Formal design-build agreements are used by property owners in circumstances where a single firm is hired that will be responsible for both designing and constructing a project. Sometimes projects fall into this category by default. For example, a contract that simply states the contractor will install a bill of materials, without reference to plans, is in fact a design-build agreement—but may leave unclear who is responsible for the actual design of the construction. This can lead to numerous problems down the road. Fortunately, the American Institute of Architects (AIA) publishes a commonly-used form for design-build agreement forms, the AIA A141. This AIA form may be worthy of consideration when choosing among starting points for a design-build project – but I recommend proceeding with caution.
The AIA recently published a 2014 update to the 2004 A141 form, and the 2004 form will no longer be available for use after 2015. The 2014 updated form includes a variety of modifications. Some clarify 2004 provisions, some simplify the form, and some change the risks and responsibilities of the parties.
Of particular note is that the 2014 form includes a key structural change from the 2004 from. Both owners and design-builders should be aware of this change before contemplating use of the new form. While the 2004 form states a maximum price and completion date for the project, the 2014 form leaves these two matters open for later agreement, once final designs have been prepared. This might make sense where the original project information is insufficient for the design-builder to make time and price commitments up front. On the other hand, owners may not wish to wait on these two critical matters until later in the process, at which time the two parties might not reach agreement. Similarly, design-builders may desire the certainty of the original agreement stating what time and price constraints they must design to. In these cases, use of the 2014 AIA form may be inappropriate without substantial modification, and consideration of another contractual starting point may be in the cards.
As always, consultation with counsel regarding the appropriate strategy for any construction contract is well-advised.