated damages even if it does not comply with the written notice and other claim requirements.
For its most significant revision to AIA Document A201, the AIA drafters have dramatically scaled down Article 11 (concerning insurance and bonds) and relocated the majority of its provisions to a newly created exhibit: AIA Document A101-2017 Exhibit A.
The AIA had previously required an owner and contractor to obtain fairly rigid but traditional forms of coverage described in the General Conditions. The Insurance Exhibit represents a significant change in that the parties are able to use checklists of various coverages in Exhibit A to negotiate at the time of contracting and to craft the risk-management strategy that makes most sense for the project.
In closing, it must be noted the AIA A201 document is a form construction agreement. There is no legal requirement that any party use the AIA A201 unaltered. If the contractor or owner do not like the revisions to the form document, including those above, they can always revise the document to conform with their particular desires. Questions regarding the meaning of particular provisions or possible revisions should be directed to counsel.
Jeremy P. Brummond practices in the litigation department at Lewis Rice in St. Louis, Missouri, with a focus on engineering and construction. He can be reached at email@example.com.
Patrick J. Thornton practices primarily in the areas of construction and environmental law, commercial litigation, and medical malpractice at Lewis Rice. He can be reached at firstname.lastname@example.org.