AHPP 1055-1070.pdf

various types of services, users should consult the special-purpose forms described in this section and the B200-series scope of services documents that are used in conjunction with B102™–2007. F or M or e I n f o r m a ti o n AIA Document Synopses: www.aia.org/contractdocs/reference. The American...

various types of services, users should consult the special-purpose forms described in this section and the B200-series scope of services documents that are used in conjunction with B102™–2007. F or M or e I n f o r m a ti o n AIA Document Synopses: www.aia.org/contractdocs/reference. The American Institute of Architects Official Guide to the 2007 AIA Contract Documents (Wiley, 2009) by The American Institute of Architects. The AIA Building Construction Legal Citator (Lexis Publishing/Matthew Bender & Company, 1984–2012), by Steven G. M. Stein, ed. Legal Guide to AIA Documents, 5th edition (Wolters Kluwer/Aspen Publishers, 2011) by Werner Sabo. Architects and Engineers, 4th edition (Thomson-Reuters/West Publishing, 2012) by James A. Acret and Anne Perrochet. 17.2 Project Team Agreements Timothy R. Twomey, Esq., FAIA When architects form teams to pursue projects, and engage consultants or establish joint ventures with other firms, additional agreements result. The project designer may be a single architect who has the necessary expertise and performs all of the professional services required. More often, however, project design includes other design firms and consultants with special expertise in building engineering systems, special design issues, a particular building type or component of the building, or other aspects of the project. In these circumstances, the architect will need to enter into agreements with other design professionals to deliver the required services. There are a variety of agreements for different purposes. Design Team Agreements Design team agreements are the documents that describe and order the relationships among the parties within the design team. These agreements establish the duties and responsibilities the team members owe to each other, and set forth the benefits each team member can expect to receive for fulfilling its respective responsibilities. It is important that design team agreements be coordinated with each other to avoid gaps or overlaps in the parties’ respective duties and responsibilities. There are different types of design team agreements for different purposes. The more common include the following: Agreements that include the architect and its other design professionals and consultants: ▶ Project Teams (10.2) covers best practices in selecting and organizing teams for project delivery. • Teaming agreements are employed to structure the relationships among the architect and other key design professionals and consultants in connection with pursuing a particular project or client. Timothy R. Twomey is an architect and lawyer with 35 years of experience. He is a vice president and deputy general counsel for RTKL Associates Inc., a global planning, design, and consulting firm with offices worldwide. 1 7 . 2 P r o j e c t Te a m A g r e e m e n t s 1055 PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S FORM I N G RELATI ONSHI PS TO AC CO MP LI S H P R OJ E CT GO ALS • Consultant agreements are typically used by an architect to retain the services of design professionals and other consultants for a project in which the architect cannot provide all of the required services itself. • Joint venture agreements create and structure the relationships between an architect and another design professional or other party who wish to combine forces to provide services to their client. Design-Build and Multi-Par ty Agreements The architect may also enter into agreements with parties that are neither owners nor design professionals, or may enter into multi-party agreements that include not only the owner but also the contractor. Agreements that include parties other than or in addition to the architect and its design professionals and other consultants: PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S • Design-build agreements set forth the relationship between a designer and a builder for projects in which the client wants a single point of responsibility with a single party for all design and construction services necessary for the client’s project. (See the Design-Build Agreements backgrounder in this section.) • Integrated project delivery agreements are a new approach to project delivery which, in a single agreement, creates and structures the contractual relationships among the client, designer, and contractor who jointly share in the success or failure of the project. (See the Integrated Project Delivery Agreements backgrounder in this section.) Such agreements may also include other design professionals and specialty subcontractors. These multi-party agreements create a design and construction team, with the owner as a team member. ▶ Contractor-Led Design-Build (9.4) and Integrated Project Delivery Overview (9.3) discuss these project delivery methods in greater detail. Each of these agreements can and should be shaped and contoured to the unique characteristics of the project, its individual participants, and the chosen method of project delivery. Each should reflect their parties’ agreements on key aspects of their relationship and reflect their respective expectations with respect to the scope of services to be performed and other obligations each party is to owe to the other, the compensation to be paid for performance of those services, the schedule in which those services are to be performed, the risks to be assumed, and by whom, and other key terms and conditions. Architect-Consultant Agreements When other design professionals are required on a project, it is common for architects to select them and add them to the design team. These design professionals act as consultants to the architect, and the architect is responsible to the client for their professional services. The architect-consultant relationship may be established just for the project at hand; it may be a strategic alliance developed between the participants to pursue specific objectives, such as a particular client type or market segment; or the two firms may have a long-standing working relationship on a variety of projects. The architect may seek consulting arrangements with a wide variety of design professionals and specialists—even with other architects. The most common interprofessional relationship is that between the architect and the professional engineer responsible for the detailed design and engineering of one or more of the building’s systems. Most large, complex projects need special expertise in civil, structural, mechanical, and electrical design. Some architecture firms include one or more of these engineering disciplines in-house; many, however, do not. Consultant services to the architect are outlined in the architect-consultant agreement. These services, and other contract terms and conditions, should be carefully coordinated with those in the architect-owner agreement. Ser vices As the architect and owner establish the services to be included in the architect’s agreement, both parties may consider the need for the services of other design professionals. 1056 Agreements and AIA Document Program It is advisable to review with the owner the list of services required to accomplish the project and establish who will be responsible for each. Each professional service identified may be provided by any of the following: • The architecture firm, through its own staff. • A design professional subcontracted to the architecture firm. The design professional may be another architect, an alliance partner, or another firm acting as a consultant to the architect. • A consultant to the owner. This arrangement may include a construction manager, a project or program manager, an independent design professional for another portion of the project, or another architecture firm performing a portion of the architecture services—with or without coordination by the architect. • The owner. The owner’s staff may provide services themselves or by some other arrangement—with or without coordination by the architect. • The contractor. The architect, or the architect’s consultants, may prepare performance specifications for building components such as curtain walls, mechanical systems, or fire sprinklers. To comply with these performance specifications the contractor will retain licensed design professionals through its subcontractors and suppliers. PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S Clarifying responsibilities between the owner and the architect accomplishes at least two things: It helps the architect identify the services for which other design consultants will be sought, and it begins to allocate project risks among the owner, architect, and others on the project team. Two major issues are covered in architect-consultant agreements: passing to the consultant the architect’s rights and responsibilities to the owner with respect to the services to be provided by the consultant, and sharing risks and rewards. Once these key points have been worked out, it is not difficult to prepare an architect-consultant agreement that incorporates the decisions of and parallels the owner-architect agreement. Legal Rights and Responsibilities Usually architects want to give their consultants the same legal rights the architect has from the owner. At the same time, with respect to the consultant’s professional discipline, a consultant should owe the same responsibilities to the architect that the architect owes to the owner. Rather than restate all of these rights and responsibilities from the owner-architect agreement—and run the risk of omitting some—it is common to incorporate the owner-architect agreement (often without specifics of the architect’s compensation) into the architect-consultant agreement. This binds the consultant to provide all of the services in its discipline and to be subject to the same terms and conditions the architect owes to the owner. The architect will need to clarify with its consultants and the owner which design services each consultant will provide and what design services, if any, the contractor will provide under performance specifications. These specifics should be defined in and coordinated with the provisions of the architect’s agreement with the owner, such as AIA Document B101TM–2007, paragraph 2.2, and with the provisions of the owner’s agreement with the contractor, such as AIA Document A201TM–2007, paragraph 3.12.10; reviewed and determined to be in accordance with applicable state law; and discussed by the architect with the owner. Risks and Rewards In assessing the risks associated with a project, the architect should assess how risks will be shared with consultants. The best advice is for the architect and the consultant to make each other aware of the risks associated with their aspects of the project. Providing to the consultant a copy of the owner-architect agreement facilitates this process. With this information, the negotiation can proceed openly. 1 7 . 2 P r o j e c t Te a m A g r e e m e n t s 1057 Compensation Issues Consultant compensation is a matter for negotiation between the parties. Consultants who understand the risks and responsibilities they are assuming will be in a position to negotiate compensation with the architect. In considering compensation, architects will want to address two additional issues: • What level of coordination is required for the consultant services? Because consultant services must be fully integrated with those of the architect, coordination should not be casual. The architect will commit time and money to coordination, and these factors should be considered in establishing the architect’s compensation. Some firms budget coordination services directly; others budget a multiple or markup of consultant costs to reflect the need for coordination as well as the costs of administration and liability. • What will happen if the architect is not paid by the owner or if the project is delayed beyond reason? Typically, the architect will not want to be obligated to pay the consultant until the architect has first been paid by the owner for the consultant’s services. Architects seldom have adequate financial resources to fund such payments, which can average between 20 and 40 percent or more of the architect’s total fees on a project. Architect-consultant agreements often include a “pay-when-paid” or a “paid-if-paid” clause, or both, for this purpose, sometimes including an agreement and release on the part of the consultant not to pursue the architect until the architect receives such funds. Consultants typically understand and accept the architect’s dilemma, but in return would expect the architect to seek prompt payment from the owner. Care has to be taken in drafting such clauses, however, since state laws vary on the enforceability of such provisions. Forms of Agreement PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S Architect-consultant agreement forms with major consultants such as engineers should parallel the owner-architect agreement. (This is normally less critical for consultants for limited purposes such as specifications, kitchens, elevators, security systems, etc.) Statements of service as well as terms and conditions should be carried consistently throughout the owner-architect agreement and the architect-consultant agreements. Using AIA Document C401TM–2007, Agreement Between Architect and Consultant, achieves this goal. However, if the standard form is modified, or a custom agreement is used, it is important to verify that the modification is reflected in all the documents. This is particularly important if the scope of services portion of the owner-architect agreement is changed; in this case, the consultant agreement should be modified as well. Digital Practice Protocols and BIM Management Issues Architect-consultant agreements should address protocols for e-mail, Internet, webbased, FTP site communications, digital information sharing, and digital document storage and transfer. Protocols should also be established for building information modeling (BIM) requirements with respect to design integration among the project team members, and possibly with respect to vertical integration issues with owners, contractors, subcontractors, fabricators, suppliers, erectors, and others involved in the construction process. Along with the significant potential benefits and opportunities such digital practices can introduce to a project, they also bring new risks, possible liabilities, and some uncertainties. Such concerns can include responsibility for the integrity of the model or its constituent parts, ownership of and use rights with respect to the model and its outputs (drawings, specifications, schedules, energy analyses, cost estimates, etc.), protocols for modifications to the model, and responsibility for errors or omissions in the data included in the model. The architect-consultant agreement offers an excellent opportunity for the parties to determine and agree upon how to handle these issues. AIA Documents E201TM–2007 Digital Data 1058 Agreements and AIA Document Program Protocol Exhibit, and E202TM–2008 Building Information Modeling Protocol Exhibit, are useful tools for organizing team members’ thoughts and reflecting their agreements on these issues. Role in Project Planning When the architect-consultant relationship is formed early in the project, or before the project begins, the consultant can be involved in project planning. The consultant then is in a position to commit to services, scope, schedule, and fee before the architect makes these commitments to the owner. ▶ Project Management with Building Information Modeling Processes (10.4) discusses BIM technology, the processes that drive it, and the control and accountability needed to manage BIM’s complexity as a production tool. The Responsibilities of the Architect As the prime design professional, the architect assumes primary contractual responsibility to the owner for the accuracy and completeness of the work of the architect’s consultants. If something goes wrong, the architect can be held contractually liable to the owner for services improperly performed by the architect’s consultant. As design professionals, these consultants are required to perform their services in accordance with applicable standards of professional practice, and failure to do so may result in their direct liability to injured parties. However, their failure to meet the standard of care may also make the architect contractually liable to the owner. This discussion underscores the importance of careful consultant selection and the need for clear agreement between architect and consultant. It is also important for the architect to understand the impact of a consultant’s recommendations and to be prepared to accept initial responsibility and liability for these recommendations. This, in turn, explains why insured architects increasingly seek to retain insured consultants and request a certificate of insurance from them. PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S Owner-Retained Consultants An owner may directly retain project consultants. The architect may or may not have any contractual responsibility for these consultants. If the architect is to have any contractual responsibility, then the architect must be able to review and negotiate those responsibilities. An owner may decide to enter into an agreement directly with another consultant for a number of reasons: • Services may be substantially different from and not overlapping with those of the architect. For example, the owner may retain a land surveyor to develop the information necessary to prepare for design services. • The owner may have a long-standing relationship with the consultant. • The owner may seek the benefit of direct and independent advice. • The owner may feel it can obtain more favorable pricing from consultants it directly retains. • The owner may prefer to structure the project team and then assume the responsibilities for its coordination, either through the owner’s in-house staff or through a program manager. On occasion, an owner may have motives that benefit the owner but not necessarily the project. For instance, the owner may want to save money by (usually unwisely) eliminating coordination services during design or construction, or the owner may want to keep total control of the project by retaining overall coordination responsibilities. In some cases, it is to the architect’s advantage to have the owner directly retain a consultant. This is especially true when the architect must rely on a consultant’s work but is not—and does not want to be—in a position to review that work independently and take responsibility for it (e.g., in connection with land surveying and geotechnical engineering). For this reason, AIA Document B101TM–2007 specifies that it is the owner’s responsibility to provide any necessary land surveying and geotechnical 1 7 . 2 P r o j e c t Te a m A g r e e m e n t s 1059 engineering data to the architect. These consultants are engaged by the owner, and the architect is entitled to rely on the survey and geotechnical information supplied by the owner. Coordination of Ser vices PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S Whatever motivations an owner has for directly retaining consultants, someone must coordinate the services of these professionals. The owner must either assume this responsibility and the risks associated with it, or assign it to a program manager or to one of the prime professionals on the project. Coordination is especially important from the point of view of the architect. Because architects are the generalist design professionals on building projects, others on the project team may expect the architect to coordinate professional services even though the architect may not have contractual responsibility or authority to do so. An architect who acts on that expectation and coordinates activities for other consultants may be held responsible for the results of that coordination, even when the owner has engaged project consultants directly and the architect is not responsible for them. This situation poses unique dilemmas for the architect. As a generalist, the architect is usually in the best position to coordinate the activities of other design professionals on the project. If the architect is not assigned these responsibilities and the owner is unable or unwilling to provide them, the architect should educate the owner about potential increased costs and schedule impacts that may result from uncoordinated design services. The architect may also want to negotiate to assume these responsibilities and to be compensated for them. The architect’s coordination responsibilities with respect to consultants retained by the owner or the owner’s project or program manager should be limited to coordinating its services with those of such consultants. The architect should never assume the responsibility for the internal coordination of any other consultants’ documents. When the architect is assigned coordination responsibilities, owner-retained consultants should be required in their contracts with the owner to coordinate their efforts with the architect, to submit to the architect’s authority to coordinate their authority, and to look only to the owner if they have claims with respect to the architect’s coordination responsibilities. And, as mentioned in the previous paragraph, whether or not the architect is to coordinate the activities of owner-retained consultants (such as attendance at meetings or adherence to schedules), the architect should never assume responsibility to coordinate the documents of such consultants (lest the architect assume responsibility for the content of the consultants’ documents). Consultants should be obligated to coordinate their own documents with those of the architect; the architect’s responsibility should be limited to coordinating the architect’s documents with those of such consultants. JOINT VE NTU RE S A joint venture is a contractual union between two or more firms for one or more specific projects. The joint venture arrangement enables fi rms to combine key resources, expertise, and experience to perform professional services on a specific project while allowing each participating firm to pursue other projects independent of the joint venture. A joint venture functions essentially like a partnership. There is an agreement detailing who brings what to the venture, who will do what, and how the compensation or profit will be shared. The agreement also details how responsibilities and risks are to be allocated internally. Typically a joint venture retains no profits and pays no income taxes; it passes profits (or losses) and tax liabilities along to its participating members. Participating firms are individually and jointly liable to the client and others for the services offered by the joint venture. In other words, each joint venture partner is responsible not only for its own actions, but also for the actions of the other joint venture partners. 1060 Agreements and AIA Document Program Generally speaking, a joint venture is formed only for the purpose of seeking and executing a specific project. After a successful project, some firms feel there is enough value in the collaboration to seek further projects that require the unique talents represented in the venture. Some joint ventures have been so successful that they have resulted in permanent mergers of the participating firms. It is imperative that the joint venture parties have and exhibit a high degree of trust and confidence in one another. It is also imperative that before the project moves forward, the joint venture parties clearly agree on a division of responsibilities for both the professional services the joint venture will provide to the client and the business responsibilities of managing the joint venture itself. This includes decisions about who will handle the finances and banking arrangements, how key decisions will be made and by whom, and how risk for profit and loss will be allocated. Leaving any of these key decisions to be resolved in real time, when emotions may be running high and the consequences significant, creates an enormous risk that the parties’ respective judgments will be unduly influenced by these factors and their ability to come to agreement severely compromised. It may also be advisable for the design professional to confirm that forming a joint venture with another party is permitted by the relevant state’s licensing or practice laws and regulations. Forming joint ventures with parties who may themselves not be licensed design professionals may be prohibited. Reasons for Forming a Venture PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S A successful joint venture begins with a clear understanding of why the venture has been formed in the first place. The initiative to form a joint venture is usually taken by the architect, although it may also come from the owner. The reasons for it may be technical or political. For example, a national firm from outside the owner’s geographic area may enter a joint venture with a respected local firm. Each primary participant in a venture must make an independent decision that the venture makes sense, but the participants must make a similar decision collectively. A firm that discovers it is being used in some unexpected and undesired way—by the owner or by another firm, say, for its higher professional liability insurance limits—may have trouble remaining content and performing at its best. Finally, it is important to understand that some owners are cautious about contracting with joint ventures formed for the specific purpose of performing services on the owner’s project. They may see the advantages for the firms but may not want their project to be the testing ground for the relationship. Process A joint venture is a business proposition, and it is important that a good business relationship be developed among the joint venture partners. The process of forming a joint venture begins with asking these questions: What does the project require? What are your firm’s strengths and weaknesses relative to these requirements? Stated another way, what does your firm bring to the project, and what does your firm need to obtain through a joint venture? One approach is to examine these key issues: • Required skills. What skills does the project require, and what does your firm have in-house (or through capable consultants)? Are other disciplines required? Is the owner expecting construction management, financing, or other specific services? • Background and knowledge. What special requirements does the project have? How much expertise or experience does your firm have in accomplishing projects like the one under consideration? • Staffing. Does your firm have the people with the right expertise and experience available to work on the project? If these people are committed to the project, can your firm meet its other commitments? 1 7 . 2 P r o j e c t Te a m A g r e e m e n t s 1061 • Geography. Does the location of one or both of the venture partners bring an advantage to the project? • Financing. If the joint venture needs resources your firm does not have (e.g., expanded computer-aided design or BIM capability), is your firm in a position to make the investment? • Insurance. Is the scope of each firm’s professional liability insurance acceptable to the other’s—and to the client? • Licensing and registration. While each joint venture member is likely to be properly licensed and registered as a corporation, partnership, or other appropriate legal entity in its home state, will each member and/or the joint venture itself be required to be licensed or registered under the local laws of the state where the project is located? • Management. Does your firm have the leadership and management capabilities to take on the project, service the client, and manage the people, processes, and risks involved? • Contacts. Does your firm have the necessary contacts to secure award of the contract? PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S A careful and honest appraisal of what you bring to the project does two things: It helps you decide whether to pursue the opportunity, and it creates a profile of characteristics to seek in your joint venture partner(s). As the parties come to agreement on the various aspects of a joint venture, these should be written down, perhaps first as a statement of principles and then later as an outline for the joint venture agreement. In this process, trust can be developed and expectations clarified and mutually agreed to, making the drafting of a joint venture agreement less difficult. Following these steps to reaching agreement will make it clear when discussions should break off—the point at which one or more of the parties do not see the reward as justifying its risk. It is sometimes easy to coast into agreement, or at least apparent agreement. Writing it down provides the first real test. The time to discover that a joint venture is not going to work is before contractual commitments have been made to the owner. An even better time is before you pitch the owner on the merits of your team. Joint Venture Agreements There are many business issues, some related to the project and others related to the ways the two firms will work together, that must be addressed in forming a joint venture. The best advice is to be aware of the full range of issues and to negotiate them before the joint venture offers to provide professional services. A review of the AIA standard form of joint venture agreement, AIA Document C101TM–1993, reveals the points to be considered in negotiating a formal agreement. Key issues include the following. Overall Management A mechanism and a budget must be created to manage the joint venture. Under AIA Document C101TM–1993, a policy board includes a representative and an alternate from each participating firm. The board’s responsibilities include, but are not limited to: • Joint venture management to manage joint venture business operations, such as its capital needs and contributions of the parties, banking and financial management, accounting and record keeping responsibilities, insurance requirements, internal dispute resolution procedures, ownership of documents, etc. • Project management to plan, organize, staff, direct, and control the project, and to establish project financial management and risk management/quality control systems. Because each joint venture participant is likely to approach these aspects of their practices in different ways, care must be taken when deciding how the joint venture will function in each of these areas. The participants will want to be open 1062 Agreements and AIA Document Program about their policies and procedures and the rationales behind them so that appropriate practices can be established for the joint venture. • Responsibility for professional services to understand that all of the participants are jointly and severally liable to the client for the quality of the joint venture’s efforts. Internally, however, responsibilities for tasks can be allocated to individual participants. Conceptually, the joint venture may take one of three approaches to doing this: • Each firm assumes full responsibility for a portion of the work. The policy board allocates specific services to each of the participants. For example, Firm A may design the building shell, and Firm B may be responsible for the building’s interiors package. • Responsibility for all services is shared by the joint venture participants. The work is apportioned to individual participants based on (1) skills and experience and (2) cost and availability of resources. For example, Firm A may provide design services, Firm B may prepare the construction documents, and Firm C may administer the construction contract. • One participant takes the lead in providing services, and the others provide support as needed. PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S When responsibility for providing professional services is shared by two or more firms, it is essential that the participants allocate responsibilities clearly. This will eliminate gaps or overlaps in professional services and minimize disputes among participants. The greater the effort joint venture participants put into breaking down and delineating general tasks into specific subtasks before project inception, the greater the likelihood that gaps and overlaps will be eliminated and disputes avoided. One simple method to consider is replacing the “major responsibility” and “minor responsibility” distinctions in the format with the notation “responsible” or “not responsible” and breaking down general tasks into more specific subtasks that can be allocated entirely to one participant. For example, Firm A may be responsible for completing all schematic design phase services “except for those subtasks specifically assigned to the other participant(s).” Those subtasks would then be assigned to Firm B, Firm C, and so forth. Financial Arrangements Of particular importance to any joint venture are the financial arrangements and especially the allocation of risks and rewards to the participants. AIA Document C101TM–1993, Joint Venture Agreement for Professional Services outlines two possible approaches to dividing rewards: the division of compensation method and the division of profit/loss method. • The division of compensation method assumes that the services provided and compensation received will be divided among the parties as they have agreed at the outset of the project. The specific division is a negotiated amount (or percentage of total compensation to the joint venture) based on (1) what each of the parties brings to the joint venture and (2) what each party does as part of the venture. Compensation to each participant is fixed at the outset; each firm’s profit or loss depends on the efficiency with which it carries out its responsibilities. • The division of profit/loss method is based on each party performing work and billing the joint venture at cost plus a stated amount for overhead. The ultimate profit or loss of the joint venture is divided among the parties at the completion of the project. By this approach, the participants share in the good or ill fortunes of the joint venture, but to be successful, it requires allocation of time and costs acceptable to each party at each step along the way. Whichever approach is selected, it is essential to budget for managing the joint venture. Sometimes joint venture participants overlook the additional time and expense involved in this management. 1 7 . 2 P r o j e c t Te a m A g r e e m e n t s 1063 Insurance The agreement should address insurance coverage for the participants, especially professional liability insurance. Participants may agree to coordinate insurance so that coverage, limits, deductibles, and other key provisions are negotiated and included in the joint venture agreement. An individual joint venture firm may find it needs an endorsement to its professional liability policy to cover participation in the joint venture—or that the participation is not covered at all. Another approach is to seek a project insurance policy that insures all parties of the joint venture. Digital Practice Protocols and BIM Management Issues PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S The parties will certainly want to agree on electronic protocols for e-mail, Internet, web-based, and FTP site communications; information sharing; and document storage and transfer. The parties will need to address building information modeling (BIM) requirements to enable design integration between the joint venture parties and among members of the entire design team. Vertical integration issues with owners, contractors, subcontractors, fabricators, suppliers, and others involved in the construction process may also be a concern. The introduction of BIM practices into the design and construction process brings significant potential benefits and opportunities but at the same time introduces new risks, potential liabilities, and uncertainties regarding issues such as who is responsible for the integrity of the model or its constituent parts, who owns and has use rights to the model and its outputs (drawings, specifications, schedules, energy analyses, cost estimates, etc.), what protocols should be used for modifications to the model, and who is responsible for errors or omissions in data included in the model. The joint venture agreement offers an excellent opportunity for the parties to determine and agree upon how to handle these issues. AIA Documents E201TM–2007 and E202TM–2008 are useful tools for organizing the joint venture members’ thoughts and reflecting their agreements on these issues. The Resulting Agreement Agreement on the essential business issues places all participants in a joint venture in a position to finalize the written agreement. At this point, each participant may want to involve its attorney. While it is possible to draft an agreement from scratch, it often makes sense to use, or at least to start with, AIA Document C101TM–1993. This document is intended to provide for the mutual rights and obligations of two or more parties who, once they have established a joint venture, will enter into a project agreement with the owner to provide professional services. It also addresses all issues most commonly encountered in structuring a joint venture, such as those described above. Associated Professional Firms Sometimes two professional firms choose to represent themselves as “associated” with each other to undertake a project. From a legal standpoint, these firms have two choices: They may either form a joint venture or establish a prime-consultant relationship, with one of the firms acting as a prime consultant to the other. Whatever arrangement is chosen, the issues discussed above should be addressed. Roles, responsibilities, risks, and rewards should be defined and delineated in a written agreement between the parties. Once an agreement has been signed, the associating firms should act with that agreement in mind. For example, two architects with a prime-consultant arrangement may hold themselves out and act so that a third party sees them as participants in a joint venture, jointly and severally liable for any resulting problems. This could result in unintended liability for one or both of the parties that would not otherwise exist if it were clear from the parties’ actions that a primeconsultant arrangement existed. Architects should approach architect-consultant and joint venture agreements— indeed, all design team agreements—with the same careful attention they pay to 1064 Agreements and AIA Document Program arrangements with owners. Both have similar purposes: to put in place an outstanding design team and a framework of arrangements that serve the client and the project well. T EAM IN G AGREEMEN TS ▶ Small-Firm Collaboration (5.7) addresses teaming, partnerships, and other arrangements with small-firm practitioners for effective project delivery. PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S Teaming agreements, sometimes called memoranda of understanding or partnering agreements, are agreements between or among the architect and one or more design professionals or other consultants. But unlike architect-consultant or joint venture agreements, which address matters in connection with projects already acquired by the architect, teaming agreements address matters in connection with the pursuit of projects not yet obtained by the architect. It is often appropriate for the architect to assemble a project team as part of the marketing effort to acquire a project. The architect may find it advantageous to form relationships, to create a team or a strategic alliance, with one or more design professionals and consultants to pool their unique capabilities and experiences to present a more convincing case to the client to select the architect’s team. This may even be a client requirement. Owners, especially those whose facilities require sophisticated engineering or other special expertise, are often acutely aware of the need for competent consultants and well-founded architect-consultant relationships. For these owners, consultants become an important part of the interview and selection process. Teaming agreements are typically much shorter than consultant or joint venture agreements, reflective of their relatively narrow purpose and short-term duration. Besides focusing on the effort required to procure the project, they also seek to protect each team member’s position in pursuing the project and from the possibly harmful effects of exposing their key staff and resources to the other team members. Thoughtfully constructed teaming agreements provide an excellent foundation for developing appropriate consultant or joint venture agreements if the team proves successful in securing the project. Teaming agreements can be and are quite flexible to address the specific circumstances of the particular project pursuit, but typically have a number of key features. Among them are the following: • Purpose. The team members agree to cooperate and to prepare a joint proposal to submit to the client for the project. In the event that the team is selected by the client, the teaming agreement will identify whether the team members will enter into a joint venture agreement with each other to carry out responsibilities in connection with the project, or whether one team member will be the prime who will enter into a contract with the client and who will, in turn, enter into consultant agreements with the other team members. The teaming agreement will also identify which team members will be the architect and engineer(s) of record for the project. • Term. The teaming agreement will identify the period of time it will be in effect, typically until either the team learns it is not successful in being awarded the project or, if successful, until the team members execute the necessary joint venture or prime-consultant agreements among themselves. • Obligations of the team members. The teaming agreement describes the services to be rendered by each team member in connection with submitting the proposal for the project, as well as the services each team member will provide if the team’s proposal is accepted by the client. Typically each team member is obligated to use its best efforts to promote and market the interests of the team in the pursuit and implementation of the project. Each team member is usually obligated to bear the costs it incurs in connection with the preparation and submission of a proposal for the project. If there is a stipend payable by the client, say, in connection with a competition which the team members intend to pursue, the teaming agreement would describe the amount and circumstances under which the team members would share that stipend. • Exclusivity. For most projects, team members agree that (a) they will market and solicit the design engagement for the project only as part of the team, (b) team 1 7 . 2 P r o j e c t Te a m A g r e e m e n t s 1065 • • • PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S • • members will not participate in any marketing for the project with any other design professional or other entity, (c) they will not independently market and solicit services for the project, and (d) they will not solicit or accept an engagement from the project owner for the project without the involvement of the other team members as otherwise described in the teaming agreement. No solicitation of other team members’ employees. Team members agree that for a stated period of time after expiration of the teaming agreement they will not directly or indirectly solicit for employment, nor employ, any person who was an employee of other team members during the time the teaming agreement was in effect. Proprietary information. Provisions are included to protect each team members’ proprietary information, data, and materials that may be provided to the other team members in pursuing the project, and not to use the other team members’ proprietary information for any purpose other than for preparation and submission of a proposal for the project. Public relations. Team members typically agree that publications or announcements they may issue, and any representations they may make to existing or prospective clients, will recognize and give appropriate credit to the other team members, and that no team member will itself take credit for the professional work or participation of the other team members. If one team member wishes to use drawings, images, photographs, or other materials related to the project which were prepared by the other team members, written permission from the other team members will first be obtained. Limitations of the teaming agreement. Team members typically want it clear that the teaming agreement itself does not constitute or create a joint venture, partnership, or formal business organization of any kind; that the sole object of the teaming agreement is the marketing and securing of business opportunities for the design of the project; that any obligations of the parties relating to the actual performance of agreements for the project will arise only from a separate agreement (such as a prime-consultant or joint venture agreement); and that nothing in the teaming agreement grants to the team members the right to make commitments of any kind for or on behalf of the other team members without prior written consent. Enforceability and dispute resolution. Provisions to enforce the terms of the teaming agreement and to resolve disputes among the team members, and what law governs the teaming agreement, are typically described. BACKGROUNDER D ESI GN- BU ILD AGR EEMENTS Timothy R. Twom ey, Esq., FAI A Project team agreements may also include design-build agreements in which the client retains in a single contract a design-builder to provide all design and construction services needed to complete the client’s project. The client achieves a single point of responsibility for all services, not having to separately retain an architect for design services and a contractor for construction services. Many clients find this approach desirable since it likely avoids, for the client, the fi nger pointing that sometimes takes place between design professionals and contractors when disagreements arise on issues related to the project, often leaving the client wondering to whom they should look for resolution of the matter. Some clients also feel that overall project schedules and project costs can be reduced by 1066 Agreements and AIA Document Program using this approach to project delivery. AIA Document A141 TM –2004 Standard Form of Agreement Between Owner and Design-Builder, together with its exhibits, can be used for this purpose. Timothy R. Twomey is an architect and lawyer with 35 years of experience. He is a vice president and deputy general counsel for RTKL Associates Inc., a global planning, design, and consulting firm with offices worldwide. BR IDGIN G AGR EEMENT Clients sometimes believe that they must first feel comfortable that the program they provide to the design-builder adequately describes the client’s goals and expectations for the project. Some clients may also want to provide the designbuilder with the general design requirements of the project so that the client has a greater confidence level that the final DE SIGN-B UI LD SUB CONTRACT S The design-builder may provide through its in-house forces all required design and construction services; more often the design-builder will, in turn, contract with needed design professionals and trade contractors for required services. The nature of those contracts will depend upon the nature of the design-builder. If the design-builder does not have any inhouse design or construction forces, it will have to retain those services through separate subcontracts with qualified design professionals and contractors. More typically, as design-build is practiced in the United States today, the design-builder is a contractor who can provide the required construction services, but must subcontract required design services to the architect. AIA Document A142TM–2004, Standard Form of Agreement Between Design-Builder and Contractor, together with its exhibits, can be used by the design-builder to retain required construction services for the project. AIA Document B143TM–2004, Standard Form of Agreement Between Design-Builder and Architect, together with its exhibits, can be used by the design-builder to retain the architect for required design services. C O ORDI NATION OF AGREEME NTS Just as in all projects, it is critically important that all agreements between the client and the design-builder, and between the design-builder and its contractor and architect, be coordinated so that there are no gaps or overlaps in the various parties duties and responsibilities, and that the provisions of the agreement between the client and design-builder properly flow down to the contractor and architect, respectively. Even if AIA agreements are used, it is likely that substantial changes will have been made in the agreement between the owner and the design-builder, so great care must be taken to similarly and appropriately reflect those changes in the design-builder’s subcontracts with the contractor and the architect, respectively. They also need to be evaluated by the architect to understand their impact on the architect and whether the architect can accept those changes. All parties must be particularly conscious of the relationships among them, and respect them, since they are different than on traditionally structured projects. Communications among the parties must be clearly delineated. The architect’s client is no longer the owner of the project, but the designbuilder. The architect’s duties now run to the design-builder, and not to the client. Clients often fail to recognize this fundamental distinction as well, and expect the architect to be the client’s adviser and to watch out for the client’s interests on the project in the same manner as they have come to expect. The design-builder will expect differently, so it behooves all parties to clearly understand their roles and how they differ from traditional relationships. Design-builders may have a tendency to treat their architect consultants much like their trade contractors. The AIA design-build documents recognize the distinction and address it appropriately. If AIA documents are not used, great caution should be exercised by the architect so that the architect does not provide to the design-builder guaranties, warranties, and other obligations common to contractors but inappropriate for design professionals. There could be significant insurance and liability implications otherwise. AR C HI TECT ’ S SER VI CES Perhaps the most important point to be negotiated between the architect and the design-builder are the services to be provided by the architect. They may not be as extensive as on traditionally structured projects where the architect is retained by the owner. Architects should not fall into the mistake of performing services as if it were a traditionally structured project, and risk breaching their contractual duties and obligations to the design-builder. The design-builder more often than not does want or need the full scope of design and/or construction phase services the architect traditionally provides, despite what the architect, and maybe even the client, may want the architect to provide. The owner may dictate in its agreement with the design-builder what minimal professional services the owner wants the architect to provide, and those should flow down to the architect in its agreement with the design-builder. The architect must assure itself, however, that it is to provide at least the minimal level and extent of professional services local licensing laws require, but beyond that is a matter of negotiation between the architect and the design-builder. Exhibit B to AIA Document B143TM–2004, Standard Form of Agreement Between Design-Builder and Architect, provides an extensive listing of services the architect can provide and from which the parties can select. It is a useful tool to identify and record the extent of the architect’s services. 1 7 . 2 P r o j e c t Te a m A g r e e m e n t s 1067 PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S design for the project provided by the design-builder will closely match the client’s expectations. If the client doesn’t have the in-house expertise to develop the program or general design requirements, the client may first want to retain a consultant to prepare this preliminary information before it is given to the design-builder for final design and construction. This approach is often called “bridging,” since this preliminary step bridges the gap, so to speak, between the client’s giving the design-builder very little specifi c information concerning the client’s goals and expectations and giving the contractor a full set of drawings and specifi cations. AIA Document B142 TM –2004, Standard Form of Agreement Between Owner and Consultant, where the owner contemplates using the design-build method of project delivery, together with its exhibits, can be used for this purpose. Exhibit B includes an extensive listing of services the client can select for the consultant to provide to help the client achieve the level of comfort it desires before engaging the design-builder under a design-build agreement. BACKGROUNDER I NT EGR ATED PR OJECT DELI V E RY AG R EEM ENT S Timothy R. Twom ey, Esq., FAI A PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S Timothy R. Twomey is an architect and lawyer with 35 years of experience. He is a vice president and deputy general counsel for RTKL Associates Inc., a global planning, design, and consulting fi rm with offi ces worldwide. These agreements are quite unique and relatively recent, though their motivations are as old as the practice of design and construction itself. They are intended to foster a highly integrative and collaborative approach to these disciplines among all key players, particularly the client, the architect and its design team, and the contractor and its construction team. Integrated project delivery (IPD) 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 optimize project results, increase value to the owner, reduce waste, and maximize efficiency through all phases of design, fabrication, and construction. At the core of an integrated project are collaborative, integrated, and productive teams composed of key project participants. Building upon early contributions of individual expertise, these teams are guided by principles of trust, transparent processes, effective collaboration, open information sharing, team success tied to project success, shared risk and reward, value-based decision making, and utilization of full technological capabilities and support. The outcome is the opportunity to design, build, and operate as efficiently as possible. T HE T RA NSIT IONAL I PD A PPROA C H Best exemplified by AIA B195TM–2008 Standard Form of Agreement Between Owner and Architect for Integrated Project Delivery and AIA A195TM–2008 Standard Form of Agreement Between Owner and Contractor for Integrated Project Delivery, with its Guaranteed Maximum Price Amendment, these documents achieve some, but not all, of the benefits of IPD and include some, but not all, of the features of IPD. It is best suited to those parties who may not be fully committed to IPD, or don’t feel they thoroughly understand it, but recognize many of the benefits to be achieved and want them for their project. This approach to IPD will be most familiar to the parties. In many ways it is structured similarly to a traditional project. The owner has separate agreements with the architect and contractor, and the three parties work together throughout the design phase. At the conclusion of the detailed design 1068 Agreements and AIA Document Program phase, the contractor provides a guaranteed maximum price. This approach does not employ a risk-reward approach to compensation nor tie an individual party’s success to project success; risk allocation and transfer are dealt with in essentially a traditional manner, and disputes are settled fairly conventionally. However, the location of subject matter in the two agreements varies somewhat, in that the two agreements contain little more than payment terms and dispute resolution provisions, and the duties of all three parties throughout the design and construction phases are set forth jointly by phase in the general conditions which applies to owner, architect, and contractor, as appropriate; the phases of the project are described a bit differently, and more appropriately, to this project delivery approach; and it includes some but not all of the collaborative processes and open information sharing inherent in a full IPD project. It is primarily through the structuring and integration of greater collaborative processes and the more open and timely sharing of information that a greater measure of benefit is achieved in this transitional IPD approach than on traditionally structured projects. THE SINGLE-PURPOSE ENT ITY (SPE) IPD APPR OACH This approach is intended to maximize the benefits and rewards of IPD. The owner, architect, and contractor structure their contractual and working relationships in a radically different way in order to realize those benefits. In fact, together, they create a single legal entity, likely a limited liability company, for the purpose of planning, designing, constructing, and commissioning the project. The company, in turn, contracts with each of the owner, architect, and contractor to fund, design, and construct the project and to otherwise perform their various duties and responsibilities one to another. This approach to IPD requires a substantial mind-set change on the part of the owner, architect, and contractor, where all are truly working to maximize the success of the project rather than their own individual success, under the theory and expectation that by doing so they will, in fact, maximize their own individual success. Working together in a common enterprise for a common purpose, and sharing the risks and rewards of doing so, requires close collaboration and cooperation and the open and timely sharing of information and identification of issues for expeditious resolution. All succeed or no one succeeds, so there is little incentive for a given party to dig into its respective silo and ignore the needs of the other parties. Dispute resolution is largely conducted internally among the members, and risk allocation is shared and the parties mutually waive most claims against each other. T HE MU LTI -PA RTY IPD APPROACH The most common approach adopted by parties to date who do venture into this method of project delivery is the multi-party approach. Under this approach, the owner, architect, and contractor do not cr