Just-updated AIA contracts resolve many issues
To stay current with industry practices, the American Institute of Architects updates its standard contracts every 10 years. In the recent publication round, 40 of more than 100 legal documents have been revised, some of them substantially. Many of the most important changes appear in document “A201 General Conditions of the Contract for Construction.” The most significant concern arbitration, according to Suzanne Harness, AIA, the AIA’s managing director and counsel for contract documents. Arbitration as a means of settling disputes was mandatory, but in 1997, nonbinding mediation was added as a precedent to arbitration. But in the revised A201, parties can choose between arbitration, litigation, or another method, with litigation as the default. Mediation remains the first step. Another change in A201 is the ability to consolidate arbitrations. In the past, an owner couldn’t combine an arbitration with a contractor with one with the architect. Consolidated arbitrations are less likely to slow down construction, thus saving time and money for all.
A third major change is in the selection of an initial decision maker, or IDM. Past AIA documents required the architect to make initial decisions on any claim between owner and contractor. This allowed construction to proceed until the decision was overturned by mediation or arbitration. But owners are unhappy if their representative, the architect, decides against them; contractors may doubt the architect’s impartiality; and architects are caught in the middle. Now, the owner and contractor may choose a third-party IDM, with the architect as the default. The architect maintains the traditional role of making decisions about submittals and the quality of the work.
The statute of limitations has in the past been ambiguous and confusing. The new A201 eliminates the contractual statute of limitations and relies instead on whichever state law governs, to a maximum of 10 years after substantial project completion. Another change is that the owner, architect, and architect’s consultants, consistent with now-common practice, are named as additional insureds under the contractor’s general liability policy. The A201 update also limits the contractor’s right to information about the owner’s finances, while increasing the owner’s access to information about contractor and subcontractor payment problems.
The B-series documents have also undergone substantial changes, to help tailor agreements to project size. The “flagship” agreement, B101, on which the others are based, is intended to replace the former B141 and B151. It is a one-part document for basic architectural services in five phases—schematic design, design development, construction documents, bidding/negotiation, and construction. Any other services are considered “additional” and can be added later.
For the first time, AIA owner-architect agreements contain an explicit “standard of care.” In the past, this hadn’t been considered necessary, because it was covered by state law. But some owners and attorneys had been inserting their own language, which was in some cases inconsistent with these laws. Harness explains: “We carefully researched state law in many states to find out what their standard of care was, and we drafted a provision we think is enforceable.” The parties to the agreement must specify the types and limits of insurance the architect is required to maintain. If these exceed the architect’s usual limit, the owner is required to reimburse the architect for any extra cost.
In the past, protections for the architect’s Intellectual property were confusing and rigid. Following termination of the agreement, the architect had to be found in default before the owner could use the architect’s instruments of service to complete the project. The new agreements give owners greater access to the architect’s work for construction, maintenance, and additions, provided the owner has paid the architect all amounts due.
Additional owner/architect agreements are now geared to project size and scope. B102 is similar to B101 but without a scope of services, intended for architects who specialize in niche services, such as historic preservation. It can be paired with any scope-of-services document, including the 11 the AIA publishes. The new B103 is designed for use on large or complex projects. It lists modified basic services, assuming that the owner will retain third-party cost estimators and project schedulers, and that construction may be fast-tracked, phased, or accelerated.
B104 is designed for midsize “projects of limited scope.” B105 is an abbreviated version of B101, replacing B155. Its simplified format and informal wording makes it more accessible for small firms and for residential or small commercial projects. Basic services are simplified as two phases, design and construction, and there is no dispute resolution provision.
Although users may, as always, make modifications to any documents, Harness notes, “People do want to start with the standard form because they can be sure everything is integrated, coordinated, with nothing left out. That’s important even to lawyers.” She urges anyone using the older forms to begin a transition right away. The 1997 forms will remain available for 18 months, but the 2007 versions are useable now, even for projects that began with the older ones. Over the next ten years, these documents will be used, interpreted, accepted, and litigated. Markets and courts will weigh in, along with architects, lawyers, owners, and contractors during the AIA’s next 10-year revision cycle.