2007 Changes to AIA A201 General Conditions
By: JOSEPH G. SPRINGER
January 2008
The American Institute of Architects’ (“AIA”) family of construction contracts are the most commonly used construction contracts in the United States. The AIA’s A201 “General Conditions,” last updated in 1997, has undergone a significant revision, with the new version released on November 5, 2007. The A201 General Conditions are incorporated into many AIA construction contracts, including the most commonly used contracts between Owners and Contractors and between Contractors and their Subcontractors. The A201 also establishes many of the rights and obligations between the Owner and the Architect. Even if you do not typically use the AIA documents, you should know about these changes, because clauses and concepts in the AIA documents are commonly found in non-AIA contracts.
1. New “Check the Box” Dispute Resolution.
The AIA contracts have required that all disputes be decided by binding arbitration since 1888. Many Contractors and Owners, however, have deleted these provisions requiring binding arbitration. While the A201-2007 still requires mediation before any binding dispute resolution process, the new form allows the parties to literally “check a box” to determine whether disputes will be resolved by arbitration, litigation, or “other.” If no box is checked, the default is litigation, and not arbitration. If the parties choose binding arbitration, the parties may also choose their own provider of arbitration services. This is a change from the A201-1997 that requires that the arbitration be administered by the American Arbitration Association.
2. Allowing the Architect and Other Parties to be Joined in Arbitrations.
The A201-1997 expressly prevented a party from joining the Architect as a party in any dispute between the Owner and the Contractor. Many Owners objected to these special protections afforded to the Architect. To address these concerns, the A201-2007 allows the Architect, or any other party “whose presence is required if complete relief is to be accorded in arbitration,” to be joined in any dispute between the Owner and the Contractor that involves a “common question of fact or law.”
3. Expanded Period for Owner to Assert Claims.
The A201-1997 provided that the statute of limitations for claims against the Contractor would begin upon substantial completion of the construction project. In contrast, Minnesota, as well as several other states, follows the “discovery rule” – the statute of limitations only commences when the Owner discovers or should have discovered the Contractor’s breach of contract. The A201-2007 has done away with the attempted contractual limitation on the Owner’s rights and instead provides that the statute of limitations will be established by applicable state law. Despite allowing the “discovery rule,” the A201-2007 also includes a 10-year “statute of repose” that provides that any claims against the Contractor must be asserted within 10 years after substantial completion.
4. New Restrictions on Financial Disclosures Required of Owners.
The A201-1997 required that the Owner furnish reasonable evidence to the Contractor that the Owner could pay the Contractor, both as a condition to starting and during the course of the project. Many Owners have complained about the obligation to continually provide the same financial information during the course of the project. To address these concerns, the AIA has restricted the Owner’s obligation to provide financial information during the course of the project—under the 2007 revisions to the A201, the Owner is only obligated to provide evidence of the ability to pay during the course of the project (a) if the Owner has failed to make payments to the Contractor as required under the Contract Documents; (b) where changes to the work materially changes the contract sum; or (c) where the Contractor has identified in writing a reasonable concern regarding the Owner’s ability to pay.
5. New Provisions Regarding Concealed Conditions.
The A201-2007 has added provisions addressing a situation in which a Contractor encounters human remains or burial markers, archaeological sites, or wetlands that the Owner had not previously disclosed to the Contractor. A Contractor discovering any of these newly-added concealed conditions must immediately cease operations and provide notice to the Owner and Architect. The Owner is then obligated to obtain any government approvals required to resume construction, and the Contractor may request that the contract time and price be adjusted accordingly.
6. New Possibility for an Initial Decision Maker.
Under the A201-1997, the Architect initially decided any claims or disputes on a construction project. Contractors often allege that Architects cannot be impartial since they were hired and are being paid by the Owner. For the same reasons, Owners may feel betrayed if an Architect rules in favor of the Contractor. To address these concerns, the proposed A201-2007 allows the parties to fill in the name of another person to act as the “Initial Decision Maker” for certain disputes. The Architect remains the Initial Decision Maker if the parties do not identify a different Initial Decision Maker. If a party does not agree with the decision of the Initial Decision Maker, the party may demand mediation and then dispute resolution in the forum provided under the contract.
7. Additional Insurance Requirements.
The A201-1997 required that the Contractor maintain “Project Management Protective Liability Insurance.” Few Contractors carried this coverage and most Owners deleted this requirement. The A201-2007 deletes the requirement for Project Management Protective Liability Insurance and instead requires that the Contractor name the Owner, Architect, and the Architect’s consultants as additional insureds under the Contractor’s Commercial Liability coverage. Additionally, the A201-2007 requires that the Contractor maintain completed operators coverage.
Takeaway
The 2007 revisions to the AIA “General Conditions” contain many new concepts and provisions. Even if you do not use the actual AIA forms, concepts and provisions from the AIA contracts are often found in non-AIA construction contracts. Consequently, you may see these new concepts and provisions gradually find their way into many non-AIA construction contracts.