Industry Round Up Blog: Tackling the latest on the new insurance and bonds exhibit, digitization, and sustainable projects exhibit
In this monthly industry round-up, we take a look at the new revised AIA conditions as well as commentaries from those in the construction and surety industry.
Just as when contractors are getting used to the 2007 American Institute of Architects (AIA) Contract, it has been replaced with a 2017 version. The 2007 General Conditions of the Contract for Construction will no longer be available for purchase after October 31, 2017.
Updated every ten years, some of the conditions of the 2017 AIA Contract Documents have been re-written that describe the rights, relationships, and responsibilities of the contractor, project owner, and even the architect. The architect is not a party to the construction contract like the contractor and project owner but partakes in the preparation and performance of contract documents and construction duties as defined in the general AIA conditions.
As Martha L. Perkins, General Counsel of the National Association of Surety Bond Producers (NASBP), wrote in her post, AIA’s A201 Contract Documents: What’s New for 2017:
These conditions “are universally seen as an industry standard and have crucial implications for surety bond professionals.”
In fact, the AIA Document A201™–2017 is in the Conventional (A201) family of documents and referred to as a “keystone” document.
Here are the key revisions of the 2017 AIA contract documents:
New Insurance and Bonds Exhibit
Accompanying the owner-contractor agreement, this 2017 revision to the A201 documents allows involved parties to create specific insurance requirements for any construction project.
Kenneth W. Cobleigh, Esq., Managing Director, and Counsel of AIA Contract Documents, called the new Insurance and Bonds Exhibit as the “single most significant 2017 revision.”
Cobleigh expounded in his NASBP Feature: 2017 AIA Contract Documents: Selected Key Changes:
The requirement helps ensure that the project insurance policies and bonds are backed by companies that are adequately capitalized and that the parties will be protected.
Most of the insurance and bonds requirements written in A201-2007’s Article 11 is now present in the Insurance and Bonds Exhibit, and Article 11 (which still covers insurance and bonds provisions) itself has been revised in the 2017 edition.
The previous 2007 version mandated insurers to notify project owners 30 days before coverage cancellations. Drafted for 2017, Article 11 now delineates the duties between the owner and the contractor to provide notice of such lapses.
The 2017 provision requires that if either party becomes aware of an imminent or actual coverage cancellation or expiration, owners or contractors must notify the other party within three business days following its discovery.
Additionally, the new Insurance and Bonds Exhibit distinguishes between required coverage and optional coverage for contractors:
- Required coverage: This involves several coverages based on the type of project, such as general commercial liability, workers’ compensation and employer’s liability, auto liability, etc.
- Optional insurance coverage: This contains different insurance coverages, including railroad protective liability, asbestos abatement liability, and physical damage to property (in storage or transit).
The 2017 AIA conditions consider the digitization of the industry; it comprises of provisions associated with the use of digital information and BIM (Building Information Modeling).
The importance of digitization, which revolutionizes the field of the construction industry, has established protocols for the use, transfer, and exchange of digital data.
According to Colbeigh:
“The revisions to section 3.11 of A201-2017 clarify that the contractor may maintain contract documents, change order, construction change directives, and other modifications at the site in electronic format.”
Sustainable Projects Exhibit
Taking into account the environmental policies and importance of constructing “green” buildings, AIA introduced the new Sustainable Projects Exhibit.
This provision offers an auxiliary element to most contracts to describe the roles and responsibilities of contractors, subcontractors, and project owners. This also addresses the environmental risks in creating sustainable design and construction elements.
Specifically written for use with third party certification, the new Sustainable Projects Exhibit puts its attention on Energy Star, LEED, and Green Globes certified projects.
In his Green Building Law Update blog about environmental law and sustainability, Stuart D. Kaplow, P.A., an attorney and the principal at the real estate boutique, writes that the exhibit “can also be adapted for use in other green building rating systems from the ICC 700 to ASHRAE 189.1, the IgCC and more.”
The new Sustainable Projects Exhibit supplements the AIA conditions of having a more defined sustainable objective and transforms the current manner of contracting for “green architecture.”
As Kaplow said, “The new Sustainable Projects Exhibit is a game changer.”
According to Joshua N. Kutch, an attorney with Frost Brown Todd LLC in Indianapolis, the new conditions outlined in the 2017 AIA contract documents, “will provide new mechanisms for the parties to construction and design projects to better meet their insurance and environmental concerns.”
Thus, the revised conditions make it easier for project owners, contractors, subcontractors, and architects to check out and determine what is available for any project.
In Colbeigh’s Construction Executive newsletter, “How Will the New 2017 AIA Contract Documents Affect Projects,” he indicates that:
In A201–2017, the contractor remains solely responsible for and has control over, construction means, methods, techniques, sequences, and procedures.
The 2017 documents are available at AIA Contracts.