Industry Watch – AIA Contracts – Why You May Not Be Able to Close Your Contracts This November.

In April of 2017 the American Institute of Architects (AIA) announced that it had updated its suite of design and construction contract documents.  It may seem like this is not big news, but the fact is the AIA only updates these documents once every 10 years.

The American Institute of Architects publishes nearly 200 contracts and forms.  These documents are frequently used throughout the design and construction industry as standard documents.

AIA contract Documents have been around since 1888 when the AIA published it’s first form of agreement.  The first standard general conditions were published in 1911.

This latest 2017 edition of the AIA Contract Documents is the sixteenth edition of these documents.

If you (or your Client’s) are currently using the 2007 version of AIA Contract Documents it is important to note the AIA will discontinue support of the 2007 versions of these documents after October 31, 2018.

This means that starting November of this year, you will be unable to create, edit or finalize a 2007 AIA document.  This is especially critical for anyone who is currently negotiating or releasing an RFP in August, September, or October with 2007 AIA contracts as their form of agreement.

Some of the changes that have been made to the AIA Contract Documents that I found most notable include;

1. Language added to address the prevalence of Building Information Modelling (BIM) and the use and handling of Digital Data.

As the saying goes, “with great power comes great responsibility” the use of BIM technology is an example of great power in computing.  The immense amount of data BIM can store and convey allows for many potential pitfalls.  The AIA is recognizing the complexity of these tools and addressing the risks of using them by strictly governing how the tools may be used and with whom the risks resides.

2. Stricter requirement for an Owner to present the Contractor with evidence that full funding for the project is in place.

As we have seen throughout this year, contractor’s (especially sub-contractors) are increasingly at risk of insolvency.  The sensitivity around payment terms and funding of projects has been very high.  The AIA is addressing this by increasing the rights of contractors to require proof of funding before incurring costs.

3. A shift in responsibility towards the Contractor for addressing safety of means and methods even when the Architect’s documents provide instructions on the means and methods.

In my practice, there have always been two universal truths with respect to job-site safety.  First, the Contractor is the ultimate authority with respect to job-site safety.  Second, Architects have no say in means and methods.  Unfortunately, there have been times when one or the other drifts out of their lane.  The AIA is attempting to fix this by removing any ambiguity.

4. A waiver of the contractor’s rights to schedule and or cost claims with respect to “Minor Change in the Work” unless the claims are made before the work commences.

I have always hated the “Minor Changes in the Work” clause because it opens the Owner to unapproved changes.  However, I understand and appreciate the need to be able to make minor changes in an effort to keep schedule.  Apparently, the AIA has come around to my way of think (just a little) by removing any rights to make claims unless the cost or schedule changes are pre-approved.

5. Introduction of a Termination Fee when an Owner terminates a project for convenience.

Termination for convenience has always been a major topic of discussion in almost every construction project.  Owner’s should have the right to terminate a project without cause.  An Owner may simply no longer need a new building and should not be obliged to carry on with a project they don’t need.  On the flip side, when a contractor dedicates resources to a project, they commit those resources and potentially forgo other work, so some compensation should be made.  The old language stated that they contractor was entitled to the full overhead and profit of the remaining unperformed work.  I’ve never agreed with that.  The AIA has now adjusted by removing this language assuming a fixed termination fee will be negotiated.

All Changes

You can see a full list of the changes on the AIA’s website here and you can also enjoy a legal review of the changes written by Michael P. Subak and Kristopher Berr on The Legal Intelligencer at this link here.

Closing

So if you have any projects in the next few months that use AIA Contract Documents be sure that you are using the new 2017 suite of contracts.  If you begin with any 2007 documents and don’t close before the end of October, you may be unable to finalize your agreements.

Any projects that have already been negotiated and signed may continue to use the 2007 contracts without any issue.

Regardless, of which contracts you use, be sure to read them carefully.  AIA contracts (as well as other standard forms of agreement) are a great starting point, but the specific language may not be favorable for you.  I don’t take the terms in these contracts for granted.  There are many areas you will want to review and edit.

Do you use AIA Contracts?  What sections do you routinely edit?  Which sections have saved you trouble in the past?  Tell me your stories.

Thanks for reading.  If you enjoyed this content, please feel free to browse my previous articles and please like, share, comment, and subscribe.  This helps promote my content and is greatly appreciated.

 

 

 

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