AIA Document C196–2008 is a standard form of agreement between a single purpose entity (“the SPE”) and a project owner, called the owner member. C196–2008 is intended for use on a project where the project participants have formed the SPE utilizing AIA Document C195™–2008, Standard Form Single Purpose Entity Agreement for Integrated Project Delivery. It is coordinated with AIA Document C195–2008 in order to implement the principles of integrated project delivery, including the accomplishment of mutually-agreed goals. C196 provides the terms under which the owner member will fund the SPE in exchange for the design and construction of the project. The SPE provides for the design and construction of the project through separate agreements with other members, including an architect and construction manager, utilizing AIA Document C197™–2008, Standard Form of Agreement Between Single Purpose Entity and Non-Owner Member for Integrated Project Delivery. The SPE may also enter into agreements with non-member design consultants, specialty trade contractors, vendors, and suppliers. For use and execution of a document, see its instructions »
Integrated Project Delivery is a project delivery approach that integrates people, systems, business structures, and practices into a process that collaboratively harnesses the talents and insights of all participants to reduce waste and optimize efficiency through all phases of design, fabrication and construction.
AIA Document C196–2008 is intended for use on a project where an owner, architect, construction manager, and perhaps other project participants, have formed a single purpose entity (“the Company”) to deliver a project utilizing Integrated Project Delivery and have executed C195–2008, Standard Form Single Purpose Entity Agreement for Integrated Project Delivery (the SPE Agreement). C196–2008 is a standard form of agreement between the single purpose entity, which is a limited liability company, and the member that is the project owner (“the Owner”). The other members of the Company are referred to as Non-Owner Members.
AIA Document C196–2008 provides the terms pursuant to which the Owner will fund the Company for the costs incurred in the design and construction of the project, including the amounts owed to the architect, construction manager and other Non-Owner Members of the Company under their separate agreements with the Company. In exchange, the Company agrees to furnish the design and construction of the project through separate agreements with the other Members, including an architect and construction manager, utilizing AIA Document C197–2008, Standard Form of Agreement Between Single Purpose Entity and Non-Owner Member for Integrated Project Delivery.
The Company may also enter into agreements with design consultants, specialty trade contractors, vendors and suppliers that are not Members of the Company (Non-Members) to furnish the necessary design services and construction. The Company itself shall not provide any services directly, but furnishes design and construction services to the owner through contracts with Members and Non-Members.
Initially, the Owner is required to fund the Company for the development of a Target Cost for the project. The Target Cost, once agreed to by the Owner, represents an amount that the Company indicates the Actual Cost will not exceed. Following the Owner’s acceptance of the Target Cost, the Owner is required to fund the Company for the Actual Cost incurred in completing the design and construction of the project. If at any point, the Actual Cost exceeds the Target Cost, the Owner is only required to fund amounts in excess of the Target Cost for amounts the Company must pay to the Non-Members and amounts owed to the Non-Owner Members for the achievement of specific project goals.
C196–2008 is intended for use in conjunction with C195–2008 and C197–2008, Standard Form of Agreement Between Single Purpose Entity and Non-Owner Member for Integrated Project Delivery. C197–2008 sets forth the specific services required of the Non-Owner Members and how the Company will compensate the Non-Owner Members for their services.
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.