In May 2012, the American Institute of Architects (AIA) released five new documents for use on sustainable projects:
1. A101-2007 SP, Standard Form of Agreement Between Owner and Contractor;
2. B101-2007 SP, Standard Form of Agreement Between Owner and Architect;
3. A201-2007 SP, General Conditions of the Contract for Construction;
4. C401-2007 SP, Standard Form of Agreement Between Architect and Consultant; and
5. A401-2007 SP, Standard Form of Agreement Between Contractor and Subcontractor.
Each of the new Sustainable Projects (SP) contracts updates the AIA’s current catalog of documents for traditional, non-sustainable projects by including provisions related to sustainable responsibilities and risk. Although most of the standard AIA documents received only modest revisions, the A201-2007, General Conditions of the Contract for Construction, received several important additions. This article highlights some of the significant benefits and burdens assigned to contractors under the A201-2007 SP.
Sustainable Objective, Sustainable Measures, and the Sustainability Plan
The A201-2007 SP includes a number of new definitions about which contractors should be aware. Under Section 3.1.2 of the A201-2007 SP, contractors are required to “perform the Work in accordance with the Contract Documents, including any Sustainable Measures identified as the responsibility of the Contractor in the Sustainability Plan.” A “Sustainable Measure” is a design or construction element that must be completed to achieve the “Sustainable Objective.” The “Sustainable Objective” is the owner’s “goal” to achieve certification of the project or benefit the environment. The Sustainability Plan identifies the parties’ roles and responsibilities associated with achieving Sustainable Measures and the Sustainable Objective. Because the “Sustainability Plan” is the road map for sustainable objectives, credits, and responsibilities, it is imperative that contractors obtain a copy of the Sustainability Plan, ascertain the Sustainable Measures for which they are responsible, and include a copy of the Sustainability Plan in subcontracts as part of a flow down provision to ensure that subcontractors share the obligations for Sustainable Measures within their scope of work.
Increased Documentation Requirements
Several provisions of the A201-2007 SP require increased documentation on the part of contractors. Section 3.15.2 requires contractors to prepare and submit a “construction waste management and disposal plan setting forth the procedures and processes for salvaging, recycling or disposing of construction waste generated on the Project.” Likewise, Section 3.11.2 requires contractors to prepare and complete “the Sustainability Documentation required from the Contractor by the Contract Documents, including any Sustainability Documentation required to be submitted after Substantial Completion.” Further, contractors must submit the required documentation to the architect in accordance with schedules or deadlines or in the absence of schedules, with “reasonable promptness.” A201-2007 SP §3.11.2. Contractors should be prepared to coordinate, supervise, and comply with the increased documentation requirements of A201-2007 SP, much of which must be provided by subcontractors.
Disclaimer of Warranty/Guarantee
To the benefit of contractors, Section 3.5.2 includes an express disclaimer that nothing in the contract documents “shall be construed as a guarantee or warranty by the Contractor that the Project will achieve the Sustainable Objective.” Contractors should never guarantee a project will achieve certification, and the AIA’s disclaimer reinforces this principle.
Waiver of Consequential Damages
The AIA has included a mutual waiver of consequential damages in its standard agreement forms since 1997. The importance of this waiver as a tool to mitigate potential damages is especially applicable to projects seeking sustainable certification, specifically for contractors. Consistent with this practice, Section 15.1.6 now waives a third category of damages resulting from “failure of the Project to achieve the Sustainable Objective.” Contractors should be wary of owners who attempt to remove this category of damages from the waiver provision. Such removal could expose contractors to exorbitant damages, including, unachieved energy savings, unintended operational expenses, lost financial or tax incentives, or unachieved gains in worker productivity.
Substitution of Materials
Under the A201-2007 SP, contractors will be required to include with any substitution request “a written representation identifying any potential effect the substitution may have on the Project’s ability to achieve a Sustainable Measure or the Sustainable Objective.” A201-2007 §184.108.40.206. Equally troubling, the architect and owner are entitled to rely on the contractor’s representation. Because contractors typically do not have the expertise to offer up such representations, contractors that do make such representations without the requisite expertise will expose themselves to liability for the negative effect of the substitution on certification or the failed performance of a substituted product. Savvy contractors that cannot remove this provision will have little incentive to propose cost saving substitutions for fear of taking on design liability or misstating the effect of the substitution on the Sustainable Objective, chilling value engineering, and driving up project costs.
Substantial and Final Completion
The A201-2007 SP prohibits an owner from making certification a condition precedent to the issuance of a Certificate of Substantial Completion (Section 9.8.1) or a final Certificate of Payment (Section 9.10.1). Contractors, therefore, have the opportunity to be paid even if the project is still awaiting certification, which could take months. Contractors, however, should expect owners to attempt to eliminate these provisions or otherwise modify them to allow for some hold back as the project navigates the certification process.
The new AIA SP documents provide a solid contractual foundation for industry participants, but are not a panacea for the challenges of sustainable projects. Contractors should familiarize themselves with the other new terms and definitions, negotiate unfair risk-shifting provisions, and prepare to complete the additional responsibilities provided for under the A201-2007 SP when working on sustainable projects.
Logan A. Hollobaugh is an associate in the Chicago office of Ogletree Deakins.