aia contracts explained

FOUNDATION® is a registered trademark of Foundation Software, LLC. One of those standards is a set of forms contractors use for a specific style of progress billing, plus the practices around them. That allows you to more easily control budgets, pay laborers and subcontractors, purchase materials, and manage other debts. In this three-part series, we’ll provide all the answers you need for handling your first AIA job. You’ll need to make adjustments to your billing system, produce another version of the application, and re-submit it. Industry and legal jargon is avoided whenever possible. If AIA Documents B171, B172 and C171 are used in other delivery methods, appropriate modifications should be made with the assistance of insurance and legal counsel. The good news: you’ve landed a huge contract with a ton of potential for profit and growth. Later, an application that shows 100% complete for that line item wouldn’t mean billing $10,000 that time. Subscribe to free eNews: weekly, quarterly or both! Retainage is a bit more complicated. AIA documents are revised and updated to incorporate changes resulting from court interpretations and rulings, legal precedent, and nuances. Each line item displays the “scheduled value,” (i.e., the cost for that line item agreed upon in the contract) along with how much work the contractor has done to-date on that line item. As an architect, owner, or contractor, using comprehensive contract documents is the most important thing you can do to protect your project, minimize risk and avoid costly litigation. Find out how AIA Contract Documents products help you complete forms, such as change order and payment applications, by importing data and performing calculations for you. © Foundation Software, LLC. That doesn’t seem so hard, right? The schedule of values was created during contracting. Take our $10,000 line-item example and assume there is 5% retainage on it. 86 0 obj <>/Encrypt 69 0 R/Filter/FlateDecode/ID[<520F46C4E708FA7922CD9B6BEBC84CE2><8AF86A99E4218842981EE04812423193>]/Index[68 36]/Info 67 0 R/Length 97/Prev 196368/Root 70 0 R/Size 104/Type/XRef/W[1 3 1]>>stream However, AIA billing software that’s fully integrated with your accounting software can certainly make things easier. Cost Plus Contract Cost plus contracts are often used when the scope has not been clearly defined, such as when the project design is still being finalized and the owner wants to begin construction. 1 for the following PROJECT: (Name and location or address) THE OWNER: (Name, legal status and address) THE ARCHITECT: (Name, legal status and address) TABLE OF ARTICLES 1 GENERAL PROVISIONS 2 OWNER 3 CONTRACTOR 4 ARCHITECT 5 SUBCONTRACTORS 6 … Completing the first AIA billing form on a job is really pretty simple with the right tools. The documents produced by The American Institute of Architects (AIA) are the most widely used standard form contracts in the construction industry. You might think of it the same way you’d think of the line items on a detailed invoice. For pricing and general information, please visit or contact Florence Hagstrom, Hon. In red lining, they’ll make adjustments to your amounts and return the forms to you. If you bill for stored materials, you’ll need to remember not to double-bill. It actually means billing $8,000 (100% of the remaining total). Whether you release retainage one line item at a time or all at once, it then becomes a true receivable amount. AIA documents are flexible. For example, let’s say your scheduled value for an item was $10,000 and your first application billed for $2000 in stored materials. There are several types of construction contracts used in the industry, but there are certain types of construction contracts preferred by construction professionals. AIA documents are revised regularly to accommodate changes in professional and industry practices, insurance, and technology. That means that you’re “holding” retainage on an ongoing basis. As a form of progress billing, AIA billing is especially helpful because it standardizes how you bill, what the invoices look like, and the language the parties use. The term “AIA” stands for the “American Institute of Architects.” The AIA is a professional organization of more than 90,000 architects, which creates standards for the industry. However, AIA documents indicate what constitutes the “Contract Documents” in both the Agreement and in the General Conditions, creating the potential for conflicting requirements. This presentation is provided for informational purposes only and should not be considered specific legal advice on any subject matter. You will also participate in live demonstrations of the desktop software and online platform, ACD5, to discover the key features that will save you time and money, and keep your projects organized. The amount you bill is generally related to the percentage of completed work. It’s not. As you near the end of the job, you “release” the retainage — which usually makes up the final billing. AIA National RSS Feed Includes small group work, continental breakfast and lunch, and a tour of the Octagon House! However, developing contract documents can be cumbersome, confusing and time-consuming. Prepared by the AIA with the consensus of owners, contractors, attorneys, architects, engineers, and others, the documents have been finely tuned during their 120-year history. AIA Contract Documents and the content therein are copyrighted works owned by The American Institute of Architects. In construction, we often shorten “Schedule of Values” to “SOV.”. Don't miss this opportunity to attend an interactive session on the latest version of AIA Contract Documents and products! C171 Please email Sharon Miller, Director of Communications for document questions and availability. AIA Orange County The biggest benefit of progress billing is that you don’t have to wait for arbitrary milestones (or even the end of the job) to bill. The bad news: it requires AIA billing, and you haven’t a clue where to start. Where AIA billing gets more complex is after that first application. AIA Contract Documents are the more than 180 forms and contracts that define the relationships and terms involved in design and construction projects. a contract is binding on each party. This means that each party has a legal obligation to do the things which the contract requires him or her to do. AIA Documents Benefiting You and the Industry, For questions about the content of specific documents, which document to use, or how to complete a document, call (202) 626-7526 or contact, which answers some 500 questions about purchasing documents, using AIA Contract Documents®. E�H��`�� ������L��I����������6^�b`� ���i�G� ��O *AIA Documents B171™, B172™ and C171™ can be modified and utilized in non‐design bid build project delivery methods as well. They facilitate communications among all the parties involved in construction, which makes it easier to produce a high quality project in a timely and economical fashion. Also called “retention,” retainage is a percentage of a contract, often 5-10%, that can’t be billed until the entire project is complete and the client has approved the work. All rights reserved. Remember, you’re not technically invoicing your client at that point. “AIA,” “The American Institute of Architects” and the AIA emblem are registered trademarks owned by the American Institute of Architects. Arm yourself with this knowledge in order to administer contracts in a more efficient and cost-effective way, regardless of the size of your firm or project. That’s what we call “AIA billing.” More accurately, AIA billing is the use of forms G702 and G703 to provide detailed information about the progress on a job. This gives the customer recourse in case they aren’t satisfied with the work. AIA standard documents include definitions of the above terms very similar to EJCDC’s (see AIA ® A101 TM, AIA ® A201 TM, and AIA ® A701 TM). It’s just an application detailing the amount you’d like to invoice. Ordering materials is a tricky part of budgeting. There are lines for each task or type of work involved.

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