The following summarizes important contract sections and provides bullet pointed analysis of particular issues to consider from the AIA 201 (2007 and 2017 versions) and the ConsensusDocs (2014 and 2017 versions). It is not intended to be all inclusive, but provides a summary comparison of the various documents.
Key Contract Issues
- Financial Assurances
- Design Risk
- Project Management/Contract Administration
- Consequential Damages/LDs
- Insurance and Indemnification
- What assurances do you have that the owner can pay for the project?
- The Contractor should have the right to request and obtain proof that the Owner has funding sufficient to pay for the Work. The provision should also provide that the Contractor may terminate the Contract if the Owner refuses to allow a review of funding documents, or should the Contractor reasonably determine that the Owner does not have sufficient funds to pay for the Work.
- A201 2007 Section 2.2.1; 2017 Section 2.2.1-2.2.2 A201
- 2014 & 2017 ConsensusDocs 200: Section 4.2
- Section 2.2.1 A201 2007 & 2017: Both editions require the Owner, upon Contractor’s written request, to provide, “reasonable evidence that the Owner has made financial arrangements to fulfill the Owner’s obligations under the Contract.” Thereafter, the Contractor may only request such evidence if (1) the Owner fails to make payments; (2) a change in the Work materially changes the Contract Sum; or (3) the Contractor identifies in writing a reasonable concern regarding the Owner’s ability to make payment when due. If the Owner does not comply, the Contractor may stop work.
- Additionally, A201 2017 Section 2.2.2 awards costs to the Contractor for demobilization and remobilization.
- Section 4.2: both before and after commencement of the Work, at the written request of the Constructor, the Owner must provide reasonable evidence of sufficient financial arrangements to fulfill its obligations. This is a condition precedent to Constructor’s commencing or continuing the work. Further, the Owner must notify the Constructor before any material changes in its funding condition occur.
- 2007 & 2017 A201: Sections 3.2.1 – 3.2.4
- 2014 & 2017 ConsensusDocs 200: Sections 2.3; 3.15, 3.3.1-3.3.2
- Section 3.2.1: “Execution of the Contract by the Contractor is a representation that the Contractor has visited the site, become generally familiar with local conditions under which the Work is to be performed and correlated personal observations with requirements of the Contract Documents.”
- Section 3.2.2: The Contractor does not have the responsibility to discover errors, omissions, or inconsistencies in the Contract Documents but, if the Contractor does discover any such issues, the Contractor must report them to the Architect.
Pursuant to the 2007 and 2017 versions of the A201, the Contractor must:
- Carefully study and compare the Contract Documents;
- Take field measurements;
- Observe site conditions affecting the work;
- The Contractor is liable if it fails to perform the obligation mentioned above and the failure to perform these obligations results in damages to the Owner.
- The Contractor is not required to ascertain whether the Documents are in accordance with applicable law, statute, ordinance, etc.
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- Under the Spearin Doctrine, the Party responsible for furnishing the completed design impliedly warrants its sufficiency and adequacy. U.S. v. Spearin, 248 U.S. 132 (1918). Accordingly, beware of any changes to this standard design risk provision that would require the Contractor to bear all costs arising from errors, inconsistencies or omissions that by reasonable study of the Contract Documents the Contractor should have discovered.
- Section 2.3: The Owner’s Design Professional provides architectural and engineering services except as otherwise required by section 3.15 and excluding services within the construction means, methods, techniques, sequences, and procedures employed by the Constructor in connection with construction operations. The 2017 version excludes design services delegated to the Constructor and services within the construction means, methods, techniques, sequences, and procedures employed by the Constructor in connection with construction operations.
- Section 3.15: The Constructor is not responsible for design criteria specified in the Contract Documents. If the Contract Documents specifically require the Constructor to be responsible for the design of a particular system of component, the Owner must specify all required performance and design criteria. The Constructor must then procure the services of a Design Professional but is not responsible for the adequacy of the performance and design criteria supplied by the Owner.
- Section 3.3.1-3.3.2: Before commencing work, the Constructor must examine and compare drawings and specifications with information furnished by the Owner or in the Contract Documents, relevant field measurements made by the Constructor, and any visible conditions that could affect the work. If the Constructor discovers any errors, omissions, or inconsistencies in the Contract Documents, the Constructor must report them in writing to the Owner. The 2014 provides that the Constructor is liable if it fails to perform this obligation and that failure damages the Owner. The 2017 version does not contain this provision.
- Constructors must take care in specifying any design responsibilities in section 2.3, including but not limited to performance specifications, equipment selections, preparation of shop drawings, etc.
- Constructor-initiated value-engineering changes may alter the Parties’ respective responsibilities concerning the adequacy of component designs and thereby shift risk for design responsibilities to the Constructor.
- 2007 & 2017 A201: Sections 3.9.1 – 3.9.3
- 2014 & 2017 ConsensusDocs 200: Section 3.4.1
- Section 3.9.2 & 3.9.3: The Contractor submits the name and qualifications of its proposed superintendent to the Owner and Architect (or to the Owner through the Architect). The Architect may reply within 14 days stating whether the Owner or Architect has reasonable objection or if the Architect requires additional time to review the choice. The Architect’s failure to respond within 14 days constitutes notice of no reasonable objection.
- Section 3.9.3: The Contractor shall not change a proposed superintendent to whom the Owner or Architect has made reasonable and timely objection. “The Contractor shall not change the superintendent without the Owner’s consent, which shall not be unreasonably withheld or delayed.”
- The only difference between the 2007 and 2017 versions is as follows: The 2007 version requires the Contractor to furnish the identity of its proposed Superintendent in writing to the Architect, who submits it to the Owner. The 2017 version does not specifically reference written notice but only requires that the Contractor notify the Owner and Architect of its proposed Superintendent.
- Constructor shall provide competent supervision for the performance of the Work. Before commencing the work, Constructor shall notify Owner in writing of the name and qualifications of its proposed superintendent(s) and project manager so Owner may review their qualifications. If, for reasonable cause, Owner refuses to approve the individual or withdraws its approval after once giving it, Constructor shall name a different superintendent or project manager for Owner’s review.
- ConsensusDocs 200 allows for more direct communication between the Owner and Constructor without an intermediary and balances decision-making responsibilities and exposure differently than the AIA. (See sections 2.3, 3.3, 3.15, 4.3, etc.).
- 2007 & 2017 A201: Section 4
- 2014 & 2017 ConsensusDocs 200: Sections 2.1 and throughout
- The Architect is the Contract Administrator. The Architect must become generally familiar with and keep the Owner informed about the progress and quality of the Work.
- The Architect is required to report “known deviations” and “observed” defects or deficiencies in the Work.
- The Architect acts as the Administrator “during construction until the date the Architect issues the final Certificate for Payment.”
- The Architect must respond to RFI’s in accordance with agreed time limits or “otherwise with reasonable promptness.”
- One change between the 2007 and 2017 editions is that the newer edition states that the Architect is required to be included in conversations between the Owner and Contractor only when related to the Architect’s services of professional responsibilities. The Owner must notify the Architect of conversations that relate to the Work even when they do not affect the Architect’s services or professional responsibilities. This allows more direct communication between the Owner and Contractor while maintaining the Architect’s ability to remain knowledgeable of discussions relating to its responsibilities.
2017 ConsensusDocs 200:
- Unlike the AIA A201, ConsensusDocs 200 virtually removes the Design Professional (Architect) from the intermediary role between Owner and Constructor.
- Instead, ConsensusDocs 200 places much of the supervision and contract administration duties on the Owner. Pursuant to section 3.10.1, the Owner and not the Design Professional issues a written order containing work instructions, now called an Interim Directive rather than Directed Change, to uncover work for the Owner’s inspection and review.
- Pursuant to section 3.11.5, the Owner and not the Design Professional notifies the Constructor when the Owner deems any part of the work or worksite to be unsafe. The Owner and not the Design Professional directs the Constructor to stop work and/or take corrective action.
- Additionally, under the ConsensusDocs Contract, the Owner, not the Design Professional, issues certificates of substantial completion and final completion pursuant to sections 9.6.1 and 9.8.1. The Owner may at its discretion seek the assistance of its Design-Professional to compile a list of items to be completed or corrected before issuing the certificates.
- It is important to note that the Design Professional’s role is largely controlled by ConsensusDocs 240, not 200. The Constructor generally does not have access to this agreement unless the Owner or Design Professional provides a copy.
- According to ConsensusDocs, this shift away from the central role the Architect plays under AIA documents allows the Owner to establish a role for the Design Professional during the construction phase of the Project that matches the Owner’s needs and desires.
- 2007 & 2017 A201: Section 3.10.1
- 2014 & 2017 ConsensusDocs: Section 6.2
- Section 3.10.1 of the 2007 A201 requires that the Contractor promptly after being awarded the Contract, prepare and submit a construction schedule providing for Work to be completed within the time limits required in the Contract Documents.
- This schedule shall be revised at appropriate intervals.
- The 2017 edition breaks down the schedule to contain date of commencement, interim milestone dates, date of substantial completion, apportionment of Work by trade or building system, and the time required for completion of each portion of the Work.
- Under section 3.10.2 of the 2007 and 2017 versions, if the Contractor fails to provide a submittal schedule, the Contractor is not entitled to any additional compensation or a time extension based on the Owner’s or the Architect’s slow processing of submittals, regardless of how long they take.
- The 2017 Contract replaces the term Contract Time and instead requires a “Schedule of the Work…formatted in detailed precedence-style critical path method that (a) provides a graphic representation of all activities and events, including float values that will affect the critical path of the Work and (b) identifies dates that are critical to ensure timely and orderly completion of the Work.”
- The Constructor must submit an initial schedule to the Owner only before, “first application for payment” and thereafter on a monthly basis. (Section 6.2.1).
- The Owner is allowed to change the sequences provided in the schedule as long as it does not “unreasonably interfere with the Work.” (Section 6.2.2).
- 2007 A201 Section 15.1.6 & 2017 A201 15.1.7
- 2014 & 2017 ConsensusDocs 200: Sections 6.5 & 6.6
- Both the 2007 and 2017 A201 Documents contain a mutual waiver of consequential damages, limiting the Owner’s and Contractor’s exposure to direct damages. Note, however, that if the Owner inserts a liquidated damages provision, however, it will have the ability to recover some agreed to amount (the per day liquidated damages amount) of what is otherwise being waived by this provision.
- ConsensusDocs 200 provides a limited mutual waiver of consequential damages.
- Section 6.6 provides that the Owner and Constructor agree to waive the more volatile of consequential damages arising out of the agreement as a default provision. If no items are listed, consequential damages not covered by insurance are waived.
- ConsensusDocs gives the Owner and Constructor an express opportunity to provide for liquidated damages instead of other damages that may be incurred because of a delay. Because this provision allows for the election of liquidated damages, it must be read in connection with the waiver of consequential damages found in section 6.6. A contract that allows the Owner to recover liquidated damages but otherwise prohibits the parties from collecting consequential damages, is not truly mutual.
- Is this good for you? Constructors should be cautious in electing to provide any liquidated damages in this section. Liquidated damages are intended to compensate the Owner and substitute for actual delay damages and/or lost revenues, Work for a mutual waiver of consequential damages and no liquidated damages. Constructors also should not agree to liquidated damages using a final completion deadline as opposed to substantial completion, as the trigger.
- On the other hand, of the Owner insists on either liquidated damages or maintaining the right to recover consequentials, it may be prudent for general contractors and construction managers to choose and a waiver of consequentials, with a cap on the liquidated damages. In doing this, the Constructor can at least measure its exposure.
- Most Contracts contain a claims process and, in such instances, the claims process must be followed, or claims potentially may be waived.
- “A Contractor seeking to recover payment in excess of the Contract price must follow the procedures set out in the Contract.” Sutton Corp. v. MDC, 423 Mass. 200, 207 (1996); Chiappisi, et al. v. Granger Construction Co., Inc., et al, 352 Mass. 174 (1967).
- 2007 A201 section 1.1.8 states that “[t]he Initial Decision Maker is the person identified in the Agreement to render initial decisions on claims in accordance with section 15.2 and certify termination of the Agreement under section 14.2.2.” The 2017 edition clarifies that the Initial Decision Maker may not show partiality to the Owner or Contractor. It also clarifies that he or she will not be liable for the results of interpretations and decisions rendered in good faith.
- 2007 A201 section 15.1.3 and 2017 A201 section 220.127.116.11 require work under protest. They also require the Contractor to preserve its rights in the event of a denial of its claim.
- 2007 A201 section 15.1.2 and 2017 A201 section 18.104.22.168 require that claims by parties must be initiated within 21 days after the occurrence of the event giving rise to such claim or within 21 days after the claimant first recognizes a condition giving rise to the claim, whichever is later.
- The Architect is the “default” Initial Decision Maker in both the 2007 and 2017 editions. (A201 section 15.2.1).
- Pursuant to sections 8.1.1, 8.2.2 and 8.3.4, the following occurs during the claims process:
- Change Orders can be directed by the Owner or requested by the Contractor.
- In instances where the Owner simply rejects the claim altogether, the Work proceeds as an interim work directive without prejudice to the Owner’s right to reimbursement in the event that the Work is later determined to be within the scope of the base Contract.
- If the parties cannot agree upon the Change Order price, an Owner may order an Interim Directive. Although the 2014 ConsensusDocs require the Owner to pay the Constructor 50% of its estimated costs to perform such work, the 2017 edition requires the Owner to pay the Constructor 50% of its actual (incurred or committed) costs. In both instances, the Constructor shall submit its application for payment within 30 days of the issuance of the Interim Directive.
- Cost of the Work under sections 8.3.4 and 22.214.171.124 now is determined net of savings from the change. Constructor’s overhead and profit shall be added to any net increase in the cost of the Work.
- 2007 & 2017 A201: Section 15.4.1
- 2014 & 2017 ConsensusDocs 200: Sections 12.1 – 12.7
- 2007 and 2017 A201 sections 15.4.1 contain default provisions requiring litigation. Arbitration must be selected as part of the Contract negotiation process if it is going to be required.
- 15.3.1 requires mediation before binding dispute resolution. The Owner and Contractor may choose arbitration or litigation.
- Although the 2007 version does not specify locale, the 2017 version requires resolution where the Project is located, unless otherwise agreed.
- The ConsensusDocs process is very different from that of the AIA documents.
- As with the A201, the Constructor must continue to work while the dispute is being resolved. (Section 12.1). However, pursuant to section 8.2.2, where the dispute involves whether certain work constitutes extra work or the value of extra work, the Owner and Constructor must split the estimated cost of work until a resolution is achieved. This sharing of cost arrangement does not prejudice either’s right to reimbursement if it is determined that the disputed work was within the scope of the Work, the Owner will be reimbursed. If it is determined that the disputed work is not within the scope of the Work, the Contractor receives the remaining fifty percent. (Compare to AIA A201 section 7, which requires the Contractor to proceed with the work at the Contractor’s sole expense).
- Pursuant to section 12.2, party representatives with the authority to resolve matters must work to resolve matters within 5 business days. If not resolved within 15 days of first discussion, then matters proceed to dispute resolution.
- Section 12.3 requires “mitigation”-a non-binding review either with a dispute review board or a project neutral.
- If mitigation is unsuccessful, mediation must follow.
- If mediation is unsuccessful, the parties will either arbitrate or litigate, depending on which choice they selected as part of negotiating the Contract. If nothing is selected, litigation is the default and not arbitration.
- Both the 2014 and 2017 ConsensusDocs require the non-prevailing Party to pay costs and reasonable attorneys’ fees as determined by the adjudicator of the dispute.
Insurance and Indemnification
- 2007 & 2017 A201
- 2014 & 2017 ConsensusDocs 200: Sections 10.1; 10.
- Pursuant to section 3.18.1, the Contractor must defend and hold harmless the Owner, the Architect, and the Architect’s consultants and agents.
- Beware of indemnifying the Architect or any design professional. Remove the reference to design professionals or limit it to that covered by commercial general liability insurance.
- The indemnification provision is pro rata – “but only to the extent caused by the negligent acts or omissions of the Contractor …”
- The indemnification provisions did not change between the 2007 and 2017 A201 documents.
- The insurance requirements did not change practically between the 2007 and 2017 documents. Section 11.1.4 of the 2007 version and Section 11.1.1 of the 2017 versionrequire the Contractor to name the Owner and the Architect as additional insureds on the Contractor’s General Liability Insurance Policy. Sections 11.1.1 and 11.1.2 of the 2007 version require the Contractor to provide Completed Operations Insurance coverage. The 2017 version does not address this coverage.
- Section 11.3 requires the Owner and Contractor to waive all rights against each other, their subcontractors, sub-subcontractors, agents, and employees, each of the other, and the Architect and the Architect’s related entities, if any, for damages cause by fire or other causes of loss to the extent covered by property insurance. It also contemplates putting the carrier on notice of the waiver. Waiver does not bar third-party lawsuits or claims for deductibles and other non-covered items. Waiver will be defined by the risks covered by the insurance and the scope of the work in the contract.
- Under this clause, contractors who would normally bear the risk of loss before project completion, may avoid that risk to the extent the builder’s risk or property insurance covers the loss.
- Many of the 2007 insurance provisions have been removed from the 2017 version and instead can be found in an exhibit to the Owner-Contractor agreement.
- The 2017 version also now requires that insurance and bonds be issued by insurers lawfully licensed to issue insurance and bonds where the Project is located. The National Association of Insurance Commissioners provides contact information for state insurance commissioners.
- The waiver of subrogation provisions remain the same.
- Significantly the ConsensusDocs Contract provides MUTUAL INDEMNIFICATION language (section 10.1) and only proportional indemnification responsibility.
- Additionally, ConsensusDocs 200 provides for the recovery of attorney’s fees and costs that exceed the percentage of the parties’ negligence in causing a loss.
- In addition to indemnifying negligent acts or omissions, under the 2017 version, the Contractor and Owner must indemnify one another for intentionally wrongful acts.
- In defining the scope of parties entitled to indemnification as including “Others” (defined as “other contractors, material suppliers, and persons at the worksite who are not employed by the Contractors or Subcontract”), the indemnification clause may be broader than the Constructor or Owner intends.
- Section 10.2.2 allows for combining primary and excess coverages to satisfy total limits required under the Contract.
- Section 10.2.1 sets the completed operations coverage for one year. This is similar to the A201, which requires completed operations coverage for the warranty period (typically one year) or longer if specified.
- Section 10.3.1 of the 2014 version requires that the Constructor maintain a Builder’s Risk Policy that also names subcontracts, sub-subcontractors, suppliers, and the design professional as additional insureds. The 2017 version gives the Owner the option to except the Contractor from obtaining a Policy.
- The 2017 version specifies additional loss risks above the 2014 version including coverage extension for damage to existing buildings, equipment breakdown, testing for newly installed machinery, and physical loss resulting from Terrorism.
- The 2014 version requires the Owner to be responsible for deductibles and co-insurance, while the 2017 version states that the party that is the primary cause of the Builder’s Risk Policy claim pay any deductible or coinsurance. If no Party is the primary cause of a claim, the Party who obtained and maintained the policy must pay the deductible or coinsurance.
- Section 10.3.2 requires the Builder’s Risk Policy to provide for a waiver of subrogation. Pursuant to section 10.3.3, if the Owner directs the Constructor not to obtain property insurance, the Owner may issue a deductive Interim Directive.
- Pursuant to section 10.4, the Owner may require the Constructor to purchase additional liability coverage that names the Owner as an additional insured on certain specified policies.
- Pursuant to section 10.4.1, Constructor and Subcontractor insurance is primary and non-contributory to any insurance available to the Additional Insureds.
- 2007 & 2017 A201: Section 9
- 2014 & 2017 ConsensusDocs 200: Section 9
- AIA 2007 & 2017 sections 9.6.2 provide that, “[t]he Contractor shall pay each Subcontractor no later than 7 days after receipt of payment from the Owner …” This is not “pay if paid” language in Massachusetts. 
- AIA 2007 & 2017 sections 9.6.4 also provide that the Owner has the right to request written evidence from the Contractor that it has properly paid Subcontractors and material suppliers. If the Contactor fails to furnish this evidence within 7 days, the Owner has the right to contact the Subcontractor directly.
- Pursuant to AIA 2007 section 9.5.3 and AIA 2017 section 9.5.4, if the Contractor fails to properly pay the Subcontractors, the Architect can withhold certification for payment and, “[t]he Owner may … issue joint checks to the Contractor and any Subcontractor or material or equipment suppliers …”
- Both AIA and ConsensusDocs allow the Owner to withhold payment if a third party files a claim. They differ in the determination of what is sufficient security to require the eventual release of funds.
- Pursuant to section 9.3.7, the Owner may adjust or reject a payment application to the extent that the Contractor is responsible under the Agreement for third party claims involving the Contractor or reasonable evidence demonstrating that third party claims are likely to be filed unless and until the Contractor furnishes the Owner adequate security. Adequate security consists of a surety bond, letter of credit, or other collateral or commitment that would be sufficient to discharge such claims once established.
 Under §8.2.2, if the parties’ dispute whether something is a Change Order at all, they share the estimated cost until resolved, whether amicably or via dispute resolution.
 Further, note that in some jurisdictions, additional steps are statutorily needed to effectuate ‘pay if paid’ even if this language was enforceable as pay if paid.