Instructions: C172™–2014, Standard Form of Agreement Between Owner and Program Manager for use on a Single Project

Synopsis.

AIA Document C172–2014 is a standard form agreement between owner and program manager for use on a single project. The program manager assists the owner in an advisory capacity on matters that impact the project during design and construction. The program manager’s basic services include creating a program management plan to describe the scope of the project and related requirements, managing project-related information, developing a budget and schedule, and establishing quality control guidelines. C172-2014 also contains cost estimating and construction administration services that the parties may select as additional services. 

Unlike in the Construction Manager as Adviser family of documents, where the construction manager has some shared responsibilities with the architect, in C172 the program manager does not have shared responsibilities with other project participants or authority to act directly on behalf of the owner with respect to the responsibilities of the architect or contractor. C172–2014 is primarily intended to be used with the A201®–2017  family of documents. For all document details and a record of changes, see the summary  »

 

Using C172–2014.

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. Professional services should not be performed prior to the effective date of the Agreement.

Parties. Parties to this Agreement should be identified using the full 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. 

Project. The proposed Project should be described in sufficient detail to identify (1) the official name or title of the facilities in the Project, (2) the location of the Project, (3) the proposed building usages, and (4) the size, capacity or scope of the Project. 

Article 1 – Initial Information

§ 1.1 Initial Information is provided in Article 1. The parties should take care to be as explicit and detailed as possible with respect to the relevant Initial Information.

§ 1.3.7 The parties must set forth the Owner’s anticipated design and construction schedule as those dates are to be incorporated into the Project Schedule.

Article 2 – Program Manager’s Responsibilities

§ 2.7 To the extent the insurance required under Section 2.7 exceeds the types or limits of insurance the Program Manager normally maintains, the Owner and Program Manager can negotiate a method by which the Owner will reimburse the Program Manager for any additional costs associated with such excess types or limits of insurance. The agreed-upon method for reimbursement, if any, shall be set forth in Section 10.6.3.

Article 3 – Scope of Program Manager’s Basic Services

§ 3.1.10 The Program Manager is required to retain all Project related documents and information it receives. The Program Manager should accomplish this through the Project Management Information System, if selected in Section 3.3.  If the parties select a different Information Management System, or none at all, the Program Manager must still retain all Project related documents and information it receives, albeit not necessarily on a web-based system. 

§ 3.3.1 & 3.3.2 The Program Manager shall provide a File Sharing System as the default Information Management System for the Project.  The parties may select an alternative Information Management System, or none at all, under Section 3.3.2. The File Sharing System is a web-based system used to distribute information, while the Project Management Information System is a more sophisticated web-based system that can be used to distribute information, maintain and organize documents, track costs and budget items, and schedule tasks.

§ 3.7.3.1 If the parties intend the Program Manager to visit the site at specific intervals or milestones, indicate the interval or milestone, such as “monthly” or weekly”, in the space below this section. However, if the Program Manager is to provide on-site representation whenever Work is being performed, the parties should check the box next to Section 4.2.1 and insert “See Section 4.2.1” in the space below this Section 3.7.3.1.  

Article 4 – Additional Services

§ 4.1 Cost Estimating Services and 4.2 Construction Contract Administration Services

Sections 4.1 and 4.2 provide menus from which the parties may select these additional services. The parties should designate the services the Program Manager shall provide by placing a check or “X” in the box adjacent to those service descriptions. The Program Manager’s services will not include any items that are not designated with a check or “X” in the appropriate box.

§ 4.3 The parties should complete the table contained at Section 4.3 prior to executing the Agreement. For each service listed, the parties should indicate the party responsible for providing the service in the appropriate column and identify the place where the service is described—e.g., “Section 4.4” “or an exhibit attached to this document and identified below.” The Program Manager is not responsible for any listed service unless specifically so designated in the Responsibility column of the table.

§ 4.5.1.3 Insert an agreed-upon number of hours beyond which the Program Manager will be entitled to compensation as Additional Services under this section.

§ 4.5.2 Insert the number of months beyond which the Program Manager shall be entitled to compensation as Additional Services.

Article 7 – Claims and Disputes

§ 7.2.4 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 10 – Compensation

There are a number of methods for computing compensation for program management services. Four of these methods are time-based, reflecting in different ways the time spent by the Program Manager on the Project:

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.

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

Square Footage, in which the square footage of the structure or structures 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 or facilities.

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 Program Manager and the Owner. Further, the AIA makes no recommendations and has no guidelines or schedules that specify the amount of compensation that should be paid.

§ 10.1 Insert the basis of compensation for the Program Manager’s Basic Services. Sample language is provided below for several of the most widely used methods of compensation.

If 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 Program Manager’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 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 Professional Fee Plus Expenses is 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. Technical Level I time at the fixed rate of ________ ($__) per hour. For the purposes of this Agreement, Technical Level I personnel include: (List those personnel by name or job title who are highly skilled specialists.)
      4. Technical Level II time at the fixed rate of ________ ($__) per hour. For the purposes of this Agreement, Technical Level II personnel include: (List those personnel by name or job title who hold intermediate-level positions relative to Technical Level I, such as professionals awaiting licensure and managers of clerical staff.)
      5. Technical Level III and clerical personnel time at the fixed rate of ________ ($__) per hour. For the purposes of this Agreement, Technical Level III and clerical personnel include: (List those personnel by name or job title who occupy junior-level positions, such as word processor or office assistant.)
      6. Compensation for services rendered by Consultants shall be based on a multiple of ________ (__) times the amounts billed by Consultants.

If a Stipulated Sum is 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.

§ 10.3 See methods of compensation shown above for Section 10.1.

§ 10.4 See methods of compensation shown above for Section 10.1.

§ 10.5 See methods of compensation shown above for Section 10.1, if other than a percentage of the invoiced amount.

Article 11 – 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.

 

Executing the agreement.

The persons executing AIA Document C172–2014 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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