For this week’s Guest Post Friday here at Musings, we welcome back Melissa Dewey Brumback. Melissa is a construction law attorney with Ragsdale Liggett in Raleigh, North Carolina. Aside from the fact that she is a UNC grad and fan, she’s okay!
In 2017, as it does every ten years, the American Institute of Architects (AIA) updated most of its standard form contract documents, including the A201 General Conditions. This cycle, the contract changes are evolutionary in nature, not revolutionary. Even so, it is crucial to know the changes to avoid making a fatal mistake that could cost you money on a construction project. In reverse order, the top 10 changes you need to know include:
# 10: Differing Site Conditions
Prior editions of the A201 provided that upon encountering differing site conditions, the Contractor was to promptly provide notice to the Owner and Architect, before the conditions are disturbed, and in no event later than 21 days after the conditions were first observed. A201–2017 shortens the time for notice from 21 to 14 days.
# 9: Owner’s Right to Carry Out the Work
Prior versions of the text allowing an Owner to carry out the Work after Contractor’s default required a Change Order. Revised A201–2017 now provides that if the Owner undertakes to cure, the Architect may withhold or nullify a Certificate for Payment in whole or in part, to the extent reasonably necessary to reimburse the Owner. If the Contractor disagrees with the actions of the Owner or the Architect, or the amounts claimed as costs to the Owner, the Contractor can file a Claim.
# 8: Direct Communication Between the Owner and Contractor
Prior editions of the A201 provided that the Owner and Contractor were to communicate through the Architect. A201–2017 recognizes that the Owner and Contractor may need to communicate directly and authorizes this approach, so long as the Owner promptly notifies the Architect of the substance of any such direct communications.
# 7: Contractor’s Means and Methods
The Contractor is solely responsible for, and has control over, construction means and methods. Under A201–2007, when the Contract Documents gave specific instructions concerning construction techniques, the Contractor was to give notification if those instructions were unsafe and then await written direction.
Under the 2017 revision, the Contractor remains solely responsible for construction means and methods. If the plans give specific instructions concerning techniques which are unsafe, the Contractor is to give notice and propose alternative techniques. The Architect must evaluate the alternative for design intent. Unless the Architect objects, the Contractor is to perform the Work using its alternative.
# 6: Notice Provisions
A201-2017 allows Notices to be delivered electronically. Notices of Claims, however, still cannot be delivered electronically.
# 6A: Notice related to Evidence of Owner’s financial Arrangements
The provisions allowing the Contractor the right to request evidence of Owner’s financing have been modified. The Contractor can request evidence of adequate financing prior to the start of Construction, and thereafter only (1) if the Owner fails to make payments; (2) the Contractor identifies in writing a reasonable concern; or (3) a change in the work materially changes the Contract Sum.
#5: Liquidated Damages
In 2017, a specific fill point has been included in the Owner-Contractor agreements (except A105) to prompt the parties to consider including a liquidated damages provision. A separate fill point is also included related to incentive provisions.
# 4: Dates of Commencement and Substantial Completion
The AIA articles dealing with the date of commencement (Article 3 in A101, Article 4 in A102 and A103) are now better defined in a check box as either (1) the date of the Agreement (the default), (2) the issuance of a notice to proceed (NTP) by the Owner, or (3) a different date as agreed by the parties. A separate section has been added to address Substantial Completion of certain phases of the Project prior to the Substantial Completion for the entire Work.
# 3: Termination for Convenience
The revised Termination for Convenience now has a “fill point” in lieu of an automatic entitlement by Contractors and Architects to lost profits when the Owner terminates for convenience. This is intended to facilitate a discussion of a fair fee in advance.
# 2: Digital Data
The 2017 Owner-Contractor and Owner-Architect agreements (except A105 and B105) expressly require the parties to agree upon protocols governing the transmission and use of digital documents, and require the use of E203™–2013 to establish digital data protocols. Using BIM information, without first having established and set forth the necessary protocols, is at the party’s own risk.
#1: Insurance
The new AIA documents include an insurance exhibit for use with the A101™–2017, A102™–2017, and A103™–2017, Owner-Contractor agreements. This approach also resulted in substantial revision of Article 11. The use of an exhibit was intended to facilitate the ability to transmit the insurance exhibit to insurance advisors.
Revised Article 11 requires both the Owner and Contractor to purchase and maintain insurance of the types and limits of liability. Owners and Contractors (as opposed to the insurers) now must also provide the other with notice of insurance cancellation within 3 business days. The party receiving notice has a right to stop the Work until the lapse is cured.
Conclusion
While the major changes made to the 2017 A201 are few in number, they could make or break your claim for payment. Bookmark this article for future reference!
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