Aia Owner Contractor Agreement Cost Plus
A421-2018, standard form of framework contract between the contractor and the subcontractor in which the work is carried out under several employment contracts The solution is relatively simple. If the owner wishes to reserve the right to accept a higher subcontracting offer, the language of the contract should be revised so that any additional costs incurred by the contractor are borne by the owner when a responsible subcontractor makes a lower offer. AIA document A103™-2017 is suitable for the use of large projects when payment to the contractor is based on labour cost, plus a fee, and if the costs are not fully known at the start of construction. All parts of the work that the contractor`s organization does not perform are performed under subcontracts or by another appropriate agreement with the contractor. The contractor will request bids from subcontractors and submit them to the architect. The owner will then determine, together with the contractor`s counsel and subject to the architect`s reasoned opposition, which offers will be accepted. This language could be a ticking time bomb for a reckless entrepreneur. If the cost-plus agreement also includes a guaranteed maximum price or a savings-sharing provision, the ability for the owner to choose the accepted subbids may cost the contractor money. If the contractor wishes to use a qualified subcontractor with an offer of USD 100,000, but the owner insists that another subcontractor be used with an offer of USD 110,000, the maximum guaranteed price should be increased by USD 10,000, or the budget from which a cost sharing is to be calculated should be increased by this amount. However, if the owner refuses a responsible subcontractor that the contractor wishes to use for part of the project work, the cost difference between that subcontractor`s offer and another offer approved by the owner shall be borne by the owner and the maximum guaranteed price [or cost savings provisions] shall be adjusted accordingly. In addition, A103 is designed for use in conjunction with the A103™-2017, Investment A, insurance and bonds. This insurance and bond exposure is a critical part of the ownership/contractor agreement and should be discussed with legal and insurance advisors. The risk that the owner would receive a higher bid would cost the contractor if he is forced to use a more expensive subcontractor.
Its costs can then exceed the maximum guaranteed price or reduce its share of possible savings. G701S-2017, Change Order, Contractor-Subcontractor Variation G705-2001 (ex-G805-2001), List of Subcontractors By simply changing the language of the contract, the contractor protects himself from the loss while giving the owner the opportunity to participate in the selection of subcontractors. . . .