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Responsibilities of the Owner under AIA’s 1997 Owner-Architect Agreement and the Construction Agreement
A Lopsided Construction Team
The Owner Doesn't Always Know What to Do

Arthur O'Leary, FAIA, MRIAI


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Members of the Team
In the usual construction contract, there are three essential parties, often spoken of as a team: an owner, a constructor, and a designer. The AIA standard contract forms anticipate the participation of these three entities, with the architect coordinating the design professionals and administering the construction contract. 

On paper, it looks like it ought to work all right and produce satisfactory construction results without a hitch. The concept of a "team," however, is sometimes an erroneous or inappropriate metaphor as the three so-called team members, most of the time, are combined on a temporary ad hoc basis, never having worked together on a previous project. For the team to function properly each of its members have to know how to do its part. All three must be aware of the contract procedures and the customary construction industry understandings and practices. 

The assumption is made that each of the three parties knows its job and is properly prepared to carry out its functions in accordance with the written agreements. This idealistic assumption is not always entirely correct. 

The Team Is Established by the Architectural Agreement and the Construction Contract 
The three main parties comprising the usual team are linked by means of two separate, though usually coordinated, contracts: 
• the owner-architect agreement, and 
• the owner-contractor contract. 

Only the owner is signatory to both agreements. The success of the venture is highly dependent on all three parties carrying out their duties and responsibilities completely and effectively. 

Contractors and architects are normally a continuous and permanent part of the construction industry while some owners are not.

Contractors. Carefully selected contracting firms generally know what they are doing since they are in the construction milieu all of the time, 365 days a year. They are licensed by the state in which they do business and they compete keenly with other competent contractors. Many members of their office organizations are graduates in various contracting, engineering, and business disciplines and most of them participate in seminars offered by their contracting associations. They usually read the industry press. Most of their field personnel are skilled in their trades and work under experienced supervisors. Their work in the field is performed under the scrutiny of building inspectors, engineers, and architects. Contracting is a full time job. 

Architects. Similarly, architectural firms are all in the hands of educated and licensed architects and engineers. They constantly participate in continuing education activities and attend seminars for improving and expanding their professional skills, understanding, and awareness. They read the professional press. They practice their professions continuously as a full time activity. It is a serious dedicated life's work. 

Owners Are All Different
The third member of the team is the owner, arguably the most important and indispensable member, without whom there would be no project or even a need for the team. Unfortunately, owners are the potential weak link in the construction process, as they do not always know what to do, or when, or how to do it. They are not uniform in their capabilities. 

Some are well qualified, understand what they are doing, and conduct themselves appropriately. This is particularly true of organizations that have full time facilities departments staffed with qualified and experienced construction professionals and administrators. Some owners are highly experienced in construction procedures having been through the process repeatedly and are almost an integral part of the construction industry. 

But other owners are only in the role on rare occasions or perhaps only once in a lifetime. For them each of the owner's duties and responsibilities is a unique experience to be puzzled over and accepted, or possibly glossed over, or even rejected. Neophyte owners usually rely heavily on their architects to keep them apprised of appropriate responses but some do not always respond to valid professional advice. Some obtain their guidance from well-meaning but often ill-informed friends or colleagues. When the inexperienced owner conducts itself in an improper, bizarre, or cavalier manner, the system breaks down. The team loses a key player. This normally produces unsatisfactory results including inappropriate buildings, uncontrolled costs, runaway construction time, and unnecessary controversy. It places an unexpected and unfair burden on the contractor and the architect. 

All parties to contracts are expected to deal with each other fairly and honestly and to refrain from interfering with the other's performance. In addition to these implied covenants of good faith and fair dealing, the AIA agreement forms assign specific duties to the owner, contractor, and architect. 

The Owner's Duties Under the Architectural Agreement
As a matter of client orientation at the very beginning of the owner-architect relationship, the architect should undertake to explain the owner's duties and responsibilities required by the agreement. These will be found in B-141-1997. 
• The owner is required to provide full information in a timely manner regarding the requirements and limitations on the project. (B141-1997, 1.2.2.1) Initially, this information should be stated in the agreement in Article 1.1. The owner, at the time of executing the agreement, will have furnished the project parameters including the size and location of the project (1.1.2.2), the program (1.1.2.3), the legal description and restrictions of the site (1.1.2.4), the overall budget and building cost budget (1.1.2.5), time limitations (1.1.2.6), the proposed construction delivery method for the project (1.1.2.7), and any other parameters that may be applicable to the project. 
• The owner must also furnish, within 15 days after the architect's written request, information needed for evaluation or enforcement of the architect's lien rights. (1.2.2.1) 
• The owner must provide the architect with a program setting forth all of the project requirements and objectives. (1.1.2.3 and 1.2.2.1)) 
• The owner must establish and periodically update the overall budget as well as the budget for the cost of the work including related costs, and reasonable contingencies. The owner cannot make significant changes in the budgets or contingencies without the architect's agreement to a corresponding change in the project scope and quality. (1.2.2.2) 
• The owner is required to designate a representative authorized to act for the owner. (1.1.3.1)
• The owner must review documents promptly and make decisions in a timely manner. (1.2.2.3) 
• The owner must provide surveys showing specified physical characteristics of the land as well as all pertinent legal limitations, zoning, and all information related to utilities available to the site. (2.2.1.2) 
• If the architect requests it, the owner must furnish the services of geotechnical engineers to determine the site characteristics relating to subsurface conditions. (2.2.1.3) 
• When requested by the architect, the owner must furnish the services of specialized engineers and other consultants reasonably required by the scope and nature of the project. (1.2.2.4) 
• The owner is required to provide all necessary physical testing and analysis required by law or the contract documents. (1.2.2.5) 
• The owner must furnish all legal, accounting, auditing, and insurance counselling services as necessary at any time for the project. (1.2.2.6) 
• The owner must give prompt written notice to the architect whenever aware of any fault or defect in the project or the contract documents. (1.2.2.7) 
• Should the owner require any certifications of the architect, the proposed language and form must be submitted to the architect at least 14 days in advance of their execution. (1.3.7.8) 
• The owner must make all payments to the architect as required by the agreement. (1.5) 
• The primary responsibility for making applications for governmental approval rests with the owner. The architect is required to assist the owner in this pursuit. (2.1.6)
• The owner is required to cooperate with the architect's recommendations to adjust the project's size, quality, or budget in the effort to comply with the owner's budget. (2.1.7.1)
• The owner is primarily responsible for obtaining competitive bids or negotiated proposals, awarding and preparing construction contracts, establishing a list of prospective bidders and in evaluating bids and proposals. The architect is obligated to assist the owner in these activities. (2.5.1, 2.5.2, and 2.5.3)

The Owner's Duties Under the Construction Contract
Owners who are not fully aware of the contractor's and architect's expectations during the construction period, will often be found wanting. An architect who realizes that the client is deficient in the knowledge necessary to perform the owner's further obligations should, at the very least, advise the client to study the general conditions of the construction contract and should warn of the possible consequences of inadequate attention to their requirements. These will be found in A201-1997. 
• If the contractor requests it in writing, the owner is required to disclose all the property information needed to evaluate or enforce lien rights. (A201-1997, 2.1.2) 
• Upon the written request of the contractor at any time, the owner must furnish to the contractor reasonable evidence that sufficient financial arrangements have been made to fulfil the owner's obligations under the contract. (2.2.1) 
• The owner must furnish to the contractor surveys of the site showing physical characteristics, legal limitations, utility locations, and the legal description. (2.2.3)
• The owner must pay the fees for all permits, easements, approvals, assessments, and charges that are not the contractor's responsibility under the contract documents. (2.2.2) 
• The owner must provide all information or services required by the contract documents or requested by the contractor in writing with reasonable promptness to avoid any construction delay. (2.2.4)
• Unless the contract documents provide otherwise, the owner must pay for all copies of the contract drawings and specifications reasonably needed by the contractor for execution of the work. (2.2.5) 
• The owner is also obligated to pay all sums when due under A201-1997, Article 9 and as required by the construction agreement. (A101-1997, Article 5 or A111, Article 12) 
• The owner is obligated to carry property insurance to protect the contractor's as well as its own interests during the construction period. (A201-1997, Article 11) 
• In addition, the owner has a number of specified duties and obligations incidental to the existence of separate contractors or work being done with the owner's own forces. See relevant provisions in General Conditions, A201-1997. 

Saving the Team
If the owner is not in a position to handle the normally required and expected owner's obligations, the architect should not sit idly by and participate on a lopsided team. The best move is to advise the owner to retain a competent entity to assist with provision of these essential services. This could be accomplished by the owner's engaging a construction manager or possibly by extending the architect's scope of service to include these additional functions. 

This article is based on a similar article that first appeared in Design Cost Data in the Sept/Oct 1998 issue.

For the purpose of this article, assume that the following agreements are in use:
Between Owner and Architect:
Standard Form of Agreement Between Owner and Architect with Standard Form of Architect's Services, AIA Document B141-1997. 
Between Owner and Contractor:
Standard Form of Agreement Between Owner and Contractor where the basis of payment is a Stipulated Sum, AIA Document A101-1997, or 
Standard Form of Agreement Between Owner and Contractor where the basis of payment is the Cost of the Work Plus a Fee with a Negotiated Guaranteed Maximum Price, AIA Document A111-1997, and 
General Conditions of the Contract for Construction, AIA Document A201-1997. 


“A Guide to Successful Construction: Effective Contract Administration” by Arthur F. O’Leary, FAIA, MRIAI or “Construction Nightmare Jobs From Hell & How To Avoid Them” by Arthur F. O’Leary and James Acret are available from bookworkz.com or call DCD at 800-533-5680.

 


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