At a Glance…
The American Institute of Architects (AIA) contracts, the most commonly used set of construction contract forms on commercial projects in the United States, recently released the second part of its once-in-a-decade updates to the 2017 versions of its primary forms. Part One in this series previously addressed the primary changes to the Owner-Contractor forms. This article, Part 2, focuses on the principal changes to the Owner-Architect forms, particularly B101-2017 (standard form of agreement) and similar forms.
The Architectural Forms Included in the AIA’s 2017 Updates
The AIA made two document releases: an April 2017 release, and an October 2017 release. The AIA’s updates to the Owner-Architect forms in the April 2017 release included the following: the B101, B102, B103, B104 and B105 Owner-Architect contract forms, as well as an update to the C401 Architect-Consultant contract form. The October 2017 release included updates to the B201 Standard Form of Architect’s Services for Design and Construction Administration, as well as a number of administrative forms and specialty services “scope” documents which can be added to the “base” Owner-Architect contract forms, for items such as site evaluation, historic preservation, commissioning, facility support services and the like.
2017 Changes to the Owner-Architect Agreements
The 2017 version of the B101 Standard Form of Agreement Between Owner and Architect reflects numerous modifications—many of which are carried over into other Owner-Architect forms like the B102, B103, B104 and B105. The names of certain of these forms are revised for 2017. For example, the B103-2017 is no longer referred to as “Standard Form of Agreement Between Owner and Architect for a Large or Complex Project,” but is now known as “Standard Form of Agreement Between Owner and Architect for a Complex Project.” The B104-2017, which was formerly known as “Standard Form of Agreement Between Owner and Architect for a Project of Limited Scope,” is now known as “Standard Abbreviated Form of Agreement Between Owner and Architect.” The B105-2017 is now known as “Standard Short Form of Agreement Between Owner and Architect,” whereas the 2007 version was known as “Standard Form of Agreement Between Owner and Architect for a Residential or Small Commercial Project.”
The following are some of the principal changes to the base AIA Owner-Architect agreements:
- Initial Information. The AIA shifted the location of key information from an optional exhibit into the first article of certain Owner-Architect forms in order to facilitate more fulsome discussions of potential issues before those issues arise. For 2017, Owner-Architect forms B101 and B103 (and to a lesser extent, B104) incorporate information—such as the owner’s program, the project’s physical characteristics, the owner’s budget, procurement and delivery methods, sustainable objectives (to be identified through E204-2017 Sustainable Projects Exhibit), and specifics regarding the parties’ representatives and consultants—into Article 1 of the agreement itself rather than as an optional Exhibit A. Article 1 of the B101 and B103 also include provisions for design and construction milestones, broken down into design phase milestones, construction commencement, substantial completion date or dates, and other milestone dates (B101 § 1.1.4; B103 § 1.1.4).
- Licensing. The AIA Owner-Architect forms now include representations regarding the architect’s licensure (B101 § 2.1; B102 § 1.1.1; B103 § 2.1); however, those representations may not be sufficient to ensure compliance with the laws of your jurisdiction—particularly if your state imposes specific registration requirements on design professionals (see, e.g., Va. Code §§ 54.1-400, 54.1-406). Accordingly, be mindful of your local requirements if the architect is not licensed in the project’s jurisdiction.
- Insurance. Although the revised forms include amplified provisions relating to insurance, including requirements that the architect to maintain liability insurance through termination (B101 § 2.5; B102 § 1.5; B103 § 2.5; B104 § 2.2), owners should consider judicious additions, such as requiring copies of policies and endorsements, and notices of cancelation in body of the agreement.
- Five Phases Remain, but with Modifications. The AIA still breaks the scope of the architect’s basic services into five phases (Article 3 of B101 and B103), but the “Bidding or Negotiation Phases Services” are now referred to as “Procurement Phase Services” (B101 § 3.5; B103 § 3.5). Under the new default provisions of the modified forms, the architect is not responsible for the owner’s acceptance of non-conforming work without the architect’s written approval (B101 § 3.1.4; B103 § 3.1.5). The revised forms further presumptively limit the architect’s liability through disclaimers relating to accuracy, completeness or timeliness of services or information from the owner or the owner’s consultants (B101 § 3.1.2; B103 § 3.1.2). The 2017 versions of B101 and B103 now specify that the architect’s submittal review responsibility is “for the limited purpose of checking for conformance with information given and the design concept expressed in the Contract Documents” and otherwise disclaim certain contractual responsibility (§ 184.108.40.206). Even if the parties adopt the AIA modifications, responsibilities to third parties may remain despite these disclaimers.
- Supplemental and Additional Services. Additional services identified at the time of agreement are now categorized by the AIA as “Supplemental Services” (§ 4.1 of B101, B103 and B104) to avoid confusing them with “Additional Services” (§ 4.2 of B101, B103 and B104) that arise during the course of the project. The new forms modify the table of “Supplemental Services” found in prior versions under “Additional Services,” and the parties may designate which of these supplemental services the architect will provide for separate compensation (i.e., beyond the agreed compensation for the architect’s basic services). “Additional Services” generally are those necessitated by circumstances arising as the project progresses. For 2017, the AIA presumptively includes under “Additional Services” extra compensation to architects for services required to comply with changes in official interpretations of applicable codes, laws or regulations (B101 § 220.127.116.11; B103 § 18.104.22.168).
- Cost of Work and Redesign. Building on the changes to “Supplemental” and “Additional” services in Article 4 that pertain to additional architect compensation, Article 6 also includes revised provisions designed to provide further compensation to architects. The AIA modified the definition of “Cost of Work” to include “the reasonable value of labor, materials, and equipment” (§ 6.1 of B101-2017, B103-2017 and B104-2017). Under the revised B101-2017, architects may obtain additional compensation for redesign services if the redesign is due to market conditions the architect could not have reasonably anticipated (§ 6.7).
- Copyrights and Licenses. As modified, copyright ownership and the owner’s license to use documents survives the termination of the agreement—except if the architect terminates the agreement for cause (§ 7.5 of B101, B103 and B104).
- Claims and Disputes Processes. The 2017 versions of B101, B103, and B104 add language providing that disputes processes of Article 8 (whether mediation, arbitration or court proceedings) survive termination of the agreement (§ 8.4).
- Termination and Termination Fees. The AIA also amended contractual termination provisions. The revised Owner-Architect agreements set an automatic termination date of one year from the date of substantial completion unless otherwise provided elsewhere in the agreement (§ 9.8 of B101-2017, B103-2017, B104-2017; Article 4 of B105-2017). The phrase “Termination Expenses” is replaced with “Termination Fee.” Fees now presumptively continue for services, reimbursable expenses and costs attributable to termination, and the “Termination Fee” (which is paired with a Licensing Fee for the owner’s continued use of instruments of service) is negotiable in the revised standard forms (§§ 9.6, 9.7 of B101, B103 and B104; §§ 5.6, 5.7 of B102).
- Confidentiality. Although the AIA amended various portions of Article 10 (Miscellaneous Provisions), the key changes relate to expanding and clarifying when “confidential” and “business proprietary” information may be shared (§§ 10.8, 10.8.1 of B101 and B103; §§ 7.9, 7.9.1 of B102).
- Savings Provision. The new forms include a savings provision that allows for severability of contractual obligations to keep the entire contract from being invalidated due to the inclusion of an invalid provision (B101 § 10.9; B102 § 7.10; B103 § 10.9; B104 § 10.8).
- Compensation. Instead of a blank section reserved for the parties to insert the amount and basis for the architect’s compensation, the 2017 revised forms now provide for compensation on a “Stipulated Sum,” “Percentage Basis” or through some “Other” method and require that the parties insert the amount, percentage value, or describe the method of compensation (§§ 11.1.1 through 11.1.3 of B101 and B103). Where compensation is on a percentage basis, progress payments are based on the most recent budget and previous payments are not subsequently adjusted based on changes to the overall budget (§ 11.6 of B101-2017 and B103-2017). Prior versions of owner-architect agreements were silent on the issue of adjusting percentage basis compensation calculations when an owner’s budget changes.
2017 Changes to Specialty Service Agreements and Administrative Forms
In addition, in October 2017, the AIA released a series of amended specialty service agreements and administrative forms. The most relevant of these revisions include the following:
- B201 Design and Construction Administration Services: Like the changes to the B101 and other base architectural documents, the 2017 changes to this form include an enhanced Initial Information section, a focus on sustainability issues, plus specific changes dealing with the scope of the architect’s review of shop drawing or submittals by a contractor performing design services, and changes in the design drawings necessitated by bid proposals exceeding the Owner’s budget.
- B203 Site Evaluation and Project Feasibility: The architect is now responsible to prepare a site evaluation and feasibility report as a deliverable.
- B205 Historic Preservation Services: Existing Buildings Assessment services were revised to facilitate a preliminary evaluation of historic buildings; the architect’s responsibility for hazardous materials is also clarified.
- B207 On-Site Project Representation Services: The scope of the representative’s authority to act on behalf of the architect was clarified, as well as responsibilities for keeping a daily log of site activities and monthly progress reports.
- B210 Facility Support Services: The “menu” of possible services was expanded to include space management, maintenance management and digital facility management systems.
- C203 Commissioning Services: Now classified as a “consultant” rather than an “architectural” document, it now includes provisions regarding: (1) the consultant’s role in preparing the owner’s project requirements; (2) a more detailed description of the commissioning plan; (3) updated commissioning-related design review provisions; and (4) updated provisions related to the commissioning during the construction phase of the project.
- C704 Certificate of Substantial Completion: Reorganized to include a separate line item identifying the date of substantial completion; the warranties provision now clarifies that warranties commence on the date of substantial completion.
This Client Alert highlights only some of the changes to the Owner-Architect forms.