Reflecting Reality: 4 Major Modifications in the AIA A133-2019 Update Lexie Rae Pereira, J.D./M.B.A
"It is no secret that the construction industry is sometimes slow to adopting technological advances; however, some contractors are quick to embrace change. By swiftly adapting to updates to the American Institute of Architects ("AIA"), some contractors have the ability to reap the benefits of embracing change. One of the most recent AIA updates involves the AIA A133-2019, Standard Form of Agreement Between Owner and Construction Manager as Constructor where the basis of payment is the Cost of the Work Plus a Fee with a Guaranteed Maximum Price ("A133-2019")."
The A133-2019, similar to its 2009 predecessor, is intended for use on projects most commonly referred to as Construction Manager at Risk (“CMR”). The CMR project delivery method allows an owner to enter into contract with the contractor before the design is completed, which means that the CMR contractor is engaged in project planning so as to benefit the project with its ‘contractor expertise’ during the design phase. See Joel Lewin & Eric Eisenberg, 57 Mass. Prac., Mass. Construction Law, § 17:42 (Nov. 2019 Update). Typically, this results in the CMR contractor providing a variety of pre-construction and construction management services during the design phase, including cost estimating, design and constructability reviews, material and equipment selection, life cycle analysis, value engineering, preparation of bid packages, scheduling, and cost control. At the conclusion of the design phase, the owner determines whether to negotiate a Guaranteed Maximum Price (“GMP”) for the Construction Phase by executing a GMP Amendment (Exhibit A) or to use the completed design as the basis of further bidding to other construction managers.
4 Major Modifications
In spirit of this project delivery method and the industry’s increasing efficiency, the AIA modified its A133 in four major ways: (1) expansion of the Preconstruction Phase Services, (2) update of Exhibit A relating to Construction Phase commencement and Substantial Completion, (3) addition of a new Exhibit B – Insurance and Bonds, and (4) general alignment with the other AIA updates.
(1) Expansion of the Preconstruction Phase Services
Consistent with the goals of CMR and the effect of technology on this project delivery method, the A133-2019 generally provides the parties with greater flexibility to define the scope of preconstruction services. For example, § 3.1.14 added a new fill point for parties to describe “any other Preconstruction Phase services to be provided by the Construction Manager.” In addition, Article 3 supplies the Constructor Manager with a greater advisory role, such as whether to establish a Building Information Model (“BIM”) or other digital data protocols (§ 126.96.36.199) and a greater collaborating role, such as working together with the Architect to reconcile cost estimates (§ 188.8.131.52).
But, with greater power comes greater responsibility. Note that § 3.1.1 now imposes an explicit standard of care upon the contractor for the performance of the preconstruction services: (See Example 1 below)
(2) Update of Exhibit A relating to Construction Phase commencement and Substantial Completion
The updated A133 anticipates the adoption of the GMP Amendment (Exhibit A) and therefore reflects the realities of the two-parted CMR delivery method. In fact, the new Exhibit A explicitly recognizes that parties may find it in their mutual interest to commence a number of Construction Phase activities during the Preconstruction Phase. This change makes the form more adaptable to the reality that certain aspects of construction, such as ordering long lead items, demolition, site work, etc. often commence during the Preconstruction Phase and therefore before the Owner issues the full notice to proceed. The updated Exhibit A and § 184.108.40.206 seek to address these realities as follows: “The Construction Phase shall commence upon the Owner’s execution of the Guaranteed Maximum Price Amendment or, prior to acceptance of the Guaranteed Maximum Price proposal, by written agreement of the parties. The written agreement shall set forth a description of the work…any insurance and bond requirements…”
Similarly, the AIA took a realistic approach when it comes to Substantial Completion in Exhibit A. Now, § A.2.3.2 provides fill-ins for Substantial Completion of certain phases of the Project (taking place prior to the Substantial Completion date of the entire Work). Although, the new liquidated damages fill point in § A.2.3.3 reminds users that the Substantial Completion dates of the phases are not to be taken lightly.
(3) Addition of a new Exhibit B – Insurance and Bonds
The new Exhibit B is the fraternal twin of the A102-2017’s Exhibit A. With both documents, the AIA opted for straightforward fill-in-the-blanks, as opposed to the previous open-ended approach. Though Exhibit B functions as an easier reference to these provisions, it is important to note that additional terms related to insurance are found in Article 11 of AIA Document A201–2017. "The AIA encourages parties to incorporate the A133-2019 Exhibit B. In fact, the failure to do so could result in confusion about the extent of, and responsibility for, insurance coverage."
(4) General alignment with the other AIA updates
Lastly, a number of revisions to the formatting of the 2019 A133 family of documents align with the 2017 updates of the design-bid-build Owner Contract Agreements:
Though the A133-2009 will continue to be supported by the AIA document software until May 31, 2021, taking the time now to become familiar with the A133-2019 is important given its relation with the A201-2017 (which has overridden the A201-2007). Be on the lookout for the next AIA rollout coming later this year and be sure to embrace the realities of the industry and quickly implement those changes.
Lexie Pereira is a J.D./M.B.A. student at Boston College Law School studying to become a construction attorney. She is currently an intern in the legal department at Consigli Construction Co., Inc. This summer, she will be rejoining Hinckley Allen as a Summer Associate, with a focus in the Construction and Public Contracts group.
About the Author
Lexie Rae Pereira, J.D./M.B.A. Candidate Boston College Law School
Lexie Pereira is a J.D./M.B.A. student at Boston College Law School, studying to become a litigator, with a focus in construction law. Outside of school, she is a legal intern at Consigli Construction Co., Inc. BP