Firm management

Small architecture firms need contracts, too

By Steven F. Weiss, FAIA

In the face of business and law, practicing architecture in a small firm setting is not much different than a large firm.

Those of us who choose to work in a smaller setting know that the requirements of professional service delivery, as well as business and personal protection, are not far from those of the large firm practitioner. When things go well, we don’t give a lot of thought to the terms of our business arrangements. When things go poorly, we may be significantly injured by an uncoordinated or conflicting contract. As such, a basic tool of your practice should be the use of comprehensive, coordinated contracts.

A contract is a set of promises. While contracts are often long and contain unfamiliar or confusing terms, the general concept is that one party promises another party something in exchange for something else. In our world, that means that we promise a certain set of professional performances in exchange for money. We promise to listen to our client, interpret their desires into a vision of a building, and create a set of documents from which that vision can be built. In turn, they promise to pay us. They agree to hire a contractor to build it, and we promise to help by doing construction administration. The contract for the world’s largest project has a lot more promises and caveats, but at its most reductive, we design, the owner pays, the contractor builds.

What makes an adequate set of contracts for a design and construction project? In the small-firm world, it may be a bit complicated Often the Owner, the third member of the project equation, has little or no experience with construction and what to expect of the other two members. The keys to a successful set of project contracts include:

1. The set of promises by the architect are clear and comprehensive. There can be room for professional judgement while still offering a clear description of what the owner and contractor should expect of the architect.

2. The set of promises by the owner defines his or her responsibilities, including not just payment but also site information, participation in defining the program and approving the design at various steps along the way, and hiring a contractor for the construction.

3. The set of promises by the contractor need to be definable and measurable. A construction contract has three basic elements: scope, money and time. The construction contract needs to clearly define those promises and allow for measurement of performance.

A comprehensive set of contracts also covers such elements as ownership of the design and the instruments of service, methods of resolution of disputes, and methods of termination.

The good news is that AIA has spent more than 125 years developing contract forms that are comprehensive, well-coordinated, and extremely well-tested in the courtroom. Using a full menu of AIA Contract Documents can help to safeguard you, your practice and your clients.

An overview of AIA’s small firm-centric contracts

B101 is the flagship, covering all of the basics of a design contract. It provides a definition of the project and sets forth both the architect’s and the owner’s responsibilities. The architect delivers services in five phases, provides cost estimates, and serves as the owner’s administrative emissary during construction. The owner provides site information and the program, offers timely and complete participation in decision-making, and approves the money.

B101 is thorough, well-coordinated, and long. It works for virtually all “straight ahead” projects and is particularly suited to projects that are large enough or complex enough to cost more than $1,000,000. It assumes design-bid-build, although it can be modified for many other scenarios. It provides for several compensation methods: fixed fee, percentage of cost of the work, or hourly. Most importantly, it assumes that the project will be constructed using the A201 document.

B103 is a close cousin to B101 but takes the responsibility for construction cost and construction schedule out of the architect’s hands. It is a typical form for more complex projects where the owner may engage a cost estimator, an owner’s program manager or similar. It also works with A201.

B104 is the abbreviated version of B101; in addition to significantly streamlined language, it combines the architect’s services into three phases. It works with A104, which is an owner-contractor agreement that includes an abbreviated version of general conditions. The whole set constitutes an abbreviated, comprehensive series of contracts for a project, well-suited for mid-size commercial or residential projects.

B105 is the short form version of the owner-architect agreement. It is much more informal than the other forms and much more focused on small projects of limited scope and duration. It works with A105 which, like A104, has an internal general conditions. B105 and A105 work for either commercial or residential projects and are well-suited for use when the parties have experience working together.

One example of the use of B105 on small commercial projects involves repetitive projects for an owner who has separate entities for individual projects but the same personnel and construction team. While AIA has published a very robust suite of master agreements with work orders for individual projects, in this case the individual legal entities requires that there be a full contract for each project. B105 is imminently suited to this common scenario.

Another common use for the B105/A105 family is smaller custom residential projects. While large custom homes might logically encourage a B101 contract, a smaller renovation or addition might be a B105 scale project.

We all practice architecture for our own reasons, but it’s pretty certain that writing contracts is not one of them. The AIA has done much of the work for you by creating (offering) a complete and well-tested set of forms that can help you spend your time designing a better world. Don’t skip over the important task of creating written agreements with your clients and their contractors, but let the AIA Contract Documents minimize the effort.

Steven F. Weiss, FAIA is principal of his 6 person firm in Chicago, engaged in a general commercial architecture practice. He has been in practice in both large and small firms for 45 years and has been a member of the AIA Contract Documents Committee since 1988.