AIA introduces both 'transitional' IPD and single-purpose entity contract documents

August 11, 2010

The American Institute of Architects introduced new contract documents at the 2008 AIA show in Boston to address the growing demand for integrated project delivery from building owners, architects, and construction firms.

The new contracts were designed to fit both firms that are already deep into IPD and those just testing the waters of moving design and construction collaboration to the front end of the design process. AIA's “transitional” IPD agreements (documents A195 2008, B195 2008, and A295 2008) all maintain the separation of contractual relationships common to the construction industry. Architecture firms and general contractors can use them to incorporate building information modeling and IPD into a project without the risk of being jointly liable for cost overruns, accidents, and other unforeseen difficulties.

Form C195 2008, however, requires the building owner, architect, and construction manager to form a single-purpose entity (SPE) as a limited liability corporation for the entire length of the project. In an LLC, no member is individually liable for the debts and liabilities of the entity, but only for the member's own debts. Still, the risks and liabilities of the members of the LLC are more aligned because they're effectively going into business together. All members must make capital contributions to cover the entity's expenses. Other project members, such as engineers, may initially become members of the LLC under Form C195 if their role on a project is large enough, but the contract stipulates that at least the owner, architect, and construction manager be included.

“With the transitional agreements we're trying to implement a lot of the principles of integrated project delivery,” said Suzanne Harness, Esq., AIA, managing director and counsel of AIA Contract Documents. “Conceptualization criteria, the design phases outlined in 'Integrated Project Delivery: A Guide.,' all these things can help eliminate the problems of waste and inefficiency without going fully into an SPE agreement.”

All the agreements stipulate the parties utilize BIM to the greatest extent possible. Team members are contractually required to meet and decide upon the types of software to be used in the project and establish protocols, standards, and tolerances for all of them. In the transitional documents the architect is responsible for the integration and coordination of the models throughout the design and construction of the project. In the SPE agreement, control of the model is up to the members. Standard mediation and arbitration are retained for the transitional documents, but the SPE agreement requires the parties in the LLC to establish their own dispute resolution board for disputes that can't be decided unanimously by the Building Team members serving on the LLC's governance board. Meeting goals such as LEED certification, target costs, and deadlines can unlock shared profits for contractually stipulated incentives in the SPE agreement as well.

“This is shared pain or shared gain,” said Phillip Bernstein, FAIA, a member of the AIA California Council and an Autodesk SVP who worked on the development of the Form C195. “The beauty of the single-purpose entity is that you really are in it together.”

The new documents are available now to members at www.aia.org/docs_default.

         
 

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