Instructions: A132™ – 2019, Standard Form of Agreement Between Owner and Contractor, Construction Manager as Adviser Edition

Synopsis. 

AIA Document A132–2019 is a standard form of agreement between owner and contractor for use on projects where the basis of payment is either a stipulated sum (fixed price) or cost of the work plus a fee, with or without a guaranteed maximum price. In addition to the contractor and the architect, a construction manager assists the owner in an advisory capacity during design and construction. Typically, there will be more than one prime contractor on these types of projects.

The document has been prepared for use with AIA Documents A232™–2019, General Conditions of the Contract for Construction, Construction Manager as Adviser Edition; B132™–2019, Standard Form of Agreement Between Owner and Architect, Construction Manager as Adviser Edition; and C132™–2019, Standard Form of Agreement Between Owner and Construction Manager as Adviser. This integrated set of documents is appropriate for use on projects where the construction manager only serves in the capacity of an adviser to the owner, rather than as constructor (the latter relationship being represented in AIA Documents A133™–2019 and A134™–2019). 

For all document details and a record of changes, see the summary » 

 

Using A132–2019.

Cover Page

Date. The date represents the date the Agreement becomes effective. It may be the date that an oral agreement was reached, the date the Agreement was originally submitted to the other party, the date authorizing action was taken or the date of actual execution. It will be the date from which the Contract Time is measured unless a different date is inserted under Section 3.1.

Parties. Parties to this Agreement should be identified using the full address and legal name under which the Agreement is to be executed, including a designation of the legal status of both parties (sole proprietorship, partnership, joint venture, unincorporated association, limited partnership or corporation [general, close or professional], etc.). Where appropriate, a copy of the resolution authorizing the individual to act on behalf of the firm or entity should be attached. Other information may be added, such as telephone numbers and electronic addresses. 

Project. The proposed Project should be described in sufficient detail to identify (1) the official name or title of the facility, (2) the location of the site; and (3) a brief description of the Project, including the proposed building usage, the size, and capacity or scope of the Project.

Construction Manager and Architect. Although not parties to this agreement, the Construction Manager’s and Architect’s names, and addresses, including full legal or corporate titles, should be used.

 

Article 3 – Date of Commencement and Dates of Substantial Completion

The following items should be included as appropriate:

§ 3.1 The date of commencement of the Work should be identified by checking the appropriate box. The date of commencement could be the date of this Agreement, a date set forth in a notice to proceed issued by the Owner, or another date using a method established by the parties. It is important to note that if a selection is not made, the default will be the date of the Agreement.

§ 3.3.1 Insert the date of Substantial Completion of the Work of all of the Contractors for the Project.

§ 3.3.2 Where portions of the Work of all of the Contractors may be occupied and used prior to Substantial Completion of the entire Work of all of the Contractors, each portion of the Work can be described in this section and the Substantial Completion date for each portion of the Work may be indicated. 

§ 3.4.1 The time within which the Contractor shall substantially complete the entire Work of this Contract may be expressed as a number of calendar days or as a specified date. Select the appropriate box and insert the date or number of days as appropriate. If a specified date is used and the date of commencement is to be given in a notice to proceed, these dates must be carefully coordinated to allow sufficient time for completion of the Work. 

§ 3.4.2 Where portions of the Work of this Contract are to be substantially complete prior to when the entire Work of this Contract shall be substantially complete, each portion of the Work can be described in this section and the date for each portion of the Work to be substantially completed may be indicated. 

 

Article 4 – Contract Sum

§ 4.1 Check the box next to the method used for determining the Contract Sum (lump sum, percentage of Cost of the Work without a Guaranteed Maximum Price, or percentage of Cost of the Work with a Guaranteed Maximum Price). Based upon the selection, complete either Section 4.2,  4.3, or 4.4.

§ 4.2 Enter the Contract Sum payable to the Contractor if using a Stipulated Sum.

§ 4.2.2 If using a Stipulated Sum, identify any alternates described in the Contract Documents and accepted by the Owner. If decisions on alternates are to be made subsequent to the execution of AIA Document A132–2019, attach a schedule showing the amount of each alternate and the date it expires.

§ 4.2.3 Identify and state the amounts of any allowances.

§ 4.2.4 Identify unit prices, and state quantity limitations, if any, to which the unit price will be applicable.

§ 4.3.2 Enter the method used for determining the Contractor’s Fee (lump sum, percentage of Cost of the Work or other method).

§ 4.3.3 Explain how the Contractor’s Fee will be adjusted for changes in the Work.

§ 4.4.2 Enter the method used for determining the Contractor’s Fee (lump sum, percentage of Cost of the Work or other method).

§ 4.4.3 Explain how the Contractor’s Fee will be adjusted for changes in the Work.

§ 4.4.7.1 Insert a Guaranteed Maximum Price for the Cost of the Work and the Contractor’s Fee.

§ 4.4.7.2 Identify any alternates described in the Contract Documents and accepted by the Owner. If decisions on alternates are to be made subsequent to the execution of A132–2019, attach a schedule showing the amount of each alternate and the date it expires.

§ 4.4.7.3 Identify and state the amounts of any allowances.

§ 4.5 Insert the amount and any conditions for liquidated damages to be assessed in accordance with Section 3.4. Liquidated damages are not a penalty to be inflicted on the Contractor, but must bear an actual and reasonably estimable relationship to the Owner’s loss if construction is not completed on time. If a provision for liquidated damages is included, it should be carefully drafted by the Owner’s attorney and acceptable to the Contractor’s attorney. For further information on liquidated damages see AIA Document A533™, Guide for Supplementary Conditions, Construction Manager as Adviser Edition.

 

Article 5 – Payments

§ 5.1.2 Insert the time period covered by each Application for Payment if it differs from the one given.

§ 5.1.3 Insert the time schedule for presenting Applications for Payment, and indicate due dates for making progress payments.

Due dates for payment should be acceptable to both the Owner and Contractor. They should allow sufficient time for the Contractor to prepare an Application for Payment, for the Construction Manager and Architect to certify payment, and for the Owner to make payment.

§ 5.1.7.1 Indicate the percentage of retainage, if any, to be withheld when computing the amount of each progress payment.

The Owner frequently pays the Contractor the bulk of the earned sum when payments fall due, retaining a percentage to ensure faithful performance. These percentages may vary with circumstances and localities. The AIA endorses the practice of reducing retainage as rapidly as possible, consistent with the continued protection of all affected parties. See AIA Document A533, Guide for Supplementary Conditions, Construction Manager as Adviser Edition.

§ 5.2.2.2 Insert the date by which Owner shall make final payment, if it differs from the one stated.

§ 5.3 Enter any agreed-upon interest rate for overdue payments.

 

Article 6 – Dispute Resolution

§ 6.2 Select from three choices of binding dispute resolution: (1) arbitration, (2) litigation or (3) another method that the parties must identify. Other types of dispute resolution include a dispute resolution board or a mini-trial. For additional information about other methods of dispute resolution, refer to The Construction Industry’s Guide to Dispute Avoidance and Resolution.

 

Article 7 – Termination or Suspension

§ 7.1.1.1 Insert the amount of any termination fee or the method for calculating the termination fee. For example, the Owner and Contractor may agree to progressively increase the termination fee up to fifty percent completion and then agree to progressively reduce the Contractor’s termination fee until final completion. Another example would be to begin with a large termination fee that is progressively reduced as the project progresses.

§ 7.2.1.3 See the instructions for Section 7.1.1.1 above.

 

Article 8 – Miscellaneous Provisions

§ 8.2 Identify the Owner’s representative and provide contact information.

§ 8.3 Identify the Contractor’s representative and provide contact information.

§ 8.6 Section 8.6 allows the Owner and Contractor to provide notice in electronic format. It is recommended that the parties use AIA Document E203™–2013, Building Information Modeling and Digital Data Exhibit, to establish the protocols for electronic communication. If E203–2013 is not used, insert the requirements for delivering notice in electronic form such as the name, title, and email address of the recipient and whether the system will be required to generate a read receipt (recommended). While notice in electronic form may be provided as set forth in this provision, other protocols for the use or transmission of digital data and BIM are established through the use of E203-2013.

 

Article 9 – Enumeration of Contract Documents

A detailed enumeration of all Contract Documents must be made in this article. Where optional documents are listed in Section 9.1.8 that will be incorporated as Contract Documents, check the appropriate box and insert an appropriate description of the document. List additional documents in Section 9.1.9 that will form part of the Contract Documents.

 

Exhibit A – Insurance and Bonds 

AIA Document A132–2019 Exhibit A is the insurance and bonds exhibit for AIA Document A132–2019. AIA Document A132–2019 Exhibit A provides the general requirements relating to insurance and bonds as well as the specific policy limits and bond amounts for the Project. Insurance requirements under the exhibit are separated into those coverages that would typically be provided by the Owner and Contractor on all projects (required coverages) and other (optional) coverages that may be selected by the parties based on their specific needs and the needs of the Project.

AIA Document A132–2019 Exhibit A, as a stand-alone document, can be readily discussed with your insurance advisors and legal counsel. Additionally, AIA Document A132–2019 Exhibit A provides an easy reference for the insurance and bonding requirements related to your Project. However, it is important to note that additional terms related to insurance are found in Article 11 of AIA Document A232–2019. Users are strongly encouraged to review their insurance needs with legal and insurance counsel to determine the appropriate insurance requirements for their particular project. When forwarding AIA Document A132–2019 Exhibit A to your insurance broker or legal counsel, be sure to include, at a minimum, Article 11 of AIA Document A232–2019 as these terms will be important to reviewing AIA Document A132–2019 Exhibit A and advising you of appropriate coverage.

Date. Identify the date of the Agreement to which AIA Document A132–2019 Exhibit A is attached just as it appears on the cover page of the Agreement.

Project and Parties (Cover Page). Identify the Project and the parties just as they appear on the cover page of the Agreement.

 

Article A.2 – Owner’s Insurance

§ A.2.3.1.1 Insert the cause of loss and any applicable sub-limits.

§ A.2.3.1.2 Insert the type of coverage and any applicable sub-limits. 

§ A.2.4 Section A.2.4 allows the Owner to select extended property insurance coverage that will be purchased and applicable to the Project. For each of the extended property insurance coverages applicable to the Project, check the appropriate box and indicate any limits of coverage or any other applicable conditions in the space below the selected coverage. 

§ A.2.5 Section A.2.5 allows the Owner to select whether it will provide cybersecurity insurance or any other types of coverage for the Project. If cybersecurity insurance will be provided, check the box for Section A.2.5.1 and indicate any applicable limits of coverage or other conditions in the space provided. Where other insurance coverage will be provided by the Owner, check the box for Section A.2.5.2 and indicate the type of coverage and any applicable limits.

 

Article A.3 – Contractor’s Insurance and Bonds

§ A.3.2.1 Where the Contractor is required to maintain required insurance for a duration other than the period for correction of the Work, indicate the duration of required coverages in the fill point provided. 

§ A.3.2.2.1 Indicate the applicable coverage limits for the Contractor’s commercial general liability coverage.

§ A.3.2.3 Indicate the applicable coverage limits for the Contractor’s automobile liability coverage. 

§ A.3.2.4 Some insurers have written excess policies which expressly state that they apply only in the event the underlying policies are exhausted through payments made by the underlying insurers (sometimes referred to as “actual exhaustion”). Policies that do not expressly require actual exhaustion are interpreted to permit exhaustion of the underlying policies through payments or contributions made by any combination of underlying insurers, insureds or third parties (sometimes referred to “functional exhaustion”.) Policies that only permit actual exhaustion are counterproductive to settlement whereas policies that permit functional exhaustion encourage settlement. The intent of this section is to facilitate settlement by requiring that any excess policies allow for functional exhaustion.

§ A.3.2.6 Indicate the applicable coverage limits for the Contractor’s employer’s liability coverage.

§ A.3.2.8 Indicate the applicable coverage limits for the Contractor’s professional liability coverage, if applicable.

§ A.3.2.9 Indicate the applicable coverage limits for the Contractor’s pollution liability coverage, if applicable.

§ A.3.2.10 Where the Contractor will provide professional liability and pollution liability coverage under a combined policy, indicate the applicable coverage limits.

§ A.3.2.11 Indicate the applicable coverage limits for Contractor’s insurance for maritime liability risks associated with operation of a vessel, if the Work requires such activities. 

§ A.3.2.12 Indicate the applicable coverage limits for Contractor’s insurance for use or operation of manned or unmanned aircraft, if the Work requires such activities.

§ A.3.3.1 Where the Contractor is required to maintain required insurance for a duration other than the period for correction of the Work, indicate the duration of required coverages in the fill point provided. 

§ A.3.3.2 Section A.3.3.2 allows the Contractor to select whether it will provide other insurance coverage in addition to that required under Section A.3.2. If other insurance will be provided, check the appropriate box for each selected coverage under Section A.3.3.2 and indicate any applicable limits of coverage or other conditions in the space provided. 

§ A.3.3.2.1 Section A.3.3.2.1 requires the Contractor, instead of the Owner, to provide builder’s risk insurance, of the same type and scope satisfying the requirements identified in Section A.2.3. This optional requirement should only be selected if there is only one Contractor performing Work on the Project, and not in a multiple prime contractor situation. Where this requirement has been selected, the Owner is relieved of the obligation to provide builder’s risk insurance except for those coverages required by Section A.2.3.1.3 and A.2.3.3. Where the Contractor’s obligation to provide builder’s risk insurance differs from Section A.2.3, the differences should be described in the fill point following A.3.3.2.1. Additionally, Article 11 of AIA Document A232­–2019 requires that the Owner adjust and settle losses under the builder’s risk insurance. If a party other than the Owner assumes this responsibility, that information should also be provided in the fill point.

§ A.3.4 Where the Contractor is required to provide payment and performance bonds, indicate the penal sum of each bond in the space provided.

 

Article A.4 – Special Terms and Conditions

Indicate any special terms and conditions that modify the insurance and bonds exhibit in the space provided.

 

Exhibit B – Determination of the Cost of the Work

Exhibit B provides the definition for the Cost of the Work and a detailed listing of the costs to be reimbursed and those costs not to be reimbursed. If the Contract Sum is a Stipulated Sum, in accordance with Section 4.2 of the Agreement, Exhibit A is not applicable.

§ B.2.2.2.1 Identify the wages or salaries of supervisory and administrative personnel that will perform Work away from the site, the type of activity, and, if applicable, any agreed percentage of time to be devoted to the Work.

 

Executing the agreement.

Each person executing AIA Document A132–2019 should indicate the capacity in which they are acting (i.e., president, secretary, partner, etc.) and the authority under which they are executing the Agreement. Where appropriate, a copy of the resolution authorizing the individual to act on behalf of the firm or entity should be attached.

 

ISO® is a registered trademark and Insurance Services Office™ and the titles of the ISO proprietary insurance forms identified herein are trademarks of Insurance Services Office, Inc. (“ISO”). Information which is copyrighted by and proprietary to Insurance Services Office, Inc. or its affiliates (“ISO Material”) is included and referenced in this publication. Use of the ISO Material is limited to ISO Participating Insurers and their Authorized Representatives and other licensees, in each case as licensed by ISO. Use by ISO Participating Insurers is limited to use in those jurisdictions for which the insurer has an appropriate participation with ISO. Use of the ISO Material by Authorized Representatives is limited to use solely on behalf of one or more ISO Participating Insurers, as licensed by ISO.

 

Important.

Modifications. Particularly with respect to professional or contractor licensing laws, building codes, taxes, monetary and interest charges, arbitration, indemnification, format and font size, AIA Contract Documents may require modification to comply with state or local laws. Users are encouraged to consult an attorney before completing or modifying a document.

Reproductions. This document is a copyrighted work and may not be reproduced or excerpted from without the express written permission of the AIA. There is no implied permission to reproduce this document, nor does membership in The American Institute of Architects confer any further rights to reproduce this document. For more information, see the document footer and the AIA Contract Documents® Terms of Service.

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