Why the AGC’s Membership Unanimously Voted Not to Endorse the 2007 Edition of the AIA A201 General Conditions documents

Why the AGC’s Membership Unanimously Voted Not to Endorse the 2007 Edition of the AIA A201 General Conditions documents

Information from Brian M. Perlberg, Esq., AGC Senior Counsel for Construction Law and Contracts

Recently the Associated Builders and Contractors Inc. (ABC) struck a deal to support the American Institute of Architects’ (AIA) contract documents.  In 2007, AGC’s 600-member board unanimously voted not to endorse the AIA A201 General Conditions document.  AGC’s decision was done after careful vetting with the AGC Contract Documents Committee and individual AGC chapters, all who expressed deep concerns that AIA A201 does not balance risk fairly, but instead significantly shifts risk to general contractors and other parties outside of the design profession.

The increased risk to general contractors stands in stark contrast to the role of architects who are bestowed immense authority without commensurate responsibility. AGC’s unanimous decision not to endorse the AIA A201 was the first time AGC did not endorse the document in more than 50 years. ABC’s recent action to encourage the purchase of AIA contract documents aside, there has been general consensus that the AIA A201 is certainly not in a general contractor’s best business interests.

Some highlighted, but certainly not an exhaustive list of concerns that place General Contractors at risk when confronted with the AIA A201 include:

Highlighted Concerns of the AIA A201

Restricts a Contractor’s Ability to Obtain Owner Financial Information (Section 2.2.1)

Obtaining timely and full payment is critical to any contractors business.  Consequently, obtaining project financing information in a timely matter is the lifeblood for Contractors to protect their business interests.  New language requires a Contractor to make a showing to obtain owner financial information once a project commences. A Contractor’s ability to stop work for an Owner’s noncompliance has been curtailed. Today’s economy makes this provision even more critical and the AIA’s approach more troubling.

Transfers Potential Liability When an Owner or Architect Impose Means, Methods, and Techniques (Section 3.3.)

If any damages occur when using Owner or Architect imposed means or methods, new language requires the Contractor to show any damage is “solely from those Owner required means, methods and techniques.”

Restricts Communications by the Contractor to the Owner (Section 4.2.4)

Contractors are contractual directed to funnel all communications through the architect, rather than direct party communications, which are considered best practice. The A201 references the Architect more than 260 times in just the general conditions document making their role pervasive and creating unnecessary contractual silos.

Inserts an Owner’s involvement with Payments Between A General payment to a Subcontractor  (Section 9.5.3 and 9.6.4)

Owners are now given the discretion to issue joint checks for a General and Subcontractor. Also, Owners may require written evidence of a Contractor’s payment to its Subcontractors.

New Unclear Standards When Encountering Differing Site Conditions (Section 3.7.5)

New language requires an immediate work stoppage upon encountering human remains, burial markers, archaeological sites or wetlands.  Definitions of such conditions are not provided.

Inserts an Owner/Architect into the Approval of a Contractor’s Superintendent (Sections 3.9.2-.3) 

Creates a new Owner/Architect approval process for a Contractor to designate or to change a Contractor’s project Superintendent.

Creates Dire Consequences Regarding Submittal Schedule

(Section 3.10.2)

A Contractor must provide a written submittal schedule that must be approved by the Architect.  Failure to meet this new requirement will prevent a Contractor from obtaining time or cost adjustments based on actual time submittal reviews.

Creates New Exposures for Unanticipated Encountering of Hazardous Materials (Sections 10.3.4-10.3.5) 

When a Contractor handles hazardous materials which are not anticipated at the worksite, the Contractor is now required to indemnification the Owner.

Defective Construction Insurance Coverage (Section 11.1.7)

   New language requires a Contractor to provide insurance that does not appear to exist for “continuing operations” after a Contractor has completed a project.

          Muddies the Water for Initial Decisions (Section 15.2.6) 

The A201 creates an ambiguous trigger which will likely restrict a Party’s ability to dispute an initial decision if a 60-day timeframe is not met.