Type: Law Bulletins
Date: 10/01/2014

What's Up With AIA Contract Documents?

For years, AIA has been touting the development of its new version of Contract Documents software that would run in “The Cloud,” which everyone knows from the ubiquitous television commercials is just the current buzzword for Internet-based software. This software development was potentially motivated (at least in part) by competitor ConsensusDocs, which has had a web-based platform for a while. An online version of AIA software could provide major advantages, such as the ability to access documents from anywhere and through the use of just a browser, with no special software installation needed, and Mac compatibility. AIA has also promised some nice new features. So we have been waiting — and we are still waiting. While AIA “launched” the new ACD5 product earlier this year, it is not available for sign up “due to overwhelming demand.”

Meanwhile, AIA’s document development continues on schedule. This year was not expected to be a major revision year; most of the important documents are updated on a 10-year cycle and the design-build forms were the only ones issued in 2004. The 2014 design-build family of documents has been issued, and the changes, while not momentous, are seemingly positive.

It is important that anyone who has previously used A141 (contract between the owner and design-builder, the core D-B document) be aware that the format has completely changed. The basic contract terms formerly consisted of A141 (agreement) and Exhibit A (general conditions, similar to A201). For 2014, those sections are combined into the A141, and Exhibit A is now a completely different document. Therefore, recycling previous exhibit templates when using the new A141 will not work under most circumstances.

From a substantive standpoint, the major change in A141 is that the process it prescribes is now highly analogous to construction management at-risk, the other most common project delivery method used for commercial projects. Under CM at-risk, which in the AIA regime involves the A133 form, an owner engages a CM to consult with the owner and assist the owner’s architect in developing plans for the project during a preconstruction phase. When plans are sufficiently complete, the CM submits a guaranteed maximum price proposal to the owner, and if it is accepted, the parties execute a GMP amendment and commence the construction phase of the project. A141-2014 now makes design-build work in the same way, except that the architect, of course, is retained by the design-builder — typically the contractor — rather than by the owner. The architect now performs preliminary design, which is similar in scope to “design development” in traditional jargon. If the owner agrees that the services are on track, the design-builder is called upon to submit a financial proposal to the owner. If it is accepted, a design-build amendment (the new A141 Exhibit A) is executed in the same manner that a GMP amendment would occur in the CM at-risk delivery method.

In the 2014 version, the design-builder’s indemnity of the owner is no longer limited to CGL-insurable claims (bodily injury and property damage). Design-builders will want to take a look at that from a risk management standpoint. In addition, another concern for design-builders from the 2004 version has not been addressed: where the design-builder warrants to the owner that the work (arguably including design services) is free from defects but cannnot obtain a corresponding warranty from the architect under the AIA forms or typical professional liability insurance industry practices.

AIA has also sought to address topics that were not current in 2004, including sustainability and building information modeling. Many projects these days seek LEED or other environmental certifications, and a lot of tax credits, leases or other high-dollar contingencies can depend on them. The criteria for LEED certification, for example, are subjective in many cases, so it is extremely risky for a design-builder to guarantee that certification will be obtained. These issues are addressed in a new A141 exhibit. Large projects now commonly employ BIM, the creation of a 3D model of the building, and the new form addresses that possibility as well. The new A141 insurance terms are better aligned with current insurance industry practices.

Many of these changes will be welcomed by design-builders and their customers, but they will not obviate the need for continued negotiations and modifications concerning risk allocations.

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