Summary:
A quick overview of "A121™–2018, Standard Form of Master Agreement Between Owner and Contractor where Work is provided under multiple Work Orders". Learn about Related documents, Changes from previous edition, and dispute Resolution from A121.
Content.
Changes from the previous edition
Dispute Resolution—Mediation and Arbitration
Synopsis.
AIA Document A121–2018 is a Master Agreement between the Owner and Contractor. It is intended for use when the Contractor’s scope of Work will subsequently be specified through the use of one or more Work Orders. A121-2018 provides only the common terms and conditions that will be applicable to each Work Order. Use of A121 plus a Work Order creates a contract that includes both the terms and the scope of Work.
A121-2018 is coordinated for use with AIA Document A221™–2018, Work Order for use with Master Agreement Between Owner and Contractor. The Master Agreement plus Work Order contracting method allows multiple scopes of Work to be issued quickly without the necessity to renegotiate the terms and conditions of the Contract.
It may be used on projects with a stipulated sum; cost of the work plus a fee, with or without a guaranteed maximum price; or other payment method determined by the parties. If using a cost-plus payment method, the parties will also use A121 Exhibit A, Determination of the Cost of the Work. For use and execution of a document, see its instructions »
Purpose.
AIA Document A121–2018 is not a stand-alone agreement and must be used with an appropriate Work Order document in order to establish the Contract for construction. A121-2018 is coordinated for use with AIA Document A221™–2018, Work Order for use with Master Agreement Between Owner and Contractor. It is important for users to note that A121–2018 and each executed Work Order is considered a separate contract for a discrete scope of Work.
Using AIA Document A221–2018, the Owner and Contractor are asked to select the payment method in the agreement using a checkbox. If either of the two cost-plus payment methods is selected, Exhibit A, which provides the detail for the Cost of the Work, will be applicable and incorporated into the Contract.
Related documents.
AIA Document A121–2018 does not include a Contractor’s scope of Work. The scope of Work must be added by Work Order to form the Contract for construction. A121–2018 has been coordinated for use with AIA Document A221–2018, Work Order. When used with a non-AIA Work Order, it is important that the documents are carefully coordinated.
Before transmitting Instruments of Service or other information in digital form, parties should establish protocols for that transmission.
Changes from the previous edition.
AIA Document A121–2018 revises AIA Document A121–2014 to parallel the 2017 revisions made in A104–2017, Standard Abbreviated Form of Agreement Between Owner and Contractor and A201–2017, General Conditions of the Contract for Construction. It incorporates alterations proposed by architects, contractors, owners, and professional consultants. Some of the significant differences in content between AIA Document A121–2014 and AIA Document A121–2018 are listed below.
Article 5 – General Provisions
§ 5.6 Similar to AIA Document A201®–2017, this section requires the development of protocols for the transmission of Instruments of Service or other data in digital form.
§ 5.7 This new section requires the parties to develop protocols for the use of, and reliance on, a building information model or portion thereof. Use of, or reliance on, a building information model without established protocols will be at the using or relying parties sole risk.
§ 5.9 Section 5.9.1 allows the Owner and Contractor to provide notice in electronic format. 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 pursuant to Section 5.6 and 5.7.
§ 5.10 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, if selected 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 provision addresses those particular interests of the Owner in a cost-plus contract, and the corollary obligations of the Contractor.
Article 6 – Owner
§ 6.1.1 Similar to A201–2017, the Contractor may request evidence that the Owner has made financial arrangements to fulfill its obligations under the Contract. The Contractor is not required to commence construction if it requests such evidence and the Owner fails to provide the evidence.
§ 6.3 Revisions to this section clarify that when the Contractor defaults or neglects to carry out the Work in accordance with the Contract Documents, the Owner may correct the Work and the Architect may withhold or nullify a Certificate for Payment to the extent reasonably necessary to reimburse the Owner for the cost of correction. If the Contractor disagrees with the withholding, it may make a Claim in accordance with Article 19.
Article 7 – Contractor
§ 7.4 This provision has been revised to require that material, equipment, and other special warranties (e.g. a twenty-year roof warranty) must be written in the name of the Owner or be transferable to the Owner and will commence in accordance with Section 13.6.3.
§ 7.9.3 Similar to A201–2017, this new provision recognizes that the Contractor may be required to hire design professionals to complete the Work where required by the Contract Documents. In that event, the Contractor is permitted to rely on the performance and design criteria provided by the Owner and Architect. The Contractor must perform the services with an appropriately licensed design professional.
Article 10 – Construction by Owner or by Separate Contractors
§ 10.1 The term “Separate Contractor” has been defined in this section to mean other contractors retained by the Owner under separate agreements and is used as a defined term throughout the document.
Article 11 – Changes in the Work
§ 11.1 To ensure consistency with the requirements of A201–2017, language has been included recognizing that the Contractor is required to proceed promptly with changes in the Work unless otherwise provided.
§ 11.3 Revisions to this section clarify that the Contractor should not proceed with a minor change in the Work directed by the Architect if the Contractor believes that the change will affect the Contract Sum or Contract Time. The Contractor may not proceed with a minor change without giving notice that it believes a change in the Contract Sum or Contract Time is warranted to the Architect.
Article 13 – Payments and Completion
§ 13.1.1 This section has been modified to require that changes to the schedule of values must be submitted to the Architect and will be used as the basis for reviewing subsequent applications for payment.
§ 13.2 Language regarding the preparation of a Control Estimate on projects where payment is based on the Cost of the Work plus Contractor’s Fee without a Guaranteed Maximum Price was previously included in Exhibit A, Determination of the Cost of the Work. This language has been moved to Article 13 because it was deemed out of place in Exhibit A. Exhibit A now includes only those provisions for determining the Cost of the Work.
§ 13.3.2 This new provision is included to better describe the requirements of the Application for Payment.
§ 13.5.4 This new provision requires that the Contractor indemnify the Owner for any lien claim or other claim related to payment by a Subcontractor, provided the Owner has fulfilled its obligations under the Contract Documents.
§ 13.7.3.4 New language has been included stating that the making of final payment by the Owner does not constitute a waiver of claims arising from audits performed by the Owner after final payment, if permitted by the Contract Documents.
Article 15 – Insurance
The insurance section has been expanded and modified to track the insurance requirements set forth in the 2017 owner-contractor agreements. The AIA encourages you to discuss the insurance and bonds requirements of A121–2018 with your insurance broker and legal counsel, so that appropriate insurance can be put in place before the start of construction.
Article 18 – Termination of the Contract
§ 18.3 This provision has been modified to establish a “termination fee” that will be agreed to by the parties and payable in the event the Owner terminates the Contractor for convenience. Additionally, revisions have been made to clarify that costs payable to the Contractor under a termination for convenience include costs attributable to terminating subcontracts.
Article 19 – Claims and Disputes
Several changes have been made to this Article. First, the section on “time limits on claims” has been moved to Article 21 from Article 19. Second, revisions clarify that claims occurring before conclusion of the corrections period are subject to a 21-day notice period and are also subject to initial decision by the Architect. Claims made after conclusion of the corrections period are not subject to the 21-day notice requirement and do not require a decision by the Architect. This change is meant to clarify that the reason for the 21 day notice period and decision by the Architect is to keep the Project moving without delay. This is not a necessity following conclusion of the corrections period.
§ 19.7 and § 19.8 These sections have been revised to clarify that consolidation and joinder decisions cannot be made at the sole discretion of the party seeking consolidation and joinder but, rather, must be made in accordance with the applicable arbitration rules.
§ 19.10 Language has been included, consistent with A201–2017, requiring the Contractor’s continuing performance pending resolution of a Claim.
Exhibit A – Determination of the Cost of the Work
Exhibit A, Determination of the Cost of the Work has been modified to conform to changes made in AIA Documents A102™–2017, A103™–2017, and A104-2017. As previously stated with respect to Section 13.2, language regarding creation and use of the Control Estimate has been deleted and included in the main text of AIA Document A121–2018. Other changes to Exhibit A are described below.
Article A.1 – Cost to be Reimbursed
General changes have been made throughout Articles A.1 and A.2 to clarify the meaning of provisions relating to costs to be reimbursed. Changes discussed below are limited to those sections where changes will affect the category of cost allowable under the provision.
§ A.1.2.2.1 A fill-point has been included in this section to allow the parties to provide for an agreement as to the allowable activities performed and percentage of time spent on activities related to the Work by the Contractor’s supervisory and administrative personnel performing Work at sites other than the Project site.
§ A.1.2.5 This new section clarifies that if the parties have agreed to a schedule of labor rates, those labor rates will remain unchanged for the duration of the Agreement unless the parties execute a Modification.
§ A.1.6.1.2 This new section has been included to allow for the cost of insurance through a captive insurer owned or controlled by the Contractor to be included in the Cost of the Work, with the Owner’s prior approval.
Article A.2 – Costs Not to be Reimbursed
§ A.2.1.2 Language formerly appearing in Section A.1.2.5, allowing the Contractor to include bonuses, profit sharing, and other incentive compensation of Contractor’s personnel in the Cost of the Work, has been moved to Section A.2.1.2 (costs not to be reimbursed). Section A.2.1.2 will allow these costs to be included in the Cost of the Work if approved in advance by the Owner. This is not a change to the operation of the provision; it clarifies that these costs may only be included in the Cost of the Work if approved by the Owner.
Article A.4 – Subcontracts and Other Agreements
§ A.4.1 This section has been revised to clarify that the Owner is not the party responsible for selecting which Subcontractor bids will be accepted. Rather, the Contractor is responsible for determining which Subcontractor bids will be accepted and the Owner, in consultation with the Architect, may choose to reject Subcontractors proposed by the Contractor.
Dispute Resolution—Mediation and Arbitration.
This document contains provisions for mediation and arbitration of claims and disputes. Mediation is a non-binding process but is mandatory under the terms of this agreement. Arbitration may be mandatory under the terms of this agreement. Arbitration is binding in most states and under the Federal Arbitration Act. In a minority of states, arbitration provisions relating to future disputes are not enforceable but the parties may agree to arbitrate after the dispute arises. Even in those states, under certain circumstances (for example, in a transaction involving interstate commerce), arbitration provisions may be enforceable under the Federal Arbitration Act.
The AIA does not administer dispute resolution processes. To submit disputes to mediation or arbitration or to obtain copies of the applicable mediation or arbitration rules, contact the American Arbitration Association at (800) 778-7879 or visit the website at adr.org.