Masonry Magazine December 1997 Page. 17
AIA A201 and A401 Questions and Answers
How do you view the latest changes in the 1997 A201 General Conditions as getting new, favorable terms?
I see the new A201 as being one more big step forward for subcontractors. Most of the improvements recommended jointly by American Subcontractors Association (ASA) and our partners at ASC (Associated Specialty Contractors) are now incorporated in A201.
What are some examples of these A201 improvements?
They range from strengthening requirements for owners to demonstrate adequate project financing, shielding the parties against consequential damages, clarifying that owner payments for subcontract work are to be held in trust by contractors and not used for other purposes, limiting potential legal costs by requiring mediation before arbitration or court action, requiring more owner insurance for on-site losses and clarifying the responsibilities of the parties where some design work is delegated to contractors and subcontractors. There are many other helpful changes, and I am sure these will be publicized in various ways.
How about the flip side? Were there any give backs or new terms unfavorable to subcontractors?
Thankfully, subcontractors retain all of their valuable protections found in the Payment and Subcontractor Relations sections of A201. Serious attempts were made to weaken subs' entitlements, but AlA concluded that both owners and subcontractors benefited from these protections. We also avoided adverse new provisions that would have cost subs more if the specs were inconsistent, would have made contractors and subs liable for loss or damage by on site visitors or unknown parties, required subs to reimburse architects for reviewing proposed substitutions and value engineering changes and allowed owners to correct deficient work at a sub's expense after one year correction period. Keeping out onerous language is often just as important.
How about A401? It was already recognized as a great subcontract form for subcontractors. Can one expect any improvements?
This good form just got better. The A201 now becomes the General Conditions, by reference, for A401 except when in conflict with other contract terms. There are also new A401 provisions that disclaim consequential damages, provide for mediation of disputes and confirm the trust nature of progress payments. Subs are now entitled to get evidence of adequate owner financing, backcharges are limited to work done only after prior notice to subs and billed promptly, billing by subs is allowed for contractor authorized extra work even if a formal change has not been issued and general contractors must give subs written notice if the full amount of their subcontract billing is not approved. There many other plus features in A401 that I'm sure many groups will also be reporting.
Did you get all of the changes to AIA documents that you would have liked or is there more to try for in the next edition?
I guess that is never possible to be completely satisfied, especially where so many competing interests have to be satisfied. It would have been nice to get escrow of retainage. AIA declined because the practice is not widespread and they fear that owners would be reluctant to use A201 if retainage escrow was required. I had hoped for a simpler system for processing claims in A201. Unfortunately none of the critics of the present cumbersome claims system could come up with a better way. We also lacked horror stories of serious problems caused by the A201 claims process. On design work, AIA did agree to architects assuming more responsibility, but I believe that A201 is still unduly protective of architects. This may be natural in documents published by AIA, but I sense that enlightened architects see merit in their accepting full responsibility for their work.
The new design delegation language in A201 has drawn fire from many. What are your thoughts on this particular provision?
I personally believe it strikes a reasonable balance and overall is helpful. It limits delegation of design to services specifically required of contractors and subs in the contract documents, requires architects to specify fully and be responsible for the adequacy of the performance and design criteria, exempts work not allowed by state law and obligates the architect to review, approve or take appropriate action on submittals by designers hired by contractors or subcontractors. Architects complain that this language is pro-contractor and general contractors argue that it's pro-architect. That's probably the best evidence that a reasonable compromise was struck.
What should subcontractors do to make the best use of these latest AIA documents?
First, take the time to read both A201 and A401. Any items of particular interest should be marked. More and more subcontractors are substituting A401 subcontract forms to replace onerous general contractor private subcontracts. ASA's Fundamentals of Fair Subcontracts shows how easy it is to do. Even if a few modifications have to be negotiated, there is comfort in knowing that the remaining language is even handed.
Suppose a subcontractor finds that some provision in as AIA document has worked against subcontractors, What should he or she do?
Subcontractors are encouraged to write to ASA headquarters reporting on any situations where AIA documents adversely affected them. Specific horror stories have the most impact on AIA when changes are recommended. No forms are ever so good that they can't be improved, and many of our best suggested changes to A201 and A401 came from members.