The American Institute of Architects (AIA) issues new form documents in ten year cycles, and this June they unveiled a new version of their 2004 Design Build form contracts. Practitioners who use these documents regularly will see some welcomed improvements as well as some features that are reminiscent of the old 1997 AIA 191 Part 1/Part 2 form. Some issues with the 2004 edition remain in the 2014 edition. Continuation of these issues will likely necessitate modification of the standard forms on a project-by-project basis.
How is the A141 different from the 2004 version?
When introduced in 2004, the A141 appeared to be patterned after the A101 Agreement between Owner and Contractor, which includes the key terms of price, payment and schedule in the A101. Likewise, the 2004 A141 was relatively skeletal and provided fill-in boxes for price, payment, retainage, schedule and dispute resolution terms. The 2004 A141 included an Exhibit A to mirror the A201 General Conditions, and even used the same numbering system with respect to the provisions. Finally, the 2004 document included an optional Exhibit B, defining Cost of Work for cost plus or GMP pricing, and Exhibit C for insurance, even though insurance terms and conditions were also set forth in Exhibit A. The A141 was a single contract for the entire Design Build project, from conceptual design through final completion of construction. The 2004 Design Build format was a major departure from the 1997 A191 Part 1 and Part 2 forms for Design Build project delivery.
The 2014 A141 agreement is, in some respects, akin to the old A191 Part 1/Part 2 form. The A191 used Part 1 for design development, and Part 2 was separately executed when the parties agreed on price for construction. Many Design Builders opted out of using the Part 1 document entirely to avoid the potential pitfall of the Owner shopping the preliminary design to other Design Builders. Instead of having two parts (one for preliminary design and one for the construction documents and construction phase), the 2014 A141 contemplates an agreed price for preliminary design and the development of a proposal (either a GMP/cost plus or stipulated sum) by the Design Builder at the time of execution of the A141. Following completion of preliminary design, the Design Builder proposes a price or GMP. When the Owner and Design Builder agree on price, they execute an amendment document, which defines price, payment terms and the schedule for construction.
Additionally, unlike the 2004 version, the 2014 Exhibit A is not a General Conditions document. Instead, the General Conditions are integrated into the A141 document. The amendment document is executed upon completion of preliminary design and when the parties come to agreement on price and schedule.
The 2014 Exhibit A is an insurance and bonds exhibit. Unlike the 2004 version (which was Exhibit C), Exhibit A insurance provisions are not potentially duplicative of insurance requirements already provided in the General Conditions. Many practitioners never used Exhibit C of the 2004 version, and instead inserted limits in Section 11 of the 2004 Exhibit A General Conditions. The 2014 Exhibit A provides blanks to fill in for the insurance limits, as well as the traditional text. Practitioners will likely beef up these terms and conditions to suit their needs.
Other Noteworthy Points:
AIA has adopted industry terminology, and now refers to the “initial information” as the “Owner’s Criteria.” Additionally, the new documents set forth a procedure for the parties to conduct meetings to evaluate the Owner’s Criteria and discuss possible alternative approaches to design and construction, as well as any recommendations regarding fast tracking or phasing of the project. In reality, these meetings occurred without contractual mandates, but now the documents describe the framework. The new A141 also requires the Design Builder to provide a written report to the Owner, with a four point evaluation of the Owner’s Criteria. If acceptable to the Owner, the Owner then provides its written consent to proceed to development of preliminary design.
After receiving the written consent to proceed, the Design Builder is then required to prepare a proposal that includes the proposed Contract Sum or GMP, the commencement date for construction and Substantial Completion. Additionally, the Design Builder is to propose personnel, contractors and suppliers and the date upon which the proposal expires. Presumably after negotiations, the parties will execute the amendment
There are new expanded reporting requirements that the Design Builder must now provide the project Owner. Practically speaking, most Design Builders provide this sort of information routinely; however, Design Builders should carefully review what is required to ensure that they can comply.
The new Sustainability Exhibit B aptly addresses the industry’s concern regarding the risks associated with not achieving a sustainability objective over which no single party has control. The Sustainability Exhibit includes a mutual waiver of consequential damages resulting from failure of the project to achieve the Sustainable Objective, or one or more of the Sustainable Measures, including unachieved energy savings, unintended operational expenses, lost financial or tax incentives or unachieved gains in worker productivity.
Unfortunately, a few issues with the 2004 edition are not addressed by the 2014 revisions. First, as in the 2004 edition, the 2014 edition still requires that the Design Builder warrant that the “Work” will conform to the requirements of the Design Build documents and will be “free from defects.” As “Work” includes design, unless modified by the parties, the Design Builder will be providing a warranty that the design will be free from defects—and uninsurable requirement.
Second, most Owners want to own the Design Build Documents at the end of the project. Other industry forms acknowledge this reality and provide a fill in point for that option. The 2014 A141 continues with the “limited, irrevocable and non-exclusive license” to use the Instruments of Service solely for use with the subject project. Owners of multiple facilities want more than this limited license and they routinely alter these provisions.
How do I obtain the new documents?
If you have the AIA software, an update of the software provides the new form. Of course, the documents can also be purchased through the AIA, or www.aia.org.
The 2004 version will continue to be available on the AIA software for 18 months.