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

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

Content.

Synopsis

Purpose

Related documents

Changes from the previous edition

Dispute Resolution—Mediation and Arbitration

 

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 use and execution of a document, see its instructions  »

Purpose. 

AIA Document A132–2019 is a standard form of agreement between Owner and Contractor for use in projects where, in addition to the Contractor and Architect, a separate 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.

A132–2019 may be used on construction management projects where the basis of payment is a stipulated sum (fixed price) or cost of the work plus a fee, with or without a guaranteed maximum price. The Owner and Contractor are asked to select the payment method in the agreement using a checkbox. If either of the two cost-plus payment methods is selected, then the parties will complete, and incorporate into the agreement, Exhibit B, which provides the detail for the Cost of the Work. 

 

AIA Document A132–2019 is intended to be used in conjunction with the following documents: 

A232™–2019, General Conditions of the Contract for Construction, Construction Manager as Adviser Edition, which is incorporated by reference; 

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. 

Insurance and Bonds.

Unlike previous editions of AIA Document A132, which included a fill point to list the types and limits of insurance, and AIA Document A232, which listed general contractual terms regarding insurance, insurance terms relating to the type and amount of coverage have been removed from AIA Document A132–2019 and A232–2019 and have been included in AIA Document A132–2019, Standard Form of Agreement Between Owner and Contractor, Construction Manager as Adviser Edition, Exhibit A, Insurance and Bonds. 

This insurance and bonds exhibit forms an integral part of AIA Document A132–2019 and allows the parties to establish key insurance terms related to the Project. Failure to use AIA Document A132–2019 Exhibit A could result in the parties having little or no insurance coverage to respond to a loss or third-party claim related to the Project. The AIA encourages you to discuss AIA Document A132–2019 Exhibit A, along with Article 11 of AIA Document A232–2019, with your insurance broker and legal counsel so that insurance appropriate to your company and Project can be put in place before the start of construction.

 

Changes from the previous edition.

AIA Document A132–2019 revises AIA Document A132–2009 to reflect changes made in construction industry practices and the law, and changes made in AIA documents in 2017. Some of the significant differences are listed below.

Throughout. References in A132–2019 to the General Conditions refer specifically to A232–2019. The 2019 edition of A132 revises the 2009 edition to reflect changes made in the most recent edition of A232.

Article 3 – Date of Commencement and Dates of Substantial Completion

§ 3.1 The format for the date of commencement of the work has been changed to a checkbox allowing the parties to select either (1) the date of the Agreement, (2) the issuance of a notice to proceed (NTP) by the Owner, or (3) a different date as agreed by the parties.  To the extent that the Owner needs additional time to file mortgages or security interests or delay the Project start for reasons other than the issuance of a NTP, the parties would select (and complete) option 3.

§ 3.3 Substantial Completion of the Project or Portions Thereof

§ 3.3.1 This new section provides a fill point in which to provide the date of Substantial Completion of the Work of all of the Contractors working on the Project.

§ 3.3.2 This section has been added to allow for Substantial Completion of certain phases of the Project to be completed prior to the Substantial Completion date for the entire Work of all of the Contractors set forth in Section 3.3.1 (tiered Substantial Completion dates). This can be used when portions of the Work will be completed and occupied by the Owner prior to Substantial Completion of the entire Work.

§ 3.4 When the Work of this Contract, or any Portion Thereof, is Substantially Complete

§ 3.4.1 A checkbox has been added so that the parties can select whether the Contractor shall substantially complete the entire Work of this Contract no later than a specified calendar date or within a certain number of days from the date of commencement.

§ 3.4.2 This section has been added to allow for portions of the Work of this Contract to be substantially completed prior to when the entire Work of this Contract as set forth in Section 3.4.1 is to be substantially complete.

§ 3.4.3 Because liquidated damages are a function of the Contractor’s failure to substantially complete the Work of this Contract within the Contract Time, this section has been added to cross-reference the fill point for liquidated damages in Article 4 (relating to adjustments in the Contract Sum).

Article 4 – Contract Sum

§ 4.2.2 Alternates. In order to clarify the handling of alternates on a Project, this provision has been modified to clearly identify alternates that are accepted at the time of contract execution and those alternates that may be accepted after a condition precedent has been met. This clarifies information previously included in a parenthetical instruction.

§ 4.4.7.2 This section contains the same revisions with respect to alternates as in section 4.2.2.

§ 4.4.8 This new provision has been added to make the document consistent with AIA Document A133–2019 and the longstanding principle that the Guaranteed Maximum Price includes costs attributable to further development of the Contract Documents to the extent that further development is consistent with the Contract Documents and does not include changes in scope, systems, kinds and quality of materials, finishes or equipment.

§ 4.4.9 This section has been added to make the document consistent with revisions to AIA Document A133–2019 and to recognize that any assumptions agreed-upon by the Owner and Contractor under Section 4.4.7.4 may require revisions to the Contract Documents. This language requires the Owner to authorize revisions to the Contract Documents that incorporate any agreed-upon assumptions upon which the Guaranteed Maximum Price is based.

§ 4.5 Liquidated Damages. A fill-point has been included for the parties to specify a liquidated damages provision or amount to be assessed in accordance with Section 3.4. The parties are free to define liquidated damages in this section as they may mutually agree; however, consultation with legal counsel is encouraged.

§ 4.6 Because Liquidated Damages have been given a separate fill-point, a fill-point titled “other” has also been included to allow the parties to list a bonus provision or other provision that will allow for adjustment of the Contract Sum.

Article 5 – Payments

§ 5.1.4.3 The provisions for the calculation of progress payments have been clarified and simplified to clearly delineate the basis for each progress payment.

§ 5.1.5.3 The provisions for the calculation of progress payments have been clarified and simplified to clearly delineate the basis for each progress payment.

§ 5.1.6.2.2 Language has been included to clarify that the allocation of costs in the schedule of values does not create separate guaranteed maximum prices for individual line items on the schedule of values. The only value guaranteed by the Contractor is the Guaranteed Maximum Price and individual line items on the schedule of values may be exceeded provided the Guaranteed Maximum Price is not exceeded.

§ 5.1.6.2.3 This new section has been included to clarify that when the Contractor allocates costs from a contingency line item on the schedule of values to another line item, the Contractor is required to provide supporting documentation to the Architect and Construction Manager to justify reallocation of contingency amounts. 

§ 5.1.6.4 The provisions for the calculation of progress payments have been clarified and simplified to clearly delineate the basis for each progress payment. 

§ 5.1.7 Retainage. A more prescriptive provision on retainage has been included that will allow the parties to clearly delineate the retainage amount, exclusions from retainage, and how retainage may be reduced when the Work of this Contract is substantially complete. 

Article 7 – Termination or Suspension

§ 7.1.1.1 A fill-point has been added for the parties to identify the termination fee that the Owner will pay to the Contractor in the event of a termination for convenience. This provision works in conjunction with Section 14.4.3 of AIA Document A232–2019. 

§ 7.2.1.3 A fill-point has been added as described for section 7.1.1.1 above. 

Article 8 – Miscellaneous Provisions

§ 8.5 Insurance and Bonds. This new provision states that the parties will provide insurance and bonds as required in the insurance and bonds exhibit, AIA Document A132–2019 Exhibit A. This replaces Article 10 of A132–2009 with AIA Document A132–2019 Exhibit A. Details on completing AIA Document A132–2019 Exhibit A are included below. It is also important to note that additional insurance provisions are included in Article 11 of AIA Document A232–2019. New for 2019 is a requirement that insurance and bonds be issued by companies lawfully licensed to issue insurance and bonds, as the case may be, in the jurisdiction where the Project is located. Information regarding insurers and sureties admitted to write insurance or issue bonds in your jurisdiction can be found by contacting the insurance commissioner in each state. Contact information for each state’s insurance commissioner can be obtained from the National Association of Insurance Commissioners. 

§ 8.6 A new provision is included that will allow the parties to describe how notice may be given in electronic format. This provision works in conjunction with the revised notice provisions found in Article 1 of AIA Document A232–2019. The default for providing notice in electronic format will be through the use of AIA Document E203™–2013, Building Information Modeling and Digital Data Exhibit. However, if the parties elect not to use AIA Document E203-2013, notice in electronic format may be given as specified by the parties in the fill point.

§ 8.7 In a contract using a stipulated sum for the Contractor’s compensation, the Owner has agreed to pay a specific amount regardless of the cost incurred by the Contractor in the performance of the Work. However, when the Contractor’s compensation is based on Cost of the Work, if selected in this Agreement, the amount expended by the Contractor as a “Cost of the Work” has a direct economic consequence to the Owner. Therefore, the Owner has a heightened interest in the efficient and economical performance by the Contractor, and the Contractor has a consequent responsibility to manage expenditures on the Project in keeping with the Owner’s interests. This provision addresses those particular interests of the Owner in a cost-plus contract, and the corollary obligations of the Contractor.

Article 9 – Enumeration of the Contract Documents

§ 9.1.8 This section has been included to allow the parties to incorporate certain optional documents as Contract Documents by checking the appropriate box. Note that AIA Documents E235™–2019, Sustainable Projects Exhibit, Construction Manager as Adviser Edition, and any applicable Sustainability Plan may be incorporated as a Contract Document. These documents will be used where the Project is required to achieve a Sustainable Objective, as specified by the Owner, and will include key provisions applicable to the Owner-Contractor Agreement. For specifics about the use of E235–2019, please see the instructions accompanying the document. 

Exhibit B, Determination of the Cost of the Work

Article B.2 – Cost to be Reimbursed

General changes have been made throughout Article B.2 to clarify the meaning of provisions relating to costs to be reimbursed. Changes discussed below are limited to those sections where changes will affect the category of cost allowable under the provision.

§ B.2.2.2.1 A fill-point has been included in this section to allow the parties to provide for an agreement as to the allowable activities performed and percentage of time spent on activities related to the Work by the Contractor’s supervisory and administrative personnel performing Work at sites other than the Project site. 

§ B.2.2.5 This new section clarifies that if the parties have agreed to a schedule of labor rates, those labor rates will remain unchanged for the duration of the Agreement unless the parties execute a Modification.

§ B.2.6.1.2 This new section has been included to allow for the cost of insurance through a captive insurer owned or controlled by the Contractor to be included in the Cost of the Work, with the Owner’ prior approval. 

Article B.3 – Costs Not to be Reimbursed

§ B.3.1.2 Language formerly appearing in Section B.2.2.5, allowing the Contractor to include bonuses, profit sharing, and other incentive compensation of Contractor’s personnel in the Cost of the Work, has been moved to Section B.3.1.2 (costs not to be reimbursed). Section B.3.1.2 will allow these costs to be included in the Cost of the Work if approved in advance by the Owner. This is not a change to the operation of the provision; it clarifies that these costs may only be included in the Cost of the Work if approved by the Owner.

Article B.5 – Subcontracts and Other Agreements

§ B.5.1 This section has been revised to clarify that the Owner is not the party responsible for selecting which Subcontractor bids will be accepted. Rather, the Contractor is responsible for determining which Subcontractor bids will be accepted and the Owner, in consultation with the Architect and Construction Manager, may choose to reject Subcontractors proposed by the Contractor. 

 

Dispute Resolution—Mediation and Arbitration.

This document contains provisions for mediation and arbitration of claims and disputes. Mediation is a non-binding process but is mandatory under the terms of this agreement. Arbitration may be mandatory under the terms of this agreement. Arbitration is binding in most states and under the Federal Arbitration Act. In a minority of states, arbitration provisions relating to future disputes are not enforceable but the parties may agree to arbitrate after the dispute arises. Even in those states, under certain circumstances (for example, in a transaction involving interstate commerce), arbitration provisions may be enforceable under the Federal Arbitration Act.

The AIA does not administer dispute resolution processes. To submit disputes to mediation or arbitration or to obtain copies of the applicable mediation or arbitration rules, contact the American Arbitration Association at (800) 778-7879 or visit the website at adr.org.

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