Coming in at #2 on our Top A201 Contract Changes is Digital Data.  (Yesterday’s post on Termination for Convenience changes is here.)

Building Information Modeling (BIM) is fast becoming common place on larger construction projects.  However, there are multiple risks associated with using digital formats that can be manipulated by multiple parties.

In the 2017 revisions to the A201, there is now a requirement that data protocols be established concerning the development, use, transmission, and exchange of all digital data, including BIM data.  (See Section 1.7).

The E203 form is the suggested document to create the digital protocol.  Note, however, that if the parties have not established a protocol, the use of any digital data is at that party’s own risk.  (Section 1.8).

Further, revised section 3.11 clarifies that the Contractor can keep contract documents, change orders, construction change directives, and other modifications at the site only in electronic format, if it so chooses.

Again, a common theme about these contract changes– they are small, but they are important.  As the designer of record, it is vital that you play a lead role in determining the who/what/when/where/why of data transmission.

Tomorrow, we finally come to Contract Change #1, dealing with Insurance.  It’s a doozy! Stay tuned!

Photo (c) W. Rebel via Creative Commons.

Today in the Top 10 Changes to the A201, we are discussing Termination for Convenience provisions.  (Yesterday’s post discussing contract changes dealing with commencement & completion is here).  The Termination for Convenience provision (14.4.3) has an interesting history which explains why this small, but very specific, change was made.

Termination for Convenience, an exclusive owner right, was added in the AIA contracts in 1997.  However, contractors and architects were losing the benefit of their bargains, including the fixed overhead and the fee or profit on the portion of Work which was terminated.

To alleviate that problem, in 2007, the contracts were revised to allow the contractor/architect to get payment for work executed, costs of termination, and reasonable overhead and profit on the work not executed.

As many of you know too well, Owners, in response, often completely struck through that provision, denying any overhead or profit for work not yet performed after a termination for convenience.

In the 2017 revision, the A201 (as well as the related Owner-Architect agreements), the automatic entitlement is eliminated, in favor of a fill point to prompt the parties to discuss a fair fee before the project begins.

A negotiated amount also serves to liquidate the Owner’s liability to the Contractor (lost business opportunity and overhead and profit on the Contractor’s unperformed work).  However, the fee is not necessarily designed to completely liquidate the Owner’s liability to the Contractor’s downstream parties.

To protect the Owner from downstream claims, the A401 will need to be edited and coordinated, so that the Owner’s entire liability to the Contractor, inclusive of subcontractors and suppliers, is established in the Termination fill point.

Likewise, if you utilize subconsultants in your architecture or engineering practice, be sure that your contracts are likewise modified to track your entitlement for termination expenses.

Tomorrow, Change #2, dealing with Digital Data.

Photo (c) TaxRebate.org.uk via Creative Commons.

Today, we are half-way through our series on the Top 10 Changes to the AIA A201.  (Here is yesterday’s post discussing financial notifications, Change #6, Part B]

Liquidated Damages can make or break a project.  They can either encourage efficient construction completion, or completely derail a project if there are multiple competing delays and delay claims.  They can also cost a contractor a lot of money if he doesn’t meet the timing requirements of the Project.

In the 2017 contract revision, a specific fill point has been included in all Owner-Contractor agreements (except A105) to prompt the parties to consider including a liquidated damages provision.

The details concerning calculation of the damages, and the limits (if any) to the damages are still left to the parties to negotiate.  The intent of the fill point is to bring the discussion to the forefront, rather than have the provision buried within the Contractor Time section of the contract.

There is also now a separate fill point for bonus or other incentive provisions.

Next up after the Easter break:  Change #4:  Commencement & Completion.  Stay tuned…

Photo (c) Peter Hopper via Creative Commons license.

Yesterday, we discussed Change #6, Notice Provisions, in the A201 Contract.  As promised, here is one more Notice Provision that has changed– that relating to Financial Arrangements of the Owner.

Since 1976, the AIA Contract Documents have allowed the Contractor to require the Owner to provide evidence that the Owner has made financial arrangements to fulfill the Owner’s obligations under the Contract.  That is, the Contractor had the unfettered right to request evidence indiscriminately throughout the Project.  The Contractor also had the unilateral right to stop work if the Owner failed to provide evidence that he was financially sound when requested.  This process could lead to abuse where, for example, a contractor demanded financial evidence as a ploy to get more time and avoid liquidated damages.

In the last contract revision, in 2007, the documents were changed to only allow the Contractor the right to request evidence of adequate financing prior to the start of Construction, and thereafter only if certain conditions were met.  In the 2017 version, revisions were made for clarification, to establish deadlines for receipt of the information, and to restrict the right to stop work relating to a change in the Work.

Now, the Contractor can request financial information before construction (Section 2.2.1) and during construction (Section 2.2.2) ONLY IF (1) the Owner doesn’t make a payment when due; (2) the Contractor demonstrates a “reasonable concern” regarding the Owner’s ability to make payment when due; or (3) there is a change in the work that materially changes the Contract Sum.

If the request is made prior to start of Work, the Contractor has no duty to commence work until the evidence is provided.  If the request is made during construction, the Owner has 14 days to provide the information or the Contractor can stop the Work or, if the request is because of a change in Work, stop work on that portion of the Work affected by the change.  Of course, the Contract Time would need to be extended if the Work is delayed, and the Contract Sum would need to be increased by the amount of the Contractor’s reasonable costs of shutdown, and re-mobilization.

Since Architects are often asked to rule on whether or not a Shut Down is proper, the changes to this provision are important to keep in mind as you administer your construction contracts.

Tomorrow, we reach the half-way point of the series:  Change #5- Liquidated Damages.

Photo courtesy  401kcalculator.org.