The most common project delivery method remains the design-bid-build method, in which an owner hires an architect to design the project. Once the design is completed, interested contractors bid on the project, and the owner selects the winning bidder to build the project. In recent years, however, we have seen a marked increase in the use of alternative project delivery methods—most notably, the construction manager as constructor (CMc) method.
Under the CMc (also known as construction manager at risk) delivery method, the Owner teams up with the general contractor (now referred to as the construction manager or CMc) early in the design process. The CMc provides preconstruction services, such as cost estimating, value engineering, and feedback on constructability and scheduling. Once the design is complete, the CMc is then retained to actually build the project, usually being compensated for the cost of the work plus a fee, either with or without a guaranteed maximum price.
In 2009, the American Institute of Architects released its AIA A133-2009 and A134-2009 Standard Forms of Agreement Between Owner and CMc where the basis of payment is the Cost of the Work plus a Fee either with (the A133) or without (the A134) a Guaranteed Maximum Price. As the CMc delivery method gained popularity, so too did the use of these form documents.
As you probably know, the AIA updates its forms every ten years. The year 2017 saw significant updates to the AIA’s most commonly used design-bid-build forms, with the most notable change being the removal of the insurance provisions from the A201 General Conditions for Construction and into a new stand-alone insurance and bonds exhibit. The AIA has now adopted that change, as well as some other less significant modifications, into its recently released 2019 updates to the A133 and A134 CMc forms.
If you use the A133 or A134 CMc forms, the following is a quick summary of the key 2019 updates of which you should be aware:
- Insurance Exhibit: The A133-2009 was coordinated for use with the 2007 version of the A201 General Conditions. The A133-2019 is now coordinated for use with the 2017 updated A201. Since the updated A201 requires the use of a standalone insurance exhibit, the AIA has released a similar exhibit for use with the A133 and A134-2019 forms.
- Preconstruction Phase Services: Absent from prior iterations of the CMc agreements, the 2019 updated A133 and A134 now impose performance standards and insurance obligations on the CMc for Preconstruction Phase services. A CMc must now “exercise reasonable care in performing its Preconstruction Service” and insurance requirements for the CMc during the Preconstruction Phase now mirror the insurance requirements for the project Architect.
- Commencement of Construction Phase: Recognizing that certain aspects of construction, such as demolition, long-lead time material orders, or site work, may actually commence during the preconstruction phase and before the Owner issues a full notice to proceed, the 2019 CMc forms now contain a provision affording the parties greater flexibility to define when the construction phase commences. The agreements now state that the Construction Phase commences upon the Owner’ execution of the Guaranteed Maximum Price proposal (in the A133) or approval of Control Estimate (in the A134), or prior to such time “by written agreement of the parties” which shall provide “a description of the Work to be performed by the Construction Manager, and any insurance and bond requirements…” for such work.
- Substantial Completion Updates: Both the A133 and A134 have slightly modified the language for establishing the date of substantial completion. The A133-2019 Exhibit A (the GMP Amendment) now contains an expanded section on substantial completion which is consistent with the 2017 updates to the Owner/Contractor agreements. The A134-2019 now contains an entirely new section in the agreement itself that allows the parties to establish a date for Substantial Completion.
The AIA’s updates typically take about a year to see widespread adoption, as most users like to avoid making changes to their forms for as long as possible. However, because the A133-2019 is designed for use with the A201-2017, and many have already adopted the updated A201, we may see the A133-2019 take hold sooner than we have seen with other documents. If you want to be ahead of the curve, the construction lawyers at Easter & Cavosie are ready to help you implement the updated AIA forms on your next CMc project.