An association of construction owner executives, who represent Dupont Co., Intel Corp., Home Depot and other major corporations, will soon publish a standard form of agreement for owners and general contractors that it says remedies inequities in documents published by the American Institute of Architects.
The document, now in final draft, was written by attorneys who belong to the Associated Owners and Developers, Atlanta. Ira Genberg, the attorney who headed the project, says AOD's draft document combines in a single form the same provisions covered by AIA's standard form for contractors and owners and its standard form for general conditions. To emphasize the flexibility in its approach, AOD incorporates different options into one document.
Standard contract documents sold by AIA dominate the market. Since no project is built without the owner, Genberg says it makes sense that the owner's vision should be reflected in the agreement. "The architect has an extremely important role," he says. "But if the agreement is between owner and contractor, and the architect is not a party, it is much less clear that the architect should have a role in drafting it."
It is also unclear how many owners will use the new document. Another Atlanta-based owners' association, the Construction Owners Association of America, created its own standard forms of agreement two years ago. Some of its 350 members use the forms, and another 400 to 500 copies have been sold, says a spokeswoman. By contrast, AIA sells thousands of forms annually and its forms are used widely.
One of the AOD document's key provisions is the option to waive consequential damages, such as lost profit when a building is not ready in time. Under both AIA and Associated General Contractors standard forms of agreement, consequential damages are mutually waived. "On the surface, this seems fair," says Genberg, but in reality most of the damages an owner seeks are consequential ones such as loss of use, rental expense and lost profit, he adds. "The owner loses a lot," Genberg notes.
Another important AOD provision prevents architects who are terminated on a project from walking away with the plans. Under the 1997 revision to AIA Standard Form B141, an owner loses the right to use any plan if the architect is terminated for any reason, including the architect's own default. To AOD, that provision promotes the architect's interest above the project's.
To remedy that perceived deficiency, AOD's draft document grants the owner a limited, irrevocable license. If the owner defaults, the AOD form allows architects to seek damages and perfect lien rights to recoup losses.
Another provision of the AOD document contrasts with an AGC document that makes the owner responsible for paying a contractor's costs if a force majeure event occurssuch as adverse unusual weather. AOD absolves the owner of any cost and only requires that the contractor be given more time.
After a quick review of AOD's new document, Mark McCallum, AGC's senior counsel and associate executive director for staff services, termed it an improvement over what he describes as COAA's heavily biased documents. But he still finds the AOD document unbalanced. "Wise contractors won't get involved if they see this or will put in contingencies" for the risks, says McCallum. Adds Genberg: "If AGC liked it, I would be worried."
