Last month’s lead article for Brickerconstructionlaw.com introduced the newly revised American Institute of Architects AIA Document A201-2007, General Conditions of the Contract for Construction. The article focused on how the AIA has changed the dispute resolution provisions. In the coming months, this column will explore other changes in the general conditions document, comparing and contrasting the A201-2007 with the 1997 version and perhaps even earlier versions.
This month’s topic is differing site conditions. The A201-2007’s differing site conditions provision reads:
§ 3.7.4 Concealed or Unknown Conditions. If the Contractor encounters conditions at the site that are (a) subsurface or otherwise concealed physical conditions that differ materially from those indicated in the Contract Documents or (2) unknown physical conditions of an unusual nature, that differ materially from those ordinarily found to exist and generally recognized as inherent in construction activities of the character provided for in the Contract Documents, the Contractor shall promptly provide notice to the Owner and the Architect before conditions are disturbed and in no event later than 21 days after first observance of the conditions. The Architect will promptly investigate such conditions and, if the Architect determines that they differ materially and cause an increase or decrease in the Contractor’s cost of, or time required for, performance of any part of the Work, will recommend an equitable adjustment in the Contract Sum or Contract Time, or both. If the Architect determines that the conditions at the site are not materially different from those indicated in the Contract Documents and that no change in the terms of the Contractis justified, the Architect shall promptly notify the Owner and Contractor in writing, stating the reasons. If either party disputes the Architect’s determination or recommendation, that party may proceed as provided in Article 15.
In keeping with the AIA’s changes in dispute resolution procedures, this new differing site conditions provision changes how a differing site conditions dispute is resolved. The A201-1997 gave either the Contractor or Owner 21 days to make a claim appealing the Architect’s decision on whether or not time or money was due as a result of a differing site condition. This provision sometimes created problems when it was not coordinated with the main dispute resolution sections of the contract, which could provide a different time frame for appealing an architect’s decision. Now that problem is cured by tying differing site conditions disputes directly into the Article 15 main dispute resolution provisions.
There are other differences. Perhaps the most obvious is the location of the differing site conditions provision in the document. In the A201-1997 it was Section 4.3.4 under Claims and Disputes. In the A201-2007 it has been moved to Section 3.7, Permits, Fees, Notices, and Compliance with Laws, as Section 3.7.4, which is a much less intuitive location.
A material difference is the changed roles played by the Architect and Owner under the A201-2007. In the 1997 version, notice of the differing site condition was to be given “by the observing party,” implying a potential duty upon the Architect or Owner to recognize and inform the Contractor of a differing site condition. Not any more. The A201-2007 requires that “the Contractor shall promptly provide notice to the Owner and the Architect.”
The biggest change is the inclusion of an entire new Section 3.7.5, which deals exclusively with “human remains” and “burial markers, archaeological sites or wetlands not indicated in the Contract Documents.” A cynic might view this as an attempt to make the Contractor potentially culpable for the Owner and Architect not doing a thorough job of characterizing the site. But the Contractor’s responsibility to stop work and report such phenomena is contingent upon the Contractor’s personnel being able to recognize these items, introducing an element of subjectivity. It also begs the question, especially for things visible from the surface—if the Architect and Owner (or the Owner’s consultants) did not recognize these items, how could they reasonably expect the Contractor to do so? But regardless of the possible unfairness of the provision, it does recognize the Contractor’s right to an adjustment of the Contract Sum and Contract Time should such phenomena slow the project down.
Despite these changes, the A201-2007’s differing site conditions provision remains true to the purpose and history of this type of contract clause. Generally, the risk for unforeseen differing site conditions is shifted to the Owner as long as the Contractor gives prompt notice of the problem. Prompt notice provides the Owner with an opportunity to investigate and resolve the problem.