AIA’s Standardized Construction Contracts: 2017 Updates Now In Effect
For more than 130 years, the American Institute of Architects (AIA) has offered a set of standardized contracts for architects, contractors, building construction owners and developers that have become the most widely used agreements for commercial construction projects. Every ten years, AIA updates the contracts and, after about 18 months, phases out the previous versions. The latest updates to the most highly used sets of contracts were released in 2017, with the 2007 contracts no longer available online after Oct. 31, 2018.
Properly drawn construction contracts are vital to ensure that major projects can overcome issues or conflicts that arise during the life of the project. Contracts should provide the framework and details for the rights and responsibilities of all parties. Comprehensive and well-designed contracts can minimize the chances of any dispute requiring litigation or arbitration to be resolved.
Here is a list of the core documents updated and a brief summary of the major changes for each:
- A101: The standard agreement between an owner and contractor for a project with a fixed-amount or lump-sum payment.
- A102: An agreement for projects contracted for the cost of work plus a fee.
- A201: The general terms and conditions for the A101 and A102/A103.
- B101: The agreement between the owner and the architect.
Many of the revisions to the A101 and A102 were the same:
- Contract time provisions were added to both to determine the official commencement of work and when the work will be substantially completed.
- Both include a new provision for payment of a termination fee if the contract is canceled for the owner’s convenience, but removed the right of the contractor to recover payment for anticipated overhead and profit of uncompleted work.
- Retainage provisions have been consolidated in their own section.
- The contracts specify standards for transmission of digital information, including building models.
Some reversions were unique either to the A101 or A102:
- The A101 changed requirements for progress payments that require the owner to pay a portion of the contract sum allocable to completed work and materials and equipment stored at the site, while the A202 retains language referring to percentages of completion and a schedule of values.
- The A102 has added provisions related to cost controls and owner approval of additional costs.
- The A102 defines what costs of the contractor are reimbursable as cost of the work, and removes some types of employee compensation — bonuses and incentives — from the list of reimbursable costs.
Some of the most important changes were to the A201:
- Insurance requirements have been moved from Article 11 of the A201 and incorporated into Exhibit A of the construction contracts. This is meant to increase flexibility and make it easier for parties to customize insurance requirements.
- Requirements for the owner to provide evidence of financial arrangements to satisfy obligations under the contract have been strengthened and clarified.
- The contractor is now obligated to propose alternate means and methods if there are safety objections to owner-required means and methods rather than wait on instructions from the architect.
- There are additional requirements for scheduling, including additional milestone dates and more details about the completion of each portion of work.
- Language has been added requiring that the architect, in serving as role as the Initial Decision Maker, “shall not show partiality to the owner or the contractor.”
- The A201 adds a new severability clause that allows the bulk of the contract to remain in force even if a court determines that one or more provisions are unenforceable.
Some of the substantial revisions to the B101 include the following:
- The B101 adopts many provisions that were previously part of the B103, a contract for more complex projects, including more detailed definitions of the project’s physical characteristics, the owner’s budget and proposed scheduling details.
- The use of the AIA contract E204 is now required if the owner identifies a sustainable objective.
- As with the A101 and A102 revisions, standards for transmission of digital data are specified.
- More detail on insurance coverage is included.
You can learn more about the details of the 2017 changes in this PDF of a PowerPoint webinar. There are also comparison texts available on the AIA website that show additions underlined and deletions in strikethrough text.
The most important thing to know, though, whether you are a contractor, business owner or architect, is this: Standard documents can be a useful starting place in the proper development of a construction contract, but they will certainly need work and the eye of a professional attorney to ensure that the finished contract actually fits the project, meets the needs and protects the rights of all involved, and complies with the legal requirements of the state and locality where the construction is taking place.