IT SHOULD NOT BE OPEN SEASON ON AIA DOCUMENTS

by Werner Sabo, FAIA, Esq.
and
James K. Zahn, FAIA, Esq.

In 1911, the American Institute of Architects published the first in a series of documents comprising the AIA family of documents. That document was the first A201, The General Conditions for the Contract for Construction. It revolutionized the construction industry because, for the first time ever, each party’s role in the construction process was clearly defined. An entire system of construction administration was established.

As the years passed, the AIA continued releasing additional documents which set the standards for agreements utilized in the practice of architecture and construction. These documents included Owner/Contractor and Owner/Architect Agreements, Contractor’s Sworn Statements, and many other forms, most of which became industry standards.

Because these documents became industry standards, they were often subject to judicial interpretation. As a result, there began a history of case law that interpreted the language used in the AIA Agreements and the meanings that the courts established for the wording of these documents. Based on the courts’ adjudications, the parties could no longer dispute the meanings of the words contained in the AIA Agreements. The word, sentence or paragraph in question now means what the court says it means. This history of case law is immensely helpful in establishing a consistency of what specific contract language means. This consistency in meaning helps the contracting parties better reach a meeting of the minds concerning contractual obligations and adds certainty to the bargain reached between the parties.

The same consistency of contractual language cannot be obtained using letter agreements, or agreements prepared from scratch by owners, architects, contractors, or their attorneys. There simply is no precedent of case law to draw upon when determining what the party’s intent is by letter agreements or self-prepared agreements. The benefit of using AIA Documents, and the court system’s tremendous body of case law, cannot be overemphasized and should not be forgotten each time an agreement has to be prepared.

CRITICISM OF THE NEW DOCUMENTS

Since October 1997, some commentators have declared open season on these newly released AIA Documents. The two documents receiving the most criticism are AIA A201, The General Conditions for the Contract for Construction and B141, Standard Form of Agreement Between Owner and Architect with Standard Form of Architect’s Services.

The documents have been criticized for requiring too much interaction between the owner and architect for completion of the agreement, for requiring an architect to redesign the project for no additional expense if it comes in over budget, and for not being slanted in favor of the architect. Other criticisms suggest that the documents do not meet the needs of sophisticated owners, do not meet varying project requirements, or do not recognize contractor resistance to these documents. To determine whether the criticisms are justified, one must first understand the process of revising AIA Documents and the goals that the National AIA Documents Committee (the "Committee") attempts to achieve with each revision.

AIA revises each of its individual documents in the family of documents, at least once every ten years. The Committee is continually gathering information, analyzing that information and creating or revising existing documents that it believes best reflect the desires and needs of the entire membership of AIA, the construction industry, and others who use AIA Documents. The gathering of information usually begins at the local chapter level, by standing document committees created by the local chapter to address matters concerning AIA Documents. These committees receive information from the local membership, analyze that information, and, if deemed appropriate, pass their recommendations regarding the information to the State’s Coordinating Committee, where the above process of gathering, analyzing and recommending is repeated. If the state doesn’t have a coordinating committee, the recommendation is given directly to the Region Documents Coordinator, who will bring it to the attention of the National AIA Documents Committee. Comments are also received directly from AIA members and other organizations with an interest in the documents. As part of this entire process, all members are encouraged to express their opinions and recommendations relative to the documents. Everyone has a chance to contribute if they so desire. Constructive input is sought and received from owners, contractors and attorneys.

On an ongoing basis, the Committee attempts to evaluate how the profession is perceived by the public. It analyzes where the profession of architecture seems to be going and what the AIA can do to promote the profession’s goals. In doing so, it considers what language owners require in their documents and what changes to the documents would benefit the entire construction industry. The Committee believes that it is imperative that the architect be perceived in a positive light by the ultimate consumers of the construction industry, the public. The AIA wants the public to choose to use an architect with the belief that the architect will benefit the project, rather than being forced to use one merely because the law requires it.

Unfortunately, some people prefer to criticize the documents after they are issued rather than to contribute to their development by participating in the established process. Others who have contributed may be disappointed that their suggestions did not find their way into the final version of a particular document. In the end, these are consensus documents that will not please everyone. Users of the documents must also recognize that specific documents can, and in some cases, must be altered to suit any particular project.

INTERACTION BETWEEN THE OWNER AND ARCHITECT

Architects have expressed a concern that they do not want to devote the time it takes to discuss the initial information required in Article 1.1 of the B141-1997. This reluctance to engage in such a discussion is detrimental to the best interests of both the architect and owner. The discussion is a very good opportunity to really get to understand the owner’s objectives and the project’s requirements. You can explain in detail the exact scope of services you intend to perform, as well as discover if these services are really what the owner needs or wants. It is also a great time to market other services that you could perform for an owner, services that go beyond the traditional phases of Schematic Design through Construction Administrative Services. Any service that you believe would be of benefit to an owner should be discussed with the owner during your discussion of Article 1.1. This is truly an opportunity to increase your services and compensation, while at the same time, it is an opportunity to avoid the owner having any misunderstandings or false expectations of what you will provide. While sophisticated owners know exactly what they want from an architect, many other owners do not know what to expect from their architects. This document will give the parties a chance to reach a clear understanding of their respective roles on the project in a way that past Owner/Architect agreements could not.

The discussion will also inform the owner that if the owner changes any of the information contained in Article 1.1, there will be a corresponding adjustment in your fee. If the project goes from a traditionally bid project to a fast-track project or a negotiated project, you are entitled to an adjustment in your fee. When the owner designates an owner’s representative, you’ll know the extent of his legal authority to direct you, and if that authority is limited, you’ll be able to determine who has the ultimate authority regarding project decisions. As the architect, you will designate a representative to the owner who will have the authority to legally bind your firm. The purpose behind this exercise is to reduce misunderstandings between the owner and architect. These misunderstandings form the seeds of mistrust later in many projects.

THE ARCHITECT MUST DESIGN TO THE OWNER’S BUDGET

Prior to the 1997 revisions of the documents, the Committee concluded, and rightfully so, that owners have two major concerns in their dealings with architects. Owners have continually expressed their frustrations over architects’ perceived inability to meet the budget and to complete the drawings within a given time span. Many times in the past, excuses concerning design delays and project cost overruns were tolerated. Today, that tolerance is wearing thin. Some owners have absolutely no tolerance when it pertains to increased design times or projects exceeding the owner’s budget. Other construction professionals, such as construction managers and design/builders, deliver buildings on budget and on time. Owners are told, and they believe it, that the architect is actually a detriment to the project and should not have a prime role in the work.

Owner’s concerns over cost and time have resulted in increased usage by the owner of the design/build project delivery system, where the design/build entity guarantees the cost and design/construction time. Many owners require the certainty of cost and time they believe is provided by a design/build agreement. Under such an agreement, the cost is contractually fixed and the design/builder obligates itself to complete the project within a specified time. If the design/builder fails to construct the project for the stated contractual amount and within the stated time, the design/build entity will be responsible for all resulting damages. Owners find such a concept very attractive over the uncertainties of the traditional design-bid-build process. The increased use of design/build is definitely not of benefit to most architects, unless the architect is the lead entity in the design/build process.

The Committee saw the new B141 as a response to the increased use of design/build by addressing the owner’s two major concerns of cost and time. If the construction budget is exceeded by the lowest bona fide bid or negotiated proposal, and the owner wants to cooperate with the architect in revising the project scope and quality as required to reduce the cost of the work, the B141 contractually obligates the architect to redesign its documents at no additional cost to the owner. Most owners appreciate this provision of their contract with the architect, and find it to be reasonable. They believe that an architect should redesign at its own cost if the budget is exceeded. The acceptance of this contractual obligation places the architect in a better light with the owner. The owner perceives the architect to be responsible for his work product. However, the architect’s sole responsibility, and limit of that responsibility, will be to redesign the project to meet the budget requirements. This seems to be a reasonable business risk to be taken by the architect.

Some architects do not agree and feel it is unreasonable that they are required to redesign a project at no additional cost if it comes in over budget. Their reasoning is that they have absolutely no control over what a contractor will charge the owner to build a project. Arguably, that is true. Unlike the new B141-1997, the prior B141-1987, did not mandate that the architect redesign the project at no additional cost to the owner, unless the parties agreed in writing that a fixed limit of construction cost was established as a condition of the agreement. The prior B141-1987 has been revised and replaced by the new B151 - 1997, Abbreviated Standard Form of Agreement Between Owner and Architect. The provisions of the old B141-1987 are generally the same as the new B151, which states that there is no fixed limit of construction cost established as a condition of the agreement, unless such fixed limit has been agreed upon in writing by the parties. If you choose not to be contractually responsible for redesigning a project to bring it in on budget, use the B151-1997. Be aware, however, that owners expect that their architects be knowledgeable about construction costs. For the architect to argue that he cannot design to a particular budget is to invite a design/builder to take over the project.

NEUTRALITY OF DOCUMENTS

Some commentators have complained that the B141 has increased the risks and services that an architect must perform and they feel that the document is not slanted enough in the architect’s favor. In the past, owners have complained that AIA documents favor the architect and shift the architect’s liability to other parties. To add to the confusion, contractors believed that the documents favored both the owner and architect to the contractor’s detriment. When the 1997 documents were drafted, the Committee attempted to make them as neutral as possible, fair to all and favoring none. Some of the language within the documents exposes the architect to reasonable liability exposure. Others benefits the contractor or the owner. But when taken as a whole, the documents are neutral, and the risks assigned to the various parties are reasonable and in accordance with how projects are designed by architects and built by contractors. It is true that the new B141 requires the architect do more specific things for an owner that may actually increase the architect’s risk if not performed properly. Such things include providing specific deliverables during Schematic Design and Design Development; submitting a specific schedule for the architect’s services to be performed by specific milestone dates; keeping track of contractor shop drawing submissions; and tracking contractor payout requests and the status of payments for same, to name a few. These additional duties should be considered by the architect when determining a fee for services performed. Naturally, the owner and architect are free to change the scope of the architect’s services on a particular project to meet the owner’s needs. The potential services that architects can perform have been expanded, affording the architect a greater opportunity to serve the client, while at the same time increasing the architect’s overall compensation.

It is hoped that the parties to the new AIA Agreements will find them to be neutral, to fairly allocate risks and responsibility for the work to be performed. The same cannot be said of any attorney-drafted document. Hopefully, this will increase the level of trust among the parties, which in turn will benefit the successful completion of the project. If the parties begin a project without trust, the project is doomed to failure.

USE AIA DOCUMENTS TO MARKET YOUR SERVICES, INCREASE PROFITS AND REDUCE LIABILITY

As stated above, the new documents give the architect an opportunity to market professional services while the agreement is being negotiated. The way the documents, particularly B141, are constructed allows for the architect to provide greater services to the owner, thus increasing the architect’s compensation in the process. These documents far surpass any others that were previously prepared by AIA and should be of immense benefit to all who use them.

These documents are not, and cannot be, perfect. They are not intended to be used without any revisions. Any criticism that these documents do not work in every conceivable situation is simply unfair. Especially with the B141 and A201, the architect, along with the owner, must take the time and effort to modify the documents to fit each particular project. Taking the time to do this properly, however, will bring rewards of better relationships between the owner and architect, as well as decreased liability for the architect.