by Cris Baird
The American Institute of Architects (AIA) promulgates standard forms of construction contracts for use by an owner and contractor when entering into an agreement for commercial construction services. The AIA also promulgates standard forms of owner/architect agreements to be used when an owner and architect contract for commercial design services. These AIA forms are considered standard in the industry and are the most commonly used forms utilized between owners and contractors, and owners and architects, in the United States.
The AIA modifies their standard forms every 10 years to reflect changes and trends in the industry, with the most recent forms being released in April 2017. This article highlights some of the most significant changes between the 2007 versions of the AIA owner/contractor and owner/architect agreements, and the updated 2017 forms.
Some of the most notable changes in the owner/contractor forms include the following.
To eliminate ambiguity with respect to the parties’ obligations to purchase insurance, the AIA has developed a new Exhibit A “Insurance and Bonds.” The new exhibit assumes the owner will purchase general liability insurance, and unless the parties elect otherwise, the owner is also required to purchase builder’s risk insurance sufficient to cover the total value of the entire project on a replacement cost basis, and for the cost of any deductibles and self-insured retentions. The exhibit also includes blanks for the contractor’s commercial general liability provisions, and requires that the agreed upon amounts of automobile liability coverage, employer’s liability coverage, and other liability coverages be filled in. If the contractor is purchasing the property insurance, the parties can now simply check certain boxes, as opposed to drafting and including new language in the contract. There is also a “fill in the blank” provision for the contractor’s obligation to provide performance and payment bonds.
A new provision has been added requiring the owner to deliver to the contractor evidence that the owner has made financial arrangements to fulfill the owner’s obligations. If the owner fails to do so and commencement of the work is delayed, the contract time is automatically extended. In addition, after commencement of the work, the owner is required to furnish evidence that the owner has made financial arrangements to fulfill the owner’s obligations if the owner (1) fails to make payments as required, (2) the contractor identifies in writing a reasonable concern regarding the owner’s ability to make payment when due, or (3) a change in the work materially changes the contract sum. If the owner fails to deliver such evidence, the contractor may stop the work and the contract sum is automatically increased by the costs of the contractor’s shutdown, delay, and start-up costs, plus interest.
A new provision has been added requiring the contractor to indemnify the owner against lien claims, and a standard 10-year time limit has been imposed on claims by the owner against the contractor.
There are also new provisions allowing the parties to “fill in the blank” to agree on the amount of liquidated damages that will be payable to the owner due to the contractor’s failure to substantially complete the work within the agreed upon timeframe, and the amount the owner will pay to the contractor in the event of a termination of the contract for the owner’s convenience.
Some of the most notable changes in the owner/architect forms include:
A new form AIA Document E204 – 2017, Sustainable Projects Exhibit, has been developed for use in the design of projects where the owner is seeking to build an environmentally sustainable project and obtain a sustainability certification (such as LEED certification).
A provision allowing the parties to “fill in the blank” to identify the amount the owner will pay the architect in the event of a termination for the owner’s convenience.
Clarifications regarding the difference between “Supplemental Services” and “Additional Services” and how progress payments are calculated.
Provisions allowing the owner and architect to “fill in the blanks” for the amount of liability insurance the architect will be required to carry, and clarification that the architect’s insurance obligations will terminate one year after substantial completion of the work.
Due to the number of changes in the various forms, it is impossible to summarize or address every change in this brief article. For additional background and a complete listing of all of the AIA documents that have been revised, go to the AIA website: www.aia.org/press-releases/82526-2017-aia-contract-documents-now-available-
All of the current AIA documents, including comparison documents highlighting the changes between the 2007 and 2017 forms, can be found at www.aiacontracts.org/.
C. Robert “Cris” Baird is Counsel at Bracewell, LLP. He can be reached at firstname.lastname@example.org.