A job I am about to begin stipulates the use of an AIA contract. I knew this going in since it was in the spec book, but honestly I have never had anyone question the use of my contract (a revised version of the JLC Legal Kit contract), including two attorneys I worked for last year.
This owner says he prefers the AIA (A101 with A201) since he is familiar with it and that it is in the specs.
I said I’ll get a copy, familiarize myself with it and we’ll try to execute one this week.
After reading the contract and perusing the 38 pages of the general conditions, it seems to me that this contract is much more in the favor of the owner and gives the architect a lot of power. Not surprising since it is written by the AIA.
Anyone ever use it? What was your experience with it? I would likely consult my attorney before signing, but thought I might get some real world feedback first.
Thanks for your comments.
Replies
You will agree when you have read it, that it strongly favors the architect.
How involved will the archy be in the job?
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"A stripe is just as real as a dadgummed flower."
Gene Davis 1920-1985
Gene,
Archy will be integrally involved. His design, and he likes to stay involved in projects. Not everything is selected but he also acts as design consultant for colors/fixtures/finishes.
The client/owner is someone that both he and I have worked with before. So there is a level of trust among all of us.
I prefer to keep the contract between me and owner, I'm not really comfortable with others reviewing, certifying, approving pay requests etc.
You'll get varied answers.
We have used them on occasion with no problems. Just remember you don't have to agree to the entire contract as written. We have on occasion stricken sections and had the architect & homeowner initial them with no problems
We have used from time to time. I would provide the arch with a copy of your standard agreement, and see what they think. Mine is based on the AIA contract, but much shorter and understandable. Most arch's have accepted it with few modifications.
Just once. Never again, but that is just me. Thirty-eight pages is overkill. It reminds me of the contracts that the credit card/banks use. They can't even explain it. Of course the owner likes it. It is favorable to him.
You are right. It gives the Arch. mucho power and he/she works for and is paid by the owner. It is now two against one and you are the ONE. That's why I do only cost plus a percentage or fee.
A contract is the first sign of distrust. Immediately upon signing, the owner wants to get the most he can and the contractor trys to do as little as he can and still meet the letter of the law. I don't like doing business that way.
No offense intended, but that's just nuts. As a HO, I wouldn't hire someone to do more than a couple grand worth of work without a contract. You might be able to do a big job without one, but if things go south I'd rather have a framework for what happens than rely on luck or verbal agreements.
I've used an AIA contract, and my opinion was that it has a large role for the architect, not necessarily 'mucho power.' That isn't surprising, given the source.
To me, it still comes down to the plans and specs that outline the scope and expectations. That's what your price should be based on. If there is something that isn't clear, well it's basis for additional cost. Of course, there's always going to be horse trading. As long as you keep up with it and document, no problem.
I've seen HOs point out several shortcomings to their standard forms elsewhere. The glaring one I realized after the fact was that there's no mention of warranty in the version we used.
Guess it all depends on your perspective.
most warranty clauses DO NOT COMPLY with the Moss-Magnusan Act which covers all written warranties
better to have no written warranty than one which does not comply with the law
we pass thru all mfr's warranties and give a verbal warranty for one yearMike Hussein Smith Rhode Island : Design / Build / Repair / Restore
We wear a lot of hats at our small firm (architects, builders, contractors) and use the AIA contracts a lot. Some things we have noticed:
1. They are big. Contract + general conditions + specific conditions plus addenda can get up to 50-100 pages. That is a pain to read through but good if the #### ever hits the fan cause everything is covered. Seriously cuts down on disputes as a significant number of situations are covered rather than left open to interpretation. Not worth it on a small job (100k or less) but worth it if you could look at a 200k dispute.
2. It makes the architect the arbiter between the owner and the contractor in a disagreement. This can be good or bad depending on the experience level of the arch.
3. There are sections for exclusions, unforeseen conditions, unit prices, travel costs etc.... Use em. These can be the get out of jail free cards but only if they are sufficiently fleshed out. We typically attach separate documents for each of these sections.
All that said, we are trying to wean ourselves off of those contracts for smaller jobs. The AIA charges a pretty penny for the use of those contracts and it isn't work it for the samll stuff. Plus, you should see some clients faces when they see a 60 page contract for a 50k job.
Just our thoughts.
Geoff
Being you have an attorney..which you should...why don't you let him do what he does best...draw up your contract or rework the AIA tract?
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Like it or not, the AIA contract is pretty much the 'gold standard.' That, siad, a few things ought to be noted:
First off, I've yet to see the architect be the issue. Overall, the contract seems pretty realistic, balanced, and complete. The value of this complex (and long) contract is directly related to the length and complexity of the job.
Let's face it .... given a job with multiple final customers, an architect, multiple engineers, complex scheduling, a variety of special conditions (like environmental rules), and many cotractors involved. and a long time span ..... a simple handshake won't cut it. I mean, what happens when the guy you shook hands with gets transferred to Timbuctu?
Even if you do all your business with a handshake, it's worth studying the AIA forms. The AIA form is where everyone starts from; if something winds up in court, the AIA form is what the judge will likely use for guidance. The AIA form has been around long enough that it's terms have already been interpreted by the courts, and pretty much defines what the 'trade practices' or 'customary conditions' are.
If anyone thinks the AIA form is unfair, they ought to see the forms GC's, major corporations, and equipment suppliers try to use! It's simply amazing how many of these contain clauses that are patently illegal (such as 'pay if paid' or a promise not to lien).
i would never work under that contract.... it's tilted against the contractor...
further my disputes clause calls for binding arbitration, which is not part of the AIA... the AIA contract sucks
if the AIA is required, it will be reviewed , annotated, struck out by my lawyer to try to regain some balance... AND there will be an arbitration clause or we won't be working
Edited 7/8/2009 8:06 pm ET by MikeSmith
Mike: I'm curious. Do you include an American Arbitration Association arbitration clause? I try to avoid using them for arbitrations, since they have become seriously bureaucratic over the years and end up costing $$ just for administration. I prefer having the two parties to the dispute agree on an arbitrator, which is usually not a problem. I always insist on mediation first.
Generally, using the AAA construction arbitration rules, but not using the AAA to administer or provide arbitrators, has worked out OK over the years.
Steve
yes.... i use AAA, their clause, and their list of arbitrators
i've gone to arbitration once... and in that case i thought it was handled well... and i think the owner thouht the same
in another case... i was expert witness for the homeowner and pretty much proved that the owner had a great case... the contractor, on the other hand, had signed Change Order after signed Change Order, for every questionable thing...
based on the change orders.... the arbitrator ruled for the contractor... as he should have
i certainly learned from that one
i dislike binding arbitration.... but compared to everything else, it's the only way i will enter into a contract... i can't pay lawyers that will compete against the resources some of my customers have
i can't wait two years for a typical court settlement
as for mediation... and non-binding arbitration... i engage in those informally... all the time... we do aim to please after all.. the problem with those is that either party can still insist on going to court on appeal
but with the AAA clause, i'm not afraid to work for anyone....lawyer-/engineer-/rich man-/poor man
Mike Hussein Smith Rhode Island : Design / Build / Repair / Restore
Edited 7/11/2009 10:18 am ET by MikeSmith
I understand your reluctance to litigate, as opposed to arbitrate. There is a certain amount of luck involved either way. Certainly arbitration is more predictable from a scheduling point, but the lack of any appeal, even from a bad decision, is a big concern, especially given that not all arbitrators know anything about the law.
Another problem I have experienced with AAA arbitrators is that many are retired or semi-retired and seem perfectly happy to let the process drag on for day after day. Judges are willing to stop lawyers from wasting everyone's time, but arbitrators get paid by the day.
My basic recommendation to clients is to agree to arbitrate small cases (200K or less) but litigate larger ones. Since I'm in solo practice, I can make fee deals that usually work for clients, whereas when I was a partner in a law firm I didn't always have that flexibility.
Just to throw in some added perspective: there was a time not too long ago where the architect's liability grew to the point that they were liable for the lifetime of the building. In other words, a 50-year-old building develops a roof leak, and the 70-something architect could still be considered liable. That's changed to a more modest figure now, but skyrocketing liability issues created much of that additional verbage.
That having been said, the AIA has always been more concerned about nitty details than big-picture thinking, in my opinion. As others have commented, a form contract can easily be adjusted.
It is heavily swayed to the Architect and Owner. That being said, it is not unusual, indeed almost the rule, that the AIA is supplemented and heavily modified by lengthy modfication agreements.
Lots of misinformation on this thread. This is coming from someone who writes these all the time as an architect. The AIA has always reviewed/revised these in partnership with the AGC. The AGC also publishes the 'Consensus Documents' - you can see comparisons here: http://www.agc.org/galleries/contracts/ConsensusDOCS%20Contract%20Comparison%20Matrix.pdf
To say that the AIA contracts are weighted toward the architect ... just not true at all, especially the most current versions.
I'm usually NOT using the AIA A101 (Standard Form of Agreement Between Owner and Contractor where the basis of payment is a Stipulated Sumlink to the latest changes - http://aia.org/contractdocs/AIAS076659#P8_1567 but rather the AIA A105 (A105™–2007 (formerly A105™–1993 and A205™–1993), Standard Form of Agreement Between Owner and Contractor for a Residential or Small Commercial Project) or A107 (A107™–2007 (formerly A107™–1997), Standard Form of Agreement Between Owner and Contractor for a Project of Limited Scope)
Here are general descriptions of most of the basic Owner-Contractor Agreements - I tend to prefer the more abbreviated versions but tailor each to suit the project:
A101™–2007 (formerly A101™–1997), Standard Form of Agreement Between Owner and Contractor where the basis of payment is a Stipulated SumAIA Document A101–2007 is a standard form of agreement between owner and contractor for use where the basis of payment is a stipulated sum (fixed price). A101 adopts by reference, and is designed for use with, AIA Document A201™–2007, General Conditions of the Contract for Construction. A101 is suitable for large or complex projects. For projects of a more limited scope, use of AIA Document A107™–2007, Agreement Between Owner and Contractor for a Project of Limited Scope, should be considered. For even smaller projects, consider AIA Document A105™–2007, Agreement Between Owner and Contractor for a Residential or Small Commercial Project. NOTE: A101–1997 expired on May 31, 2009.
A102™–2007 (formerly A111™–1997), Standard Form of Agreement Between Owner and Contractor where the basis of payment is the Cost of the Work Plus a Fee with a Guaranteed Maximum PriceThis standard form of agreement between owner and contractor is appropriate for use on large projects requiring a guaranteed maximum price, when the basis of payment to the contractor is the cost of the work plus a fee. AIA Document A102–2007 is not intended for use in competitive bidding. A102–2007 adopts by reference and is intended for use with AIA Document A201™–2007, General Conditions of the Contract for Construction. NOTE: A111–1997 expired on May 31, 2009.
A103™–2007 (formerly A114™–2001), Standard Form of Agreement Between Owner and Contractor where the basis of payment is the Cost of the Work Plus a Fee without a Guaranteed Maximum PriceAIA Document A103–2007 is appropriate for use on large projects when the basis of payment to the contractor is the cost of the work plus a fee, and the cost is not fully known at the commencement of construction. A103–2007 is not intended for use in competitive bidding. A103–2007 adopts by reference, and is intended for use with, AIA Document A201™–2007, General Conditions of the Contract for Construction. NOTE: A114–2001 expired on May 31, 2009.
A105™–2007 (formerly A105™–1993 and A205™–1993), Standard Form of Agreement Between Owner and Contractor for a Residential or Small Commercial ProjectAIA Document A105–2007 is a stand-alone agreement with its own general conditions; it replaces A105–1993 and A205–1993. A105–2007 is for use on a project that is modest in size and brief in duration, and where payment to the contractor is based on a stipulated sum (fixed price). For larger and more complex projects, other AIA agreements are more suitable, such as AIA Document A107™–2007, Standard Form of Agreement Between Owner and Contractor for a Project of Limited Scope. A105–2007 and B105™–2007, Standard Form of Agreement Between Owner and Architect for a Residential or Small Commercial Project, comprise the Small Projects family of documents. Although A105–2007 and B105–2007 share some similarities with other agreements, the Small Projects family should NOT be used in tandem with agreements in other document families without careful side-by-side comparison of contents. NOTE: A105–1993 and A205–1993 expire on May 31, 2009.
A107™–2007 (formerly A107™–1997), Standard Form of Agreement Between Owner and Contractor for a Project of Limited ScopeAIA Document A107–2007 is a stand-alone agreement with its own internal general conditions and is intended for use on construction projects of limited scope. It is intended for use on medium-to-large sized projects where payment is based on either a stipulated sum or the cost of the work plus a fee, with or without a guaranteed maximum price. Parties using A107–2007 will also use A107 Exhibit A, if using a cost-plus payment method. AIA Document B104™–2007, Standard Form of Agreement Between Owner and Architect for a Project of Limited Scope, coordinates with A107–2007 and incorporates it by reference.
Jeff
Edited 7/11/2009 9:16 pm ET by Jeff_Clarke
You're entitled to your opinion. I stand by mine.
By way of example, under the AIA, if the architect is at fault for the design, which is usually the case, he can not be joined in the owner-contractor or general contractor-subcontractor arbitration. That, my friends is protectionist bull pucky and designed to insulate and protect the architect for his own faulty designs.
I don't blame the architect--he is responsible only to the owner, but in the case of a faulty design where the blame is being cast on the sub or general, the architect needs to be part of the resolution.
I have other examples, too numerous to mention. Currently, my modification sheet is over 20 pages, modifying the standard AIA. Regards, Scooter "I may be drunk, but you're crazy, and I'll be sober tomorrow." WC Fields, "Its a Gift" 1934
You might do well to look at case law regarding third-party beneficiary doctrine before blaming the AIA for contractual clauses - that are in line with extensive case law along these lines.
Jeff
Actually Jeff, I AM a construction lawyer, contractor and furniture builder and published a law review article in Construction Lawyer Magazine on the infirmities of the AIA visa vis contractors, and especially how it is incredibly unfair the AIA is. Check it out--Winter 2005. The 3rd Party Beni theory has been repeatedly held not to work in the AIA. So cut me some slack here--After 30 years doing this stuff, I know a little bit about what I am talking about.
I suspect you are aligned with the owners, developers and architect's side of the industry--and thats OK. Even the architects I work for all agree that the AIA was designed to screw contractors and protect the architects and owners, a fact they gleefully like to point out. Read the title of the document--America Institute of Architects. Do ya think they'd draft a document which disfavored the owners/developers/architects?
So the challenge for the contractor, and this thread is about-- protecting contractors with AIA's--is to read, understand, and modify the AIA insofar as time of completion, payment for services, reporting issues, liability for design faults, and damages. Regards, Scooter "I may be drunk, but you're crazy, and I'll be sober tomorrow." WC Fields, "Its a Gift" 1934
the last time i even contemplated signing an AIA contract, it was with much trepidation
there were reams of specs, time of completion and penalty clauses...but i bid it according to the plans , specs and contract
the contract was awarded to someone else for about half my price.... none of the clauses survived the negotiation... the specs were changed,, the time of completion was eliminated and there was no further discussion of penalty clauses
i took it very seriously and bid accordingly... but no one else did
what is your understanding of Warranty issues... am i right in thinking that Moss-Magnuson pertains ?
during the late '70's and early '80's we were a mfr. of solar heating components and we attempted to write a warranty that complied
after that i made it our policy not to give a written warranty in construction since i felt that either the courts were going to decide the issue or we were going to write a faulty warranty clause
now we merely pass thru mfr's warrantys and give a verbal labor warranty of 1 year
we often go back further if we feel we should
Mike Hussein Smith Rhode Island : Design / Build / Repair / Restore
Contracts can waive some statutory protections. Typically, the AIA provides greater protection for the owner/developer. So this really is a waiver, its an enhancement of the existing law. So if the protection is greater, the AIA probably controls, unless there is something specific in the statute which forbids such contractual provisions.
So I've just given you a lawyerly answer, "It depends." Regards, Scooter "I may be drunk, but you're crazy, and I'll be sober tomorrow." WC Fields, "Its a Gift" 1934
took it very seriously and bid accordingly... but no one else did
I receive bids that are different like that, and we factor that into the decision. Just received several bids for a new building, one contractor excluded the bid bond and performance bond. Missing the bid bond was ok, but we noted the omission. Missing the performance bond eliminated them from the decision process."Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
I think your decision falls into the basic rule of thumb: "He who has the money makes the rules."
Not really. Looking at the various bids, the bottom line is surely important. Time of construction is important if a: one bid is very long or very short, and/or b: if there is a deadline looming like a lease expiration. Then you start looking at things that were excluded from the proposal, and you apply a relative value of importance to the exceptions. No bid bond Why not? Not bondable? it can be a tough decision if the bids are close.
Reputation, past projects, etc are certainly considered too."Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
Like I said: He who has the money makes the rules.
Scooter , Lets talk about contracts , I will send you some items I would like to discuss. i like the fact that you are an attorney in construction law.
Some items, Lien waivers, disputes over payments, release of retainage, liquidated damages, Eichleay formula , Cardinal changes, arbitration, mitagation, court, Going up against a client that is an attorney, Approval of g702 703 by architect and refusal to pay by owner
"Approval of g702 703 by architect and refusal to pay by owner"
So the Architect's involvement in administration of the contract (theoretically in impartiality to Owner and Contractor) may work in your favor in this case?Jeff
I agree scooter . lets talk later
Sure you can write AIA contracts all day and night, but you are too busy to change your occupation on your profile from the default "Arts and Entertainment" :)
"Sure you can write AIA contracts all day and night, but you are too busy to change your occupation on your profile from the default "Arts and Entertainment" :)"
To what? Architect isn't listed.
Can I change it to 'Retired'??? Pleeeaaasse??
Jeff
Edited 7/8/2009 11:01 pm ET by Jeff_Clarke
Right now, wouldn't Non-profit be a better description? I always end up Arts/ Entertainment for a while around my birthday. I notice other poster's seem to do the same.
Jeff,
Thanks for providing a lot of info. Unfortunately when I tried your links it said "the file was damaged and could not be repaired" so I couldn't view them.
One of my concerns with the A101 and A201 is just the shear size of the thing. 38 pages for the gen con. Perhaps the A105 or A107 would be easier to understand.
Is there a way to view a copy of that doc online? No problem paying the $11.00 for the original but I have to order, wait for them to mail and then review it.
Seems like their ought to be a way to view a sample doc- no?
Also, since you said you regularly prepare these doc's, would the A107 be suitable for new house construction or is it too brief for that?
Thanks
Corrected link for changes from 1997-2007 documents:
http://aia.org/contractdocs/AIAS076659#P8_1567
Yes, I find the A101 too cumbersome and almost always use the others.
You can get a pretty good idea of the A107 from this: http://www.aia.org/aiaucmp/groups/aia/documents/pdf/aias076820.pdf
Jeff
Jeff,
Thank you again for providing this info. I looked through the A107 link you provided. I understand that they show the text that was deleted as well as the text that was added.
But I am unclear if that represents the document in its entirety, or does that only show the changes. Also, are there a separate set of general conditions for the A107?
Thanks in advance for your assistance.
Just about evert trade, every skill worth learning takes a fair amount of time to master. This is true for everything from airplane design to zookeeping. Yet, I am continually amazed (and amused) at the folks who suddenly think they are instant experts ... especially when the 'trade' they assume is law.
Maybe because that's because talk is cheap. Maybe they think that BS and logic are the same. maybe they think the world will mold itself to their advantage. Yet, their ignorance is no barrier to their arrogance; indeed, such folk often pride themselves in never having had a course on the topic.
I tend to find that engineers are the worst offenders - and the fresher from school, the worse they are. A close 'second' are certain fields that are in some ways similar to law, but whose trade training program teached things that are directly contrary to what the law schools teach.
In this thread, many folks have made absurd comments, comments that show their hubris. Among these idiotic statements are:
"We don't have contracts." Sure you do. It may be vague and verbal, but the moment you agree to do something for pay, you have a contract. Of course, the less is spelled out, the more room there is for an outsider (like the judge) to 'fill in the blanks.'
"We extensively modify the form contract." While there's some truth to this - form contracts almost require modification by definition - this statement also ignores one of the basic legal principles: any uncertainties get construed against whoever wrote it.
"We write ..." also leaves out some important details. Namely, that what you write has to be enforceable. There are several principles that often make your 'riders' meaningless (or even work against you). Left unsaid is that contract language has often been assigned meanings by the courts (case law), and the courts may not allow you to change that. There are also such issues as complying with the law, public policy, and conflicts with other parts of the contract.
"We don't warranty." Nice try- but most places have legal requirements as regards warranties. If the contractors' board says 1 year, then you're on the hook, regardless of whatever 'understanding' or contract you may have. The same issue comes up when you request down payments, etc.
"It's too long." Ever pause to wonder how it got that way? Simply put, every line in a form contract (like the AIA) has been the focus of litigation, and has been changed as the result of court rulings. If one of your riders is seen as an attempt to return to prior language, doom on you.
"My attorney writes ..." While your attorney is exactly the person who should be writing, keep in mind that the other party has no obligation to accept. If you want to have your guy negotiate with their guy, you're likely to spend far more than the job is worth - and nothing gets done. Rome wasn't built by lawyers.
Sometimes I wonder how anything ever gets done ....
"I tend to find that engineers are the worst offenders . . ."
Had a GC-turned-architect boss once who thought the medical and law fields were the worst, when it happened. Have heard similarly from others.
My take is a lot of education combined with being in a complicated profession. People don't tend to question either profession, so it's fertile ground for egos to grow. Haven't noticed the same with engineers though.
I have signed AIA contrcts over the past 30 years. Schedule of values is a big part of the submittals.
You can not generate an AIA contrct unles you are subscriber.
Chuck S
We use them on all projects over about 100k, and we are the customer. We also have about 14 pages of supplemental conditionas and changes to the aia form, including a clause that we will not go to arbitration. It is a lengthy document, but overall it is fair to all sides, and covers almost anything that can go wrong. Here's one way to look at it: if you do a good job as a contractor, hold up your end of the deal, follow the blueprints and specs, get all changes in writing, then you won't have any problems with the aia form. Everything is negotiable.
"Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
Absolutely - Supplementary General Conditions are an ideal way to tweak things.
Edited 7/8/2009 11:11 pm ET by Jeff_Clarke
Thanks to all the replies so far.
I want to continue the discussion and it was probably bad form to start the thread and then leave...
but I had to help move a gun safe tonight.
I'll continue tomorrow.
The AIA contract is just like any other contract.....it's just an agreement between two parties about who will do what when, for how long and for how much money.
If there is something in the AIA doc that you don't like, you're free to strike it and, assuming both parties agree, that's fine.
You can also draw up your own addendum, clarifying things that aren't clear, noting things that aren't noted, or just saying whatever the heck you want to say. Again, assuming both parties agree, that's fine.
Point is, it's an agreement, not the 10 commandments chiseled in stone. No reason to sweat it.
Just a thought from a homeowner who paid $2600. in legal fees to get OUT of an AIA contract with an architect: Factor into your cost several thousand dollars, I'm guessing, for your lawyer to review/modify any contract other than the one you usually use.
The high level of trust between all the parties is great. Now you need to get it in writing. Two of the 3 parties want to use their contract and they hold the purse strings. You'll still pay the legal fees to review/modify whether you get the job or not, and however long it takes to finalize it--or not.
It'll also slow things way down, since lawyers always are busy in this world. Don't even dream of signing their contract without a thorough legal review.
Factor into your cost several thousand dollars, I'm guessing, for your lawyer to review/modify any contract other than the one you usually use.
I wish! For an experienced construction lawyer, reviewing/modifying a contract, isn't that time consuming. I can usually review, comment, discuss and revise a proposed contract with a client in a few hours.
Where we really make out is when clients sign $10 million contracts without asking us to review them, or, better yet, when they start work before signing any contract and then have a problem. Litigation is far more lucrative for most lawyers than dispensing advice.
Yes, even in the big city here I had a hard time finding anybody who'd dispense advice. Most of them said: Nope, I just start working when the litigation starts.Still, the experienced guys around here get $400 per hr or more, so a few hours of reviewing a very long contract; plus a few hours of back and forth with the other parties/their lawyers; and before you know it, you're talking big bucks. Esp. if you end up not getting the work.
Edited 7/11/2009 12:25 pm ET by MtnBoy
Yes, even in the big city here I had a hard time finding anybody who'd dispense advice.
That's unfortunate. Some of my best clients have been people to whom I gave a few minutes of free advice, or an hour or two of paid advice. They remember me when they get in trouble.
This is SOP on many larger and commercial projects. wouldn't sweat it personally... but do remember that on such a job there are certain ways things should be done and methods of accounting that should be followed.
even monthly billings should be on AIA forms.
it is not a bad system once you get used to it.
I refuse to accept that there are limitations to what we can accomplish. Pete Draganic
Take life as a test and shoot for a better score each day. Matt Garcia
Pete,
I think it is a decent system for commercial projects, and in a previous career, I used a lot of the AIA CMA forms for pay requests, schedule of values, etc. for commercial projects.
I just find it overly complex for residential construction and in my initial review I found several clauses that seemed tilted too far to the owner's side for my taste.
I should hear back from my attorney tomorrow and we'll see what she has to say.
Quote: "it seems to me that this contract is much more in the favor of the owner."
Rather than give vague impressions of a contract, why don't you post specific clauses that are an example of this? I agree, though, that the A101 seems a little heavy-handed for residential work. I have been using A105/205 for many years, and do not see anything that particularly favors the owner or architect.
Richard,
Since you quoted my post, I'll respond.
My comments were based on my general impression after an initial read through. I wanted to see if those impressions were shared by BT posters who are also residential contractors. So, I wasn't looking to debate the specific legal merits of contract clauses.
But here are a few specific examples that, IMO favor the owner:
Article 7 of the contract, which references Article 14 of the General Conditions.
14.3 SUSPENSION BY THE OWNER FOR CONVENIENCE
14.4 TERMINATION BY THE OWNER FOR CONVENIENCE
Now, I'm not a lawyer but when I read that the owner can suspend or terminate the contract without cause, that makes me a little nervous. I also notice that same right is not extended to the contractor.
Article 5.2 of A201- Requires the contractor to furnish a list of all subs and suppliers and allows the owner and architect to reasonably object to any person or entity on the list.
Article 5.3 of A201- Requires the contractor to have contracts with all subs that reference The Contract Documents. (Maybe not one-sided, but many of my subs will have no interest in signing an agreement that requires them to be bound to the provisions of a 45 page document).
In general, there are also significant administrative and documentation burdens for a small residential construction contractor, such as myself. (Specifically citing each of those examples here is an administrative burden in itself <G>.)
Just my opinion.
Please tell us, giving us the specific language, how the contract you now use prevents the owner/client from terminating the contract.
There are a million or so different scenarios that could play out and give a property owner a reason to want to suspend or stop a building project.
Are you interpreting the word "convenience" in the AIA language, as meaning simple whimsy? And how is whimsy, as in "I just decided I don't want to do that right now," any different than something more "weighty," as in, "my wife and kids were killed in a car accident on their way home from a soccer game?"
As a previous poster commented, all those clauses are in there because of all of the things that should be addressed in a contract. Maybe the one you use simply doesn't address suspension or stoppage, but that doesn't mean that an owner cannot decide to suspend or stop.
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"A stripe is just as real as a dadgummed flower."
Gene Davis 1920-1985
While these sound a little scary, does the contract provide that you can't get paid costs/damages for these events? (No, it doesn't.) How would you feel as an Owner that could lose his/her job in the middle of construction? Maybe you'd like a little protection for this possibility? Basically, this contract is saying "you do work, you get paid for it." The scope may change. It is NOT saying, "you signed up for a $500K project, you HAVE to complete a $500K project," although contractors would certainly like this.The clauses requiring subcontractors to be acceptable to the Owner protect the Owner from subs that might be known to him to be low-ballers, financially unsound, or do shoddy work. If an Owner has no knowledge of any reason why the sub would be unacceptable, then you have no problem. I don't believe that you would be required to substitute a more expensive sub for free if the Owner has an objection to a sub.Requiring subs to be bound by the same terms as you are is a protection for YOU! If the job got cancelled mid-stream due to a job loss, or finding out that the construction funds were being managed by a Bernie Madoff, would you want to be held to a full contract amount by your subs?No one is saying that you shouldn't be compensated for the additional administrative burdens, are they? Maybe you could offer a discount for using a less burdensome contract. As I said before, I think that the AIA 101 is a heavy-handed contract for residential work, and not many residential contractors are set up to handle this level of administration. However, you should definitely be charging for it if you are going to be operating under these conditions.
An Owner should be able to terminate an Agreement for their convenience and this right should not be one that accrues to the Contractor. Look - the Owner is hiring the Contractor to work for HIM - not the other way around. What if they lose their job and have to stop the work? What if horrendous subsoil conditions are discovered (like a buried leaking oil tank with six-figure costs? OTOH the Contractor should not be able to terminate just because they feel like it.
The importance of the Contractual principle of a 'meeting of the minds' for a construction project involve, primarily:- the Contractor is GOING TO DO THE WORK (and not just if he feels like it or not)
and
- the Owner is going to PAY HIM (and not just if he feels like it or not)
However, there is ample room for adding whatever termination details you want - so the Owner wants to terminate? As a Contractor you should be protected against unwarranted expenses and can negotiate whatever penalties you like.
All expenses to date plus a 20% 'sudden demobilization' fee? Why not?
Now in terms of objecting to subcontractors - I can understand the difficulty of having to find someone else you may not have a relationship with in order to do the work. OTOH, if you DO have a reasonable (Owner or Arch't should have to show cause IMO) objection and have to hire someone else, the cost differential, if any, should be passed along to the Owner so that the Contractor is not out-of-pocket. You may be able to negotiate other supplemental terms to CYA if the 'new' sub turns out to be a dud.
Jeff
Edited 7/18/2009 1:12 pm ET by Jeff_Clarke
Going from memory ... if the owner cancels for convenience, he is required to pay you for the fair value of the work complete, including matewrials ordered that cannot be returned etc. We have a couple of subs that we refuse to allow on our projrcts. 99% of the time we go with the subs selected by the gc. We also have a mwbe requirement, and if the % is noit high enough we require the gc to find a qualified mwbe sub, and we pay the difference. The architect has a lot of involvement in the project, and it's supposed to be impartial. He is supposed to make decisions based onj the facts of the project, not in favor of the owner or the gc."Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
c'mon eddie... pretend i just fell off the turnip truck....
"mwbe"..........????Mike Hussein Smith Rhode Island : Design / Build / Repair / Restore
Minority and Women's Business Enterprise?
Jon Blakemore RappahannockINC.com Fredericksburg, VA
You got it. Official corporate goal is 10% minority participation, unofficial is 15%. Sometimes it is difficult. We just lost our furniture vendor and bank equipnment vendor, both were mwbe certified."Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
Mike, it's just the everyday language of the commercial contractor, and a whole lot of that work requires that some portion of subcontracts go to MWBEs.
Maybe your senators and your representative will chime in with all the others, when congress makes that a requirement of residential work.
Soon as they finish up the heavy lifting they are doing now with environmental and health stuff, they'll get to it. I promise.
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"A stripe is just as real as a dadgummed flower."
Gene Davis 1920-1985
ntw.... helen will become president and i'll ride backseatMike Hussein Smith Rhode Island : Design / Build / Repair / Restore
helen will become president and i'll ride backseat
And that's the way it works half the time. The white male owner decides he wants to get a leg up on the competition, so he incorporates, makes DW 51% owner, and nothing changes except they get to add a couple of letters after the name of the company. I used to deal with a contractor who had two company names, depending on if he needed the mwbe designation. "Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
How can a contractor possibly know who every subcontractor and supplier will be?I want to put this question in relation to lien laws. The lien laws in my state are typical of lien laws of other states and which have been pretty standard for at least 150 years. They state that any person who furnishes labor, materials or equipment for construction shall have a lien whether the labor, materials or equipment are furnished at the instance of the property owner or the property owner's agent. It then states that contractors and subcontractors are agents of the property owner.With this in mind, the suppliers mentioned are labor, material and equipment suppliers. How can a contractor possibly know who each of these parties will be. The property owner must first employ the contractor as agent before any of these parties can come onto the job. A contractor certainly cannot award a subcontract to a subcontractor without first having an agency contract to do so. Suppose it were the other way around. A contractor enters into a contract with a sub prior to the general contract being awarded. Now a different contractor is awarded the general contract. How does that sub execute his contract and get paid if the contractor with whom he dealt does not get the job?
what's your question ?Mike Hussein Smith Rhode Island : Design / Build / Repair / Restore
When you submit your proposal to the client, you will probably know who the major subs are, and some of the suppliers. The rest you fill in as you go along."Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
oh oh....you fired up again?
The first time I read it was back in the 80's. My impression was that it favored the architect the most and the owner second and the general contractor was everyone's doormat.
It makes perfect sense to if the document was generated by architects. Of course they are going to protect themselves the most, from the evil general contractors. They also have to pacify the owners if they want to sell their services to them with this cushy self protecting document. By default, since both the Architect and Owner stepped backwards, when volunteers were sought, the General Contractor ends up being the bogey man.
I don't think anyone could make a logical case against the above theory...but there's no harm in trying.
The first time I read it was back in the 80's. My impression was that it favored the architect the most and the owner second and the general contractor was everyone's doormat.
They've been through a number of versions since then - I think in the 1993 version they started involving the AGC in the language.
Jeff
Thought I would add something I just came across while negotiating a contract for my latest project. AIA has issued a current version of the contract, it is the 2007 version, and this is the first time we have had to use it.
We use A201-2007 "General conditions of the contract for construction" which is now 41 pages, but 10 pages is the cover and an index. Paragraph 2.2.1 states in part: "Prior to commencement of the work, the contractor may request in writing that the owner provide reasonable evidence that the owner has made financial arrangements to fulfill the owner's obligations under the contract."
My point is that section clearly benefits the contractor.
"Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
Edited 7/31/2009 10:29 am ET by FastEddie
Yes, and it's certainly a reasonable provision, since the GC has so much on the line.
Jeff
Vintage , No big deal here in New York. I can assist you with anything you need regarding 101 and 201. You are 100% correct , that they are written in favor of the owner and give the architect too much administrative power over the construction contract and documents
The key here is that you can delete those area in the contract that you dont agree. and when the final document is drafted it will show you what was taken out or amended .
I frequently modify , Progess payments as weekly or biweekly if the project is short. Usually never allow for liquidated damages, ect
let me know- also do they want you to use G702-703 application for payment
Dont sweat it grab the job in this economy.
A 201 is a standard Boilerplate general conditions attachment to what ever other contract is offered.
If you are up on your game , it is really not a big deal with a few exceptions. To be continued