Architect Contract
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The architect's contract is usually straight forward. On almost all of the development projects I have managed, the architect and developer have used the AIA Document B101 - Standard Form of Agreement Between Owner and Architect. I ask the architect to create the initial draft of the contract and send to me for review. Below are some items in the contract that a development manager should pay particular attention to.
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Consultants Retained Under Basic Services
Under this section of the contract, review who the architect plans to hire to provide structural, MEP and other engineering services (if any) for the project. Make sure you know of and are comfortable with these engineering consultants. If those engineers are lazy with their design and not cost conscious, they can cost the project a lot of unnecessary expense that a more deliberate and cost conscious design could achieve. For example, it is easy to design a structurally sound building if you throw tons of steel at it. A good structural engineer will be cost conscious with the tonnage of steel as he designs the structure.
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Design Errors & Omissions
Developers shouldn't expect perfect plans. That's unreasonable. Owners don’t pay architects enough money or give them enough time for perfect plans. There are bound to be some level of errors and omissions in every set of plans. One of the main reasons developers carry a contingency in their development budgets is to deal with these design shortcomings, which usually result in a change order from the GC.
However, if there are gross errors and omissions that will cost the project a lot of money, you may consider filing an errors and omissions claim against the architect. If you do file this claim, that is going to be a painful and drawn out process for everyone. But to help ensure you are protected, check the Professional Liability limits in your contract to make sure the dollar thresholds are high enough. Typically those thresholds should be at $2 million per claim and $3 million in aggregate for smaller projects, and $5 million and $7 million respectively for larger projects.
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Supplemental and Additional Services
This section of the B101 provides a handy table to be able to quickly review who all is performing what design service. For example, civil engineering and building commissioning are listed in this section. These are services that the architect may or may not contract for and provide under his base service. This table helps the development manager quickly see if there are any scope gaps or overlap in design services.
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Construction Phase Services
This section of the contract is important because it identifies how many site visits the architect will make to the project during construction. I typically want the architect to be onsite at least once per month after the building starts going vertical. It also identifies the architects participation in Owner/Architect/Contractor meetings, which can sometimes happen weekly on complex developments. Clarify in this section how often you expect the architect to visit the site and participate in project meetings.
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Also make sure your architect's structural and MEP engineers have sufficient project site visits in the contract. The structural engineer should visit the site 2 - 4 times to ensure the superstructure of the building is coming together as planned. The MEP engineer should have a similar amount of visits to review the MEP equipment and connections before walls are closed up.
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Billing of Compensation at Different Phases of the Project
The important thing to review in this section of the contract is to make sure a good percentage of the architect's billing is held for the Construction Phase portion of the architect's work. I try to make this portion 25% - 30% of the architect's full contract dollar amount. But sometimes architects push back and try to lower it.
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You, as the development manager, want to hold a large percentage of the architect's payment until he starts performing contract administration during the construction services phase. If you hold a high percentage of his payment until this phase, you have more leverage over the architect to ensure he does a good job during contract administration. If you pay him 90% of his fee during the design phase, you don't have much financial leverage to ensure he performs well during CA.
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Next Page: Overseeing the Design Process
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