The American Institute of Architects updates its form documents on a regular basis, and the A201 General Conditions (1997 Ed.) were slated for review in 2007. They were finally made public in December. At the same time, a new set of construction contract documents were published, called ConsensusDOCS, by an Associated General Contractors-led group. AGC says it represents the combined and agreed positions of about 20 construction groups, including public and private owners, subcontractor groups (including Mechanical Contractors Association of America) and others. While the length of this column doesn't allow for an in-depth analysis of all the items in these documents that are different from the older AIA and AGC documents, I can hit the high points.
A201 General Conditions
First off, these general conditions are nowhere near as different from the old ones they replace, as many commentators would tell you. Granted, virtually every paragraph is changed, but most of the changes are grammatical — active vs. passive voice, moving a subject from one paragraph to another.
The substantive changes are:
Contractors still may insist on evidence of financing before starting work, but they no longer have the right to stop work without some triggering event, such as huge changes or checks bouncing, etc. This reduces the contractor's security.
Contractors used to be obligated to pay subs “promptly.” Now they must pay within seven days of receipt of payment from the owner. More and more, this is what state law requires anyway.
Contractors used to be able to stop all work if hazardous materials were encountered. Now, they can only stop if the materials found “are likely to cause injury.”
The length of time to file a lawsuit used to be hard to figure out. Now, the contract says that suits have to be filed no later than 10 years after substantial completion. This is problematic because by state law, the time to file suit could be much earlier than 10 years, and some states won't let you shorten a statute of limitation by contract. So check with your lawyer on this one.
The insurance provisions are more specific about completed operations coverage (at least one year) and about requiring additional insured coverage for owners, general contractors and architects — but only to the extent that they are sued for what the subcontractor actually did wrong. I know that the American Subcontractors Association is unhappy about this, but it is unlikely that any owner or GC will not require additional insured coverage whether it is in the A201 or not.
Because so many people were crossing arbitration out of the old A201, the AIA gave up the fight and now makes the “default” option court litigation unless the parties check a box to choose arbitration.
People also complained that asking the architect to be the initial decider of disputes was like asking the fox's consultant to guard the henhouse. As a result, the AIA now gives the parties the option to designate an “initial decision maker” who could be someone other than the architect. Unless they are undertaking another Big Dig, however, the odds are extremely low that parties just beginning a project will want to pay a lawyer or designer to attend all their meetings and read their minutes and correspondence to be up to speed.
These documents combine the general conditions in the owner/contractor agreement itself. They also have published owner/designer and owner/subcontractor documents (among others).
Among the provisions that would be of interest to a subcontractor are:
Approved shop drawings and submittals are now considered to be “contract documents” and subcontractors can rely on them.
A sub who has had to defend/indemnify the GC/owner/architect can recoup any part of his attorney's fees in excess of his own liability.
Under the AIA format, the owner only need give the contractor the right to come back and examine or fix a “defect” if it is found in the first 12 months after substantial completion. (After that, the owner can fix it and send the contractor a bill.) In the ConsensusDOCs, the owner always and forever has to go back to the contractor and give him the opportunity to fix the problem — but the contractor does not have to give the sub this same right.
No further retainage can be withheld after 50% completion.
If entitlement to payment for additional work is disputed, the owner must advance half the estimated cost of the work.
Arbitration also is optional, not mandatory.
ConsensusDOCs encourages parties to complete a couple of other side agreements — one on the use of electronic communications and one identifying items that might have significant price or time impacts so that they can be dealt with in advance.
Of course there are many more differences than just these, and contractors are encouraged to attend seminars, read articles and above all, talk to their attorneys before starting to use them — particularly because all construction documents on a project need to tie together.
Susan McGreevy is a partner at Husch & Eppenberger, Kansas City, Mo., 816/421-4800, e-mail to [email protected].