How does an AIA Consultant Agreement work?
AIA Consultant Agreements are focused on starting the relationship where the consultant is hired to render services to the architect relative to the project upon which the architect is serving. AIA Consultant Agreements define the scope of the work, fees, and schedule for the consultant to follow for the duration of the project. The agreements generally start off describing the project and then detail the professional services being provided, the schedule, supplemental exhibits and the additional terms and conditions governing the work . In addition, these documents also include all definitions needed to clarify the contract in a manner that best furthers the interests of the architect, consultant and owner. The agreements cover the obligations and responsibilities of the parties and put limits on how and when the parties can seek money from each other. The consultant agreements assure all parties that they retain the ability to ask the courts or arbitration panels to enforce their rights in case the other party does not live up to their obligations under the contract.
Elements of an AIA Consultant Agreement
An AIA consultant agreement is generally a short document. It begins with the date of the contract and an identification of the owner and consultant. The first major component is identification of the Project. As with any contract with the opportunity for ambiguity, careful attention should be paid to weaving in the Project description, project drawings (if needed) and a list of any documents (including books or reports) that will be part of the scope of services.
The next major component is a list of services for the consultant. Clause 3.1 is a pre-defined list of 12 categories of work that are typically included in the scope of services. The owner and consultant can modify the scope and omit and other categories of work. Fortunately, the Owner has the ability to charge surcharges in certain circumstances, including situations where the Consultant fails to perform the contracted work timely and fails to respond to the Owner’s schedule inquiries. But if the Contractor is unable to continue work on the Project, there are some unfortunate circumstances (clauses 6.2.1 and 6.2.5) under which services performed by the Consultant are deemed complete – even though a significant portion of the Consultant’s work remains.
The next major component is identification of the time of payment. If you are looking to avoid scope creep, it is important to include the stipulation that the Owner may withhold evidence of each Consultant’s continuing obligations under the contract. The Agreement also clarifies that the Owner is not required to withhold payment of fees that the Consultant may have a right to obtain from the Contractor. These provisions, along with those governing the Architect’s payment applications, are important to uphold for all parties to understand that AIA Consultant Agreement holder does not have a claim against the Owner for payment if construction is not completed.
The last major component in the AIA Consultant Agreement is identification of the responsibility and the ability to not only enforce lien rights, but also to release them. Recall that the Consultant establishes fee restrictions for the Contractor; accordingly, it is important to allow the Owner the ability to receive lien releases only when the balance owed to the Contractor is equal to or less than the Enforcing Lien Amount. Further, if there are any delays to the project that are caused by failure of the Consultant to perform its services, the Agreement allows the Owner to stop work until payment has been made or a bond has been provided to the Owner for any stop work claims made by the Contractor against the Owner.
The benefits of AIA Consultant Agreements
The most significant benefit of using a standardized contract like the AIA consultant agreement is the broad definition of "single document." The AIA and other design industry trade associations drafted these forms to consolidate all of the documents relating to the design process into one unified agreement. This consolidation also follows the spirit of the legal concept of integration (as discussed here, here and here). In the AIA world, the designer and the owner agree to be bound to contractual terms not just by signing one document, but by the entire set of integrated documents circulated among the parties.
AIA consultant agreements also are advantageous because they are already written in a way that tries to strike a fair balance between the interests of the designer and the client. The agreements will not have a guaranteed price or time, but they provide a basis to manage client expectations to a reasonable level, and add some protection for the designer against unreasonable demands by the client.
The agreements also seek to provide some level of protection for small and medium-sized design firms who may not be appropriately insured. While small companies often assign their agreements with their employees as collateral for loans, they also should ensure that their independent contractor agreements do not place them at risk if their independent contractors fail to fulfill their obligations under a contract. For more on these issues, see our discussion of vicarious liability and limits on liability.
Finally, an often overlooked benefit of the AIA consultant agreement is the cost. Many local AIA chapters will provide blank copies of these agreements for little or no cost to nonmember firms. Even for nonmembers, the cost of purchasing AIA forms is small compared to the expense of consulting a lawyer on more bespoke agreements or disputes arising out of those agreements.
Pitfalls with an AIA Consultant Agreement
While the AIA Consultant Agreement has proven to be a successful option for many, its use can sometimes present challenges. There are a few common issues that come up when drafting or using an AIA Consultant Agreement. So knowing about these potential issues may help you avoid unnecessary misunderstandings or disputes down the line.
Negotiation Difficulties
One of the biggest struggles with an AIA Consultant Agreement is negotiating with the consulting team. One of the most common circumstances where this occurs is when a prime consultant is drafting their own contracts with consultants, usually on a dotted line through the AIA form’s second signature line. The consultant may balk at the idea of being hired under the prime consultant’s own contract and expect the prime consultant to hire them under the AIA form. In general, this is not an unreasonable expectation when the AIA forms are used as intended. The AIA even requires, in one of its official FAQs, that the prime consultant enter into an agreement with its consultants that is "consistent with the scope, terms and conditions of [the AIA] form." In other words, the AIA expects the prime consultant to use the AIA form in conjunction with the B101 and have two separate agreements with the Architect and the AIA Consultant Agreement.
Some prime consultants may resist this advice, believing that this adds liability to them. They may also be concerned about the cost to the owner in paying for the prime consultant’s agreements. However, the model form suggested by the AIA would reduce the risk to the prime consultant of being held responsible for the consultant’s mistakes. It also protects the prime consultant’s intellectual property (the documents and information it provides to the consultant) from being copied by the consultant’s other clients. The cost to an owner would be no different than if the AIA form were the only agreement. The total costs of the project would be the same either way; the prime consultant would be paying the consultant out of funds it received from the owner.
The form agreement generally will not apply to design-build agreements.
In addition, it is critical that the prime consultant issues purchase orders for the consultants and then complies with any requirements for invoicing and purchase order purposes. Otherwise, the owner could be surprised by the invoices of consultants who were not previously vetted by it. The owner likely negotiated terms acceptable to it with the prime consultant but not with these consultants.
Consultants can also be difficult if they believe their abilities are being disrespected. For instance, a prime consultant may insist on reviewing and approving changes made by the consultant to prime consultant documents. However, the AIA form does not require the prime consultant to approve changes. A consultant’s request for the prime consultant’s approval of its changes can be an attempt to exert control over the prime consultant rather than an effort to ensure the prime consultant is satisfied. A more reasonable alternative might be the AIA’s Integrated Project Delivery form. The AIA Consultant Agreement can be a great tool for coordinating a consulting team, but problems can arise when the prime consultant believes managing the consultants is consistent with the prime consultant’s obligations to the owner. The AIA does not always agree with this approach. That is why using a form or a set of common rules is best. Regardless of the outcome, the goal should always be clear and open communication between the prime consultant and its consultants. Open and clear communication will help avoid and reduce the issues that arise while playing the telephone game by ensuring the prime consultant and its consultants are clear on each other’s roles and responsibilities.
Negotiation strategies for an AIA Consultant Agreement
As is often the case with agreements, AIA Consultant Agreements are heavily negotiated by the parties. It is always a good idea to be prepared when negotiating any agreement but especially so when negotiating an AIA contract form or other form of agreement. Like the AIA Owner-Architect Agreement the AIA Consultant Agreement defines rights and obligations that can be onerous to the party who must bear the burden of those obligations. It is very important not only to be able to identify those provisions, but also be able to affordably resolve those issues in a mutually agreeable manner.
The most common areas of negotiation are in the scope of services and the compensation provisions. These are the areas that are most likely to benefit one party or the other. The important thing to remember though is that when negotiating these areas, make sure both parties have a complete understanding of what is to be performed and at what cost. If both parties fully understand the scope of services and the associated costs , reaching an agreement should be relatively easy.
AIA Documents are written in a specific language that carries with it certain meanings and interpretations. It is highly recommended to reach out to a construction attorney to help you review, analyze and negotiate the AIA Consultant Agreement. The AIA Consultant Agreement is the professional’s lifeblood and should be reviewed thoroughly prior to executing not only the initial agreement but also all of the amendments that are entered into on the project. The AIA General Conditions that are incorporated into the AIA Consultant Agreement by reference and are frequently amended as the project proceeds or goals change on the project. The AIA Consultant Agreement should not only be reviewed at inception but all of amendments and attachments should be reviewed periodically throughout the life cycle of the agreement to ensure the Consultant is fully protected and to facilitate payment for services.
Legal issues surrounding an AIA Consultant Agreement
In addition to the issues related to overall contract negotiation and execution, there are a number of legal considerations that one should bear in mind when drafting or entering into an AIA Consultant Agreement as well. For example, it is essential to ensure that the Agreement adheres to the requirements of the building permit system in effect in the local jurisdiction where the project will be constructed and to review the requirements of any applicable professional boards (such as a state Board of Architecture or Board of Engineering) to ensure compliance with their requirements as well.
In some jurisdictions, an unlicensed architect or engineer may enter into a contract to provide professional services on a project but may not be able to sign and seal architectural or engineering drawings or perform any other acts that can only be performed by a licensed architect or engineer. This article was written in connection with an AIA Standard Form AIA B101-2017 Standard Form of Agreement Between Owner and Architect to provide additional descriptors regarding the responsibilities of an Architect and the constraints in the systems used to allow Architects to comply with state laws. However, similar constraints and limitations can be imposed on Consultants and their services as well so it is important to confirm what services your Consultant can legally engage in with the local jurisdiction and state boards of architecture, engineering, or other relevant licensing boards.
How to select the best AIA Consultant Agreement for your undertaking
There is no universal "one-size-fits-all" contract provision. As mentioned in the introduction, the AIA has four standard agreements for consultant services; three of these are suitable for most projects. When reviewing the AIA standard forms, be aware that they have a "one size fits all" approach in that they do not differentiate between types of consultants.
The Design Services Agreement (B101) has an attachment that allows the parties to insert the services provided and has a menu of standard services for the owner to select from. Because it is adaptable to most design situations, the B101 is the recommended starting point for any unique situation.
Once you have reviewed the standard forms, you can make changes to any provision you deem necessary to ensure that the contract works for your particular project. For example, the B101 provides for construction phase services of 15 percent of the total services per the schedule. Sometimes this is too high or low. The parties can and should adjust this figure as necessary.
Typically, as the size of the project increases, the sensitivity of the cost and schedule becomes greater. The consultant agreement and procurement process should address the complexity of the project and ways to mitigate these risks rather than transferring them to the consultant. In cases where the project will require consultants to work together , such as a large renovation with multiple consultants, or a new building and interior with multiple consultants, the Owner should consider the involvement of a prime consultant. The prime consultant is responsible for coordinating the work of the other consultants and integrates the design process. The prime consultant has a direct contractual relationship with the owner; the prime consultant is considered the architect of record. Prime consultants should be retained for projects of considerable scale and complexity—typically projects with two dozen or more different consultants involved.
For any project, first consider whether you need additional AIA forms, such as the AIA G201 (Standard Form of Architect’s Design and Construction Administration Services) and AIA G202 (Project Design and Construction Management Administration). These forms address the owner-architect relationship and establish procedures by which efficient and effective construction and administration can take place for the design architect.
In addition, the AIA has a series of new forms for complex projects. These new forms support the Integrated Project Delivery or IPD delivery method.