Instructions: A195™–2008, Standard Form of Agreement Between Owner and Contractor for Integrated Project Delivery

Synopsis. 

AIA Document A195–2008 is a standard form of agreement between owner and contractor for a project that utilizes integrated project delivery (IPD). AIA Document A195–2008 primarily provides only the business terms and conditions unique to the agreement between the owner and contractor, such as compensation details and licensing of instruments of service. A195 does not include the specific scope of the contractor’s work; rather, it incorporates by reference AIA Document A295™–2008, General Conditions of the Contract for Integrated Project Delivery, which sets forth the contractor’s duties and obligations for each of the six phases of the project, along with the duties and obligations of the owner and architect. Under A195–2008, the contractor provides a guaranteed maximum price. For that purpose, the agreement includes a guaranteed maximum price amendment at Exhibit A. For all document details and a record of changes, see the summary »

 

Using A195-2008.

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.

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, 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, if known, (3) the proposed building usage, and (4) the size, capacity or scope of the Project, if known.

Architect. As in the other AIA Contract Documents, the Architect’s full legal or corporate title should be used.

Article 1  – The Work of this Contract

§ 1.1 The Contractor’s services requirements are set forth in AIA Document A295–2008 General Conditions of the Contract for Integrated Project Delivery, which is incorporated by reference. The Contractor is required to perform consulting services prior to the establishment of the Guaranteed Maximum Price. After establishment of the Guaranteed Maximum Price, the Contractor is required to construct the Project in accordance with the GMP Documents.

§ 1.3 Additional Services. The Contractor is entitled to recover for Additional Services, in certain instances and prior to establishment of the Guaranteed Maximum Price. Section 1.3 requires the Contractor to notify the Owner and await authorization to proceed before providing any of the listed Additional Services. Once the Guaranteed Maximum Price is established, a change in the scope of the Contractor’s work or services that results in adjustment of compensation is accomplished by use of a Change Order or Construction Change Directive.

Article 3 – Copyrights and Licenses

A195–2008 requires the Contractor to provide services during the design phases and, as such, the Contractor may provide Instruments of Service to the Owner. The Contractor may also provide Instruments of Service, such as shop drawings or other submittals, during the Construction Phase. Accordingly, A195–2008 contains provisions governing the ownership and use of those Instruments of Service. The Contractor and the Contractor’s subcontractors are deemed the authors and owners of their respective Instruments of Service, and they retain all common law and statutory rights, including copyright. The Contractor grants a license to the Owner to use the Instruments of Services solely and exclusively for the Project. This license will only terminate if the Contractor rightfully terminates the Agreement for cause due to the Owner’s default. In the absence of such a termination by the Contractor, the Owner retains the license to use the Instruments of Service for completion of the Project. If the Owner subsequently uses the Instruments of Services without retaining the author of the Instruments of Service, the Owner agrees to release and indemnify the Contractor for such uses. If the Owner rightfully terminates the Agreement for cause, however, the Owner is not required to release and indemnify the Contractor for its further use of the Instruments of Service. If the Owner terminates the Agreement for its convenience, or the Contractor terminates the Agreement due to the Owner’s suspension of the Project, A195–2008 requires the Owner to pay a licensing fee to the Contractor for the Owner’s continued use of the Instruments of Service.

Article 4  – Compensation

The Compensation Article is divided into two portions: Compensation prior to establishment of the Guaranteed Maximum Price; and Compensation after establishment of the Guaranteed Maximum Price.

§ 4.1 Services Provided Prior to Establishment of the Guaranteed Maximum Price

The Contractor’s compensation in this section is modeled after the Architect’s compensation in many AIA Owner-Architect Agreements.

There are at least ten methods of computing compensation for Contractor’s services prior to establishment of the Guaranteed Maximum Price. Four of these methods are time-based:

Multiple of Direct Salary Expense, in which direct salaries of designated personnel are multiplied by a factor representing benefits, overhead, and profit.

Multiple of Direct Personnel Expense, in which the salaries plus benefits of designated personnel are multiplied by a factor representing overhead and profit.

Professional Fee Plus Expenses, in which the salaries, benefits, and overhead of designated personnel are the expense and the fee may be a multiplier, percentage or lump sum representing profit.

Hourly Billing Rates, in which salaries, benefits, overhead and profit are included in the rate for designated personnel.

Other methods, while they may be indirectly related to time expended on the Project, do not use time as a factor in the calculation:

Stipulated Sum, in which compensation is listed as a dollar amount.

Percentage of Cost of the Work, in which compensation is calculated by applying an assumed percentage to the estimated or actual Cost of the Work, whichever is most certain at the time the calculation is made.

Multiple of Consultants’ Billing, in which Consultants’ bills are multiplied by a factor representing the Contractor’s administrative costs, overhead, and profit.

Square Footage, in which the square footage of the structure is multiplied by a pricing factor.

Unit Cost, in which the number of certain units such as rooms, acres, etc. is multiplied by a pricing factor.

Royalty, in which compensation is a share in the Owner’s income or profit derived from the built facility.

The AIA makes no recommendation as to the appropriateness of any of these methods of compensation on a particular project, nor does the AIA suggests that the foregoing list includes all methods that are possible, practical or in actual use. The use of any of the compensation methods described above, singly or in combination with other methods, is a business decision for the Contractor and the Owner. Further, the AIA makes no recommendations and has no guidelines or schedules that specify the amount of compensation a Contractor should be paid.

§ 4.1.1 Insert the basis of compensation for the Contractor’s Pre-GMP Services. Sample language is provided below for several of the most widely used methods of compensation.

If a Multiple of Direct Salary Expense is used, include multipliers using words and numerals in the following insert:

Compensation for services rendered by principals and employees shall be based on a multiple of ________ (__) times Direct Salary Expense, which shall be defined as the direct salaries of the Contractor’s personnel engaged on the Project, excluding any costs of mandatory or customary contributions and benefits. Compensation for services rendered by Consultants shall be based on a multiple of ________ (__) times the amounts billed by Consultants.

If a Multiple of Direct Personnel Expense is used, include multipliers using words and numerals in the following insert:

Compensation for services rendered by principals and employees shall be based on a multiple of ________ (__) times Direct Personnel Expense. Compensation for services rendered by Consultants shall be based on a multiple of ________ (__) times the amounts billed by Consultants.

If a Professional Fee Plus Expenses is to be used, include the dollar figure and the appropriate multipliers (using words and numerals) in the following insert:

Compensation shall be a Fixed Fee of ________ ($__) plus a multiple of ________ (__) times Direct Personnel Expense. Compensation for services rendered by Consultants shall be based on a multiple of ________ (__) times the amounts billed by Consultants.

Alternatively, the fee (representing profit) may be calculated as a multiplier or percentage.

If Hourly Billing Rates are used, include the cumulative amount for salary, benefits, overhead, and profit to fix each rate using words and numerals in the following insert:

Compensation for services rendered by Principals and employees shall be based upon the hourly billing rates set forth below:

      1. Principals’ time at the fixed rate of ________ ($__) per hour. For the purposes of this Agreement, the Principals are: (List Principals, such as owners, partners, corporate officers and participating associates.)
      2. Supervisory time at the fixed rate of ________ ($__) per hour. For the purposes of this Agreement, supervisory personnel include: (List managerial personnel by name or job title, such as general manager, department head or project manager.)
      3. Compensation for services rendered by Consultants shall be based on a multiple of ________ (__) times the amounts billed by Consultants.

If a Percentage of Cost of the Work is to be used, insert the following:

Compensation shall be ________ percent (__%) of the Cost of the Work, as defined in the GMP Amendment.

If a Stipulated Sum is to be used, insert the sum in words and numerals in the following sample language:

Compensation shall be a stipulated sum of ________ ($__).

No sample language is provided for compensation based on square footage, unit cost or royalty. Parties choosing one or more of these methods should craft their own language based on the particulars of the Project.

§ 4.1.2 See methods of compensation shown above for Section 4.1.1.

§ 4.1.3 See methods of compensation shown above for Section 4.1.1.

§ 4.2 Services Provided After Establishment of the Guaranteed Maximum Price.

Following the establishment of the Guaranteed Maximum Price, the Contractor will be compensated for its actual costs plus the Contractor’s Fee, subject to the Guaranteed Maximum Price.

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

Article 5 –  Payments

The Payment Article is divided into two sections just as the Compensation section.

§ 5.1 Progress Payments for Pre-GMP Services

The progress payment sections for Pre-GMP Services are modeled after the corresponding payment sections in most AIA Owner-Architect Agreements. Section 5.1 allows the parties to agree to an initial retainer amount.

§ 5.2 Progress Payments for Construction Services After the Guaranteed Maximum Price is Established

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

§ 5.2.3 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 A295–2008. 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 in A295–2008.

§ 5.2.7.3 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. The AIA endorses the practice of reducing retainage as rapidly as possible, consistent with the continued protection of all affected parties. See AIA Document A503™, Guide for Supplementary Conditions, for a complete discussion.

§ 5.2.7.4 Insert the percent to be retained from Work the Contractor self-performs.

§ 5.3.4 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 in A295–2008 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.

Article 6 –  Dispute Resolution

§ 6.1 Prior to Establishment of the Guaranteed Maximum Price. The Owner and Contract are required to resolve any claim or cause of action arising out of or relating to Contractor’s Pre-GMP Services pursuant to the mediation and arbitration provisions set forth in the A295–2008. This includes the joinder and consolidation provisions set forth in the A295–2008.

§ 6.2 After Establishment of the Guaranteed Maximum Price. Any Claim that arises from the Contractor’s Services after establishment of the Guaranteed Maximum Price are subject to Article 13 of A295–2008 in its entirety. Accordingly, all such claims are subject to the Initial Decision Maker process as a condition precedent to mediation and arbitration.

§ 6.2.2 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.

Article 9  – Special Terms and Conditions

Insert any modifications to the standard text of the document, if the modifications are not otherwise inserted elsewhere in the document. For more information about modifying the document, refer to the Modifications section of these Instructions.

Exhibit A –  Guaranteed Maximum Price Amendment

This Amendment will typically be completed by the Contractor at the conclusion of the Detailed Design Phase in the A295–2008.

§ A.1.1.1 Insert a Guaranteed Maximum Price for the Cost of the Work and the Contractor’s Fee. Insert specific provisions if the Contractor is to participate in any savings when the final Contract Sum is below the Guaranteed Maximum Price.

§ A.1.1.2 Insert an itemized statement of the Guaranteed Maximum Price organized as instructed or reference an attachment with such information.

§ A.1.1.3 Identify any alternates described in the GMP Documents and accepted by the Owner. If decisions on alternates are to be made subsequent to execution of the GMP Amendment, attach a schedule showing the amount of each alternate and the date it expires.

§ A.1.1.4 Identify and state the amounts of any allowances.

§ A.1.1.5 State any assumptions on which the Guaranteed Maximum Price is based.

 

Executing the agreement.

The persons executing AIA Document A195–2008 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.

 

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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