New AIA agreements support integrated project delivery
In May, the American Institute of Architects published a new set of legal documents that can restructure relationships among professionals and reformulate the processes of designing and building. These agreements support integrated project delivery, or IPD, a practice model that seeks to overcome construction-industry problems of waste and inefficiency.
In theory, an IPD project is carried out by a collaborative team of owner, architect, constructor, and major consultants who share goals, liabilities, and rewards. Key to IPD is the use of building information modeling (BIM) software, which enables a building to be constructed digitally—and conflicts to be found and resolved—well before construction begins. But constructors must be involved early in design, and traditional notions of design phasing change. All parties must forego a certain degree of self-interest in deference to project goals, and create a new system of rewards and liabilities.
New AIA documents support two approaches to using IPD. One set is evolutionary, enabling firms to begin working with IPD while relying on familiar agreements. The second is more revolutionary, initiating new legal relationships to maximize IPD’s benefits. The evolutionary approach is embodied in the A295 family of agreements. These are A295-2008, General Conditions of the Agreement for Integrated Project Delivery; B195-2008, Standard Form of Agreement Between Owner and Architect for an Integrated Project; A195-2008, Standard Form of Agreement Between Owner and Contractor for an Integrated Project; and Guaranteed Maximum Price (GMP) Amendment to A295-2008. Unlike traditional AIA agreements, B195 and A195 do not include a scope of services; instead, this is spelled out in A295 General Conditions, which also establish a collaboration process for the owner-architect-constructor team. According to Suzanne Harness, FAIA, the AIA’s managing director and counsel for contract documents, “A295 writes up a process for early involvement on the part of the contractor, working with the architect through design development, providing constructability reviews, and developing a guaranteed maximum price.” This approach changes only a little from the traditional risk-and-reward model.
The more revolutionary approach is C195-2008, Standard Form Single Purpose Entity (SPE) Agreement for Integrated Project Delivery. The owner, architect, and constructor form a limited liability company (LLC) for the sole purpose of designing and building the project. Harness explains: “The LLC then contracts with the owner-member, the architect-member, and the construction-manager-member for the services necessary to get the building designed and built.” These separate contracts are necessary because many states’ licensing laws would not permit the LLC itself to practice architecture or engage in the business of construction management. Traditional AIA agreements could be used for this purpose, with modifications, but the AIA will publish the new agreements in the fall.
One novel aspect of the SPE model is that all members agree to waive claims against each other, except for willful misconduct. Also new is the way profit incentive is structured. Early in the collaboration, the owner establishes a set of measurable goals—schedule, cost, or sustainability, for instance. During design and construction, the architect and construction manager are compensated for their direct costs, but shared profits are determined by the degree to which the owner’s goals are finally met. This gives all players the incentive to resolve disputes internally and to work together to achieve the project’s higher goals.
The AIA documents change the activities undertaken during each phase of the process and rename them. During the conceptualization phase, key consultants and subcontractors are brought into the team; a common understanding of the program is reached, the architect schedules design services, and the constructor prepares an overall project schedule.
In the criteria-design phase, the architect conducts a code review and identifies design alternatives, and environmental considerations; the team considers materials and systems and begins work on a digital model; and the constructor begins to work with subcontractors and suppliers. This phase ends with owner approval of design documents and the cost estimate. In the detailed-design phase, major components and systems are selected, and the constructor begins construction coordination. At the end of this phase, the constructor proposes a thoroughly documented GPM.
The implementation-documents phase is roughly equivalent to the traditional construction-documents phase, and also incorporates shop drawings and subcontractors’ submittals. All of this design information becomes part of the digital model, used extensively during construction, and ultimately used by the owner to operate the building.
One major difference between IPD and traditional design-bid-build project delivery is the early involvement of the constructor. According to Harness, the advantages of competitive bidding are moved to the trade level. “If you’re going to bring the contractor in early, you’ll be looking for expertise in management and the ability to work with architects and other designers, as well as construction experience.”
Another major difference, of course, is liability. Harness says the insurance industry is watching with great interest because the SPE agreements present such an unfamiliar way of structuring professional relationships. C195 requires that the members consult with an insurance adviser and purchase insurance for the SPE and its members based on that advice. But how the insurance industry responds to the new paradigms won’t be fully understood until the first firms begin to put them into practice.