Summary: A134™–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 without a Guarantee Maximum Price

A134-2019 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 without a Guarantee Maximum Price

Content.

Synopsis

Purpose

Related documents

Changes from the previous edition

Dispute Resolution—Mediation and Arbitration

 

Synopsis.

Similar to AIA Document A133™–2019, AIA Document A134–2019 is intended for use where a construction manager, in addition to serving as adviser to the owner during the preconstruction phase, also provides construction of the project. However, in AIA Document A134–2019 the construction manager does not provide a guaranteed maximum price (GMP). A134–2019 employs the cost-plus-a-fee method, wherein the owner can monitor cost through periodic review of a control estimate that is revised as the project proceeds.

The document divides the construction manager’s services into two phases: the preconstruction phase and the construction phase, portions of which may proceed concurrently in order to fast track the process. A134-2019 is drafted to be used in conjunction with a new Insurance and Bonds Exhibit (Exhibit A) which is a critical part of the agreement and should be discussed with legal and insurance counsel.

A134–2019 is coordinated for use with AIA Documents A201®–2017, General Conditions of the Contract for Construction, and B133™–2019, Standard Form of Agreement Between Owner and Architect, Construction Manager as Constructor Edition. For use and execution of a document, see its instructions  »

 

Purpose. 

AIA Document A134™–2019 is a standard form of agreement between Owner and Construction Manager and is intended for use on construction management projects where the basis of payment is the Cost of the Work Plus a Fee without a Guaranteed Maximum Price, and the cost is not fully known at the commencement of construction. 

This document is intended for use on construction projects where a Construction Manager, in addition to acting as an advisor to the Owner during the preconstruction phase, also provides construction of the project, but does not provide a guarantee of cost. Do not use this document if the Construction Manager will be providing a guarantee of cost (use AIA Document A133™–2019 for projects where a guaranteed maximum price will be provided). 

The Construction Manager’s services under this document are divided into two phases: the Preconstruction Phase and the Construction Phase, portions of which may proceed concurrently. A134-2019 also includes an Insurance and Bonds Exhibit (Exhibit A), which is a critical part of the agreement, and should be discussed with legal and insurance counsel.

 

AIA Document A134–2019 is intended for use in conjunction with the following documents: 

A201®–2017, General Conditions of the Contract for Construction. Note: As stated in Section 2.3 of this document, A201–2017 is adopted only to a limited extent for Preconstruction Phase services, whereas during Construction Phase services, A201–2017 is generally incorporated into this document, unless specific exceptions are made in this document or by amendment to this Agreement.

B133™–2019, Standard Form of Agreement Between Owner and Architect, Construction Manager as Constructor Edition.

Insurance and Bonds. Unlike previous editions of AIA Document A134, which included a fill point to list the types and limits of insurance, and AIA Document A201, which listed general contractual terms regarding insurance, insurance terms relating to the type and amount of coverage have been removed from the document and have been included in the Exhibit A, Insurance and Bonds. This insurance and bonds exhibit forms an integral part of AIA Document A134–2019 and allows the parties to establish key insurance terms related to the Project. Failure to use AIA Document A134–2019 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 A134–2019 Exhibit A, along with Article 11 of AIA Document A201–2017, 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 A134–2019 revises AIA Document A134–2009 to reflect changes made in the 2017 update of AIA Document A201, as well as other revisions. It incorporates alterations proposed by architects, construction managers, owners, and professional consultants. The following are some of the significant changes made to the contents of AIA Document A134–2019.

Throughout. References in A134–2019 to the General Conditions refer specifically to A201–2017.

Table of Articles. A1342019 has been reorganized to better conform to the structure of similar AIA documents, including A103-2017, Owner/Contractor Agreement for Cost of the Work Plus a Fee without a Guaranteed Maximum Price. The organizational revisions include renaming and renumbering several articles and relocating some sections. Because A134 includes the Construction Manager’s preconstruction services, it is not possible to completely align the two documents.

Cover Page. The fill points for the parties to appoint a Designated Representative have been moved to Article 1, Initial Information.

Article 1- Initial Information

A key change between A134-2019 and A134–2009 is the addition of this initial information section. Article 1 provides fill points for the parties to provide detailed initial information, much of which is particularly important to identify the scope of the Construction Manager’s preconstruction services.

§ 1.1.6 Sustainable Objective. Sustainable design and construction continues to rapidly evolve as owners are increasingly interested in incorporating sustainable features into projects. A134–2019 addresses current industry practices relating to sustainable design. Section 1.1.6 requires the Owner to identify any anticipated Sustainable Objective it may have for the Project. The Sustainable Objective is the Owner’s goal of incorporating Sustainable Measures into the design, construction, maintenance and operations of the Project to achieve a Sustainability Certification or other benefit to the environment, to enhance the health and well-being of building occupants, or to improve energy efficiency. If the Owner identifies a Sustainable Objective, the parties will incorporate AIA Document E234–2019, Sustainable Projects Exhibit, Construction Manager as Constructor Edition, into the Agreement to establish a process for creating a Sustainability Plan that will clearly define the parties’ responsibilities in terms of pursuing the Sustainable Objective. For more information on participating on a project with a Sustainable Objective, please see AIA Document D503™, Guide for Sustainable Projects.

Article 3 – Construction Manager’s Responsibilities

§ 3.1.1 Extent of Responsibility. This section was moved from its previous location as section 2.1.8. It was also edited to require the Construction Manager to exercise reasonable care in performing its Preconstruction Services.

§ 3.1.3.3 Use of Digital Data. This section requires the Construction Manager to assist in the development of protocols for the development, use, transmission, and exchange of digital data through the use of AIA Document E203™–2013, Building Information Modeling and Digital Data Exhibit.

§ 3.1.7 This new section requires the Construction Manager to revise and update its recommendations regarding constructability and schedules as the Architect progresses with the preparation of the design documents.

§ 3.1.8 This section adds recommendations regarding equipment, materials, services, and temporary Project facilities to the Construction Manager’s preconstruction services.

§ 3.1.9 This new section requires the Construction Manager to provide a staffing plan for Preconstruction Services for the Owner’s review and approval.

§ 3.1.10 If the Owner identified a Sustainable Objective in Article 1, this section requires the Construction Manager to fulfill its Preconstruction Phase responsibilities as required in AIA Document E234™–2019, Sustainable Projects Exhibit, Construction Manager as Constructor Edition.

§ 3.1.11 Subcontractors and Suppliers

§ 3.1.11.1 This section provides the requirements for the Construction Manager to prepare a subcontracting plan to address any specific Owner requirements, such as those that may be related to a funding source or statutory requirements.

§ 3.1.14 Other Preconstruction Services. This new fill point has been added to the document to enable the parties to specify other Preconstruction Services, if applicable, by describing them in the fill point or by referencing an attached exhibit.

§ 3.3 Construction Phase

§ 3.3.1.2 This section has been revised to provide that the Construction Phase shall commence either upon the Owner’s approval of the Control Estimate, or, in the alternative, by written agreement of the parties prior to acceptance of the Control Estimate.

§ 3.3.1.3. Substantial Completion

§ 3.3.1.3.1 A checkbox has been added so that the parties can select when Substantial Completion of the entire Work will be achieved. Select the appropriate box and insert the date or number of days as appropriate.

§ 3.3.1.3.2 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 set forth in Section 3.3.1.3.1 (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. Where portions of the Work may be occupied and used prior to Substantial Completion of the entire Work, 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.

3.3.2 Administration. Previous sections 2.3.2.1 and 2.3.2.2 were moved to Article 9 and Section 2.3.2.3 was deleted. These revisions are consistent with the format of AIA Document A103-2017.

Article 4 – Owner’s Responsibilities

§ 4.1.6 If the Owner identified a Sustainable Objective in Article 1, this section requires the Owner to fulfill its responsibilities as required in AIA Document E234™–2019, Sustainable Projects Exhibit, Construction Manager as Constructor Edition.

Article 5 – Compensation and Payments for Preconstruction Phase Services

§ 5.1.2 A table has been added to list the hourly billing rates for the Preconstruction Phase services of the Construction Manager and the Construction Manager’s Consultants and Subcontractors.

Article 6 – Compensation for Construction Phase Services 

§ 6.1.7 A fill-point has been added in which the parties may specify a liquidated damages provision or amount. The parties are free to define liquidated damages in this section as they may mutually agree; however, consultation with legal counsel is encouraged.

§ 6.1.8 A fill-point titled “other” has been added in which the parties may list a bonus provision or other provision that will allow for adjustment of the Contract Sum.

Article 7 – Cost of the Work for Construction Phase

§ 7.1 Costs to be Reimbursed. General changes have been made throughout Article 7 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.

§ 7.2.2.1 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 Construction Manager’s supervisory and administrative personnel performing Work at sites other than the Project site. 

§ 7.2.5 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 Project unless the parties execute a Modification.

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

§ 7.8 Related Party Transactions. This section previously was numbered section 6.10 in A134-2009.

§ 7.9 Costs Not to be Reimbursed

§ 7.9.1.2 Formerly Section 6.2.5, language allowing the Construction Manager to include bonuses, profit sharing, and other incentive compensation of Construction Manager’s personnel in the Cost of the Work, has been deleted and moved to this section under costs not to be reimbursed. Section 7.9.1.2 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 9 – Subcontracts and Other Agreements

§ 9.1 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 Construction Manager is responsible for determining which Subcontractor bids will be accepted and the Owner, in consultation with the Architect, may choose to reject Subcontractors proposed by the Construction Manager.

Article 10 – Accounting Records

Article 10 was section 6.11 in A134-2009.

Article 11 – Payments for Construction Phase Services

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

§ 11.1.7 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 at Substantial Completion.

Article 13 – Termination or Suspension

§ 13.2.3 Termination by the Owner for Convenience. A fill-point has been added for the parties to identify the termination fee that the Owner will pay to the Construction Manager in the event of a termination for convenience. This provision works in conjunction with Section 14.4.3 of AIA Document A201–2017.

Article 14 – Miscellaneous Provisions

§ 14.3 Insurance and Bonds. This section is divided into provisions for insurance and bond requirements for the Preconstruction Phase, and for the Construction Phase.

§ 14.3.1 Preconstruction Phase. Fill points are provided for specification of the types and limits of insurance to be provided by the Construction Manager in the Preconstruction Phase.

§ 14.3.2 Construction Phase. This new provision states that, after the Owner approves the Control Estimate, the parties will provide insurance and bonds as required in the insurance and bonds exhibit, AIA Document A134–2019 Exhibit A. This replaces Article 8 of A134–2009 with AIA Document A134–2019 Exhibit A. Details on completing AIA Document Exhibit A are included below. It is also important to note that additional insurance provisions are included in Article 11 of AIA Document A201–2017, including 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.

§ 14.4 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 A201–2017. 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.

Article 15 – Scope of the Agreement

§ 15.2.5 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 E234™–2019, Sustainable Projects Exhibit, Construction Manager as Constructor 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-Construction Manager Agreement. For specifics about the use of E234–2019, please see the instructions accompanying the document.

 

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.

Was this article helpful?
3 out of 3 found this helpful
Have more questions?
Submit a request