This standard form of agreement between owner and contractor is appropriate for use on large projects requiring a guaranteed maximum price, when the basis of payment to the contractor is the cost of the work plus a fee. AIA Document A102–2017 adopts by reference and is intended for use with AIA Document A201®–2017, General Conditions of the Contract for Construction. In addition, A102 is drafted to be used in conjunction with the A102™–2017, Exhibit A, Insurance and Bonds. This insurance and bonds exhibit is a critical part of the owner/contractor agreement and should be discussed with legal and insurance counsel. For all document details and a record of changes, see the summary »
Date. The date represents the date the Agreement becomes effective. It may be the date that an original oral agreement was reached, the date the Agreement was originally submitted to the Owner, 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 4.1.
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, limited liability, closed 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, size, and capacity or scope of the Project.
Architect. As in the other AIA Contract Documents, the Architect’s full legal or corporate title should be used.
Article 2 – The Work of This Contract
If portions of the Work are to be performed by persons or entities other than the Contractor, these should be indicated in the Supplementary Conditions.
Article 3 – Relationship of the Parties
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, as 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 article addresses those particular interests of the Owner in a cost plus contract, and the corollary obligations of the Contractor.
Article 4 – Date of Commencement and Substantial Completion
The following items should be included as appropriate:
§ 4.1 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.
§ 4.3.1 The time within which Substantial Completion of the Work is to be achieved 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.
§ 4.3.2 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.
Article 5 – Basis for Payment
§ 5.1.1 Enter the method used for determining the Contractor’s Fee (lump sum, percentage of Cost of the Work or other method).
§ 5.1.2 Explain how the Contractor’s Fee will be adjusted for changes in the Work.
§ 5.1.3 If there will be a limitation placed on Subcontractors’ overhead and profit, enter the amount or explain how the limitation will be calculated.
§ 5.1.4 Enter the percentage cap that will be used to determine the rental rates for Contractor-owned equipment.
§ 5.1.5 Identify unit prices and state quantity limitations, if any, to which the unit price will be applicable.
§ 5.1.6 Insert the amount and any conditions for liquidated damages relating to failure to achieve Substantial Completion of the Work, or designated portion of the Work, on time. 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 A503™, Guide for Supplementary Conditions.
§ 5.1.7 Insert terms and conditions for any bonuses or other incentives that might result in a change to the Contract Sum. This space may also be used to insert specific provisions if the Contractor is to participate in any savings when the final Contract Sum is below the Guaranteed Maximum Price. For further information on bonus, incentive and savings provisions, see AIA Document A503, Guide for Supplementary Conditions.
§ 5.2.1 Insert a Guaranteed Maximum Price for the Cost of the Work and the Contractor’s Fee.
§ 18.104.22.168 Identify any alternates described in the Contract Documents and accepted by the Owner as included in the Contract Sum.
§ 22.214.171.124 List other alternates which may be accepted subsequent to this document’s execution, including the price of each alternate and the conditions for acceptance.
§ 5.2.3 Identify and state the amounts of any allowances.
§ 5.2.4 State any assumptions on which the Guaranteed Maximum Price is based.
Article 7 – Costs to be Reimbursed
§ 126.96.36.199 Identify supervisory and administrative personnel that will perform Work related to the Project at a location other than the Project site. Also identify the type of activity the personnel will perform and what percentage of their time will be required for the Work.
Article 12 – Payments
§ 12.1.2 Insert the time period covered by each Application for Payment if it differs from the one given.
§ 12.1.3 Insert the time schedule for presenting Applications for Payment, and indicate due dates for making progress payments.
The last day upon which Work may be included in an Application should normally be no less than 14 days prior to the payment date, in consideration of the 7 days required for the Architect’s evaluation of an Application and issuance of a Certificate for Payment and the time subsequently accorded the Owner to make Payment in Article 9 of AIA Document A201–2017. The Contractor may prefer a few additional days to prepare the Application.
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 Architect to certify payment, and for the Owner to make payment. They should also be in accordance with time limits established by this Article and Article 9 of AIA Document A201–2017.
§ 188.8.131.52 Indicate the percent 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.
§ 184.108.40.206.1 Certain items included in the Contract Sum may be excluded from the calculation of retainage. Where there are any limitations or exclusions from retainage, list those items.
§ 220.127.116.11 The AIA endorses the practice of reducing retainage as rapidly as possible, consistent with the continued protection of all affected parties. A provision for reducing retainage should provide that the reduction will be made only if the Architect judges that the Work is progressing satisfactorily. If the Contractor has furnished a bond, demonstration of the surety’s consent to reduction in or partial release of retainage must be provided before such reduction is effected. Use of AIA Document G707™ is recommended. Insert terms for reduction or limitation of retainage.
§ 18.104.22.168 Often, the majority of retainage is released upon Substantial Completion of the Work. However, the Owner may continue to retain some portion of retainage to cover the remaining Work to be completed. Insert any conditions for release of retainage upon Substantial Completion. Where bonds have been provided by the Contractor, consent of surety should be obtained as outlined in Section 22.214.171.124 above.
§ 12.2.3 Insert the date by which Owner shall make final payment, if it differs from the one stated. When final payment is requested, the Architect should ascertain that all claims have been settled or should define those which remain unsettled. The Architect should obtain the Contractor’s certification required by Article 9 of AIA Document A201–2017 and must determine that, to the best of the Architect’s knowledge and belief and according to the Architect’s final inspection, the requirements of the Contract have been fulfilled.
§ 12.3 Payments due and unpaid under the Contract bear interest from the date payment is due at the legal rate prevailing from time to time at the place where the Project is located. If a different interest rate is to be paid, insert the amount here.
Article 13 – Dispute Resolution
§ 13.1 In this section, the Owner and Contractor may identify an Initial Decision Maker to render initial decisions on claims arising between them. If the parties do not identify an Initial Decision Maker, then the Architect will provide initial decisions.
§ 13.2 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 or visit adr.org for more information.
Article 14 – Termination or Suspension
Terminations under AIA Document A102–2017 are treated similarly to terminations under a stipulated sum agreement and so follow the provisions of AIA Document A201–2017, except that Section 14.2 provides detailed instructions for calculating the amount due to the Contractor in the event the Owner terminates the contract for cause and the unpaid balance on the Guaranteed Maximum Price exceeds the cost of finishing the Work. Note that in the case where the Owner terminates the Contractor for cause, the amount of the Contractor’s fee is calculated on a pro-rata basis. If the Contractor terminates for cause, or the Owner terminates for convenience, AIA Document A201–2017 provisions govern. A102 Section 126.96.36.199 provides (1) for the Owner to pay the Contractor fair compensation for any Contractor-owned equipment that the Owner chooses to use in completing the Work that is not included in the Cost of the Work, and (2) for the Contractor to facilitate assignment of subcontracts and other contracts to the Owner, should the Owner elect to assume the rights and responsibilities associated with those contracts.
§ 14.1.3 AIA Document A201–2017, Section 14.4.3, requires payment of a termination fee to the Contractor in the event that the Owner terminates the Contractor for convenience. Insert here, the amount of the 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. The parties may also agree to begin with a large termination fee that is progressively reduced as the project progresses.
Article 15 – Miscellaneous Provisions
§ 15.2 Identify the Owner’s representative and indicate how that person may be contacted.
§ 15.3 Identify the Contractor’s representative and indicate how that person may be contacted.
§ 15.6 Section 1.6 of AIA Document A201–2017 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, pursuant to A201-2017 section 1.7.
§ 15.8 Insert other contract provisions here.
Article 16 – Enumeration of Contract Documents
A detailed enumeration of all Contract Documents must be made in this article. Where optional documents are listed in Section 16.1.8 that will be incorporated as Contract Documents, check the appropriate box and insert an appropriate description of the document. List additional documents in Section 16.1.9 that will form part of the Contract Documents.
Exhibit A – Insurance and Bonds Exhibit
AIA Document A102–2017 Exhibit A is the insurance and bonds exhibit for AIA Document A102–2017. AIA Document A102–2017 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 A102–2017 Exhibit A, as a stand-alone document, can be readily discussed with your insurance advisors and legal counsel. Additionally, AIA Document A102–2017 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 A201–2017. 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 A102–2017 Exhibit A to your insurance broker or legal counsel, be sure to include, at a minimum, Article 11 of AIA Document A201–2017 as these terms will be important to reviewing AIA Document A102–2017 Exhibit A and advising you of appropriate coverage.
Date. Identify the date of the Agreement to which AIA Document A102–2017 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.188.8.131.52 Insert the cause of loss and any applicable sub-limits.
§ A.184.108.40.206 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.220.127.116.11 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.3.2.3 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 maritime liability risks associated with operation of a vessel, 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.18.104.22.168 Section A.22.214.171.124 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. 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.126.96.36.199 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.188.8.131.52. Additionally, Article 11 of AIA Document A201¬–2017 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.
Executing the agreement.
The persons executing AIA Document A102–2017 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.
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