What is an Owner Architect Agreement?
Owner Architect Agreements are the contracts that establish the owner/architect relationship and define the obligations of both parties. As with any contract, they are essential to the project’s success and they should be drafted to protect the interests of both the owner and the architect. It is important for the terms of the Owner Architect Agreement to clearly spell out the scope of the architect’s responsibilities, particularly regarding the services the architect is providing on the project. Not only should the scope of services be clearly defined, but the manner in which those services will be provided must be spelled out. For example, if the design services include construction administration, the parties must agree upon what the architect’s role will be during construction. Will the architect conduct periodic observations of the work, or will the architect communicate with the contractor exclusively through the owner? If the work is complex, this point becomes critical.
Many things can go wrong during a construction project. If the owner is not clear on the extent of damages caused by deficiencies in the construction or design, it could receive a huge back bill at the conclusion of the project with expense awards far in excess of those contemplated at the start . Therefore, the limitation of liability clauses found in many design contracts play a significant role in reducing the risk for an architect.
Because all construction projects carry a risk of injury to persons and damage to property, liability insurance is a common risk management tool. Architects typically carry professional liability insurance which covers the architect’s negligent acts, errors or omissions in the performance of his/her services. Its primary purpose is to pay the architect’s costs to "make things right" (i.e. repair the design, correct the drawings, etc.) if claims are made against the architect. II do realize that there are exceptions and some Architects will not recognize their own negligence, and some Architects have not actually performed contract documents for the project, but depending on the scope of the project, the participation of other professionals, and specific administrative duties to be performed by the Architect, liability for things not within the professional liability policy cannot be disclaimed by an "Act of God".
Components of the Agreement
An outline of key elements typically included in an owner architect agreement include the following:
Scope of Work: A comprehensive and detailed scope of work, delineating the architect’s contractual duties, services to be performed, and general description of the project will help ensure a mutual understanding between the parties and avoid disputes while it is being performed, as well as for easy reference later on should a dispute arise relating to the performance of such services. Oftentimes, the scope of work will not only provide a general description of the architect’s services, but also the specific requirements and nature of such architectural, programming, planning and interior design services.
Compensation: Compensation for the architect’s basic services can be calculated on either a lump sum or hourly basis, depending on the type and magnitude of services to be performed. It is important to note that the architect may charge for certain additional services not included in the above-mentioned compensation calculations, such as design and planning for various items not included in the plans and specifications, additional revisions and changes to the plans and specifications, or if the architect’s services are delayed due to acts or omissions of the owner.
Ownership of Documents: Ownership of documents, as well as other items such as studies, surveys, models, and renderings developed by the architect in connection with its services should be addressed, as this can become a contentious area of dispute between owners and design professionals.
Project Schedule: A project schedule should be outlined, including the general duration for completion of the architect’s services. There are at least several basic project schedules available that frequently draw from generally accepted industry standards. The content can include: architect’s proposal submittal and review, authority authority submissions and review, and construction document production and review.
Additional Items for Inclusion: Additional items and conditions for inclusion in an owner architect agreement may include: (1) a limitation of liability provision; (2) an additional insured provision; and (3) compliance with applicable laws.
Owner’s Rights and Responsibilities
The Owner Architect Agreement also outlines a number of rights and responsibilities for the owner. The level of control an owner can exert over a project is limited by the anticipation of the scope and scale of the project. The parties to the owner-architect agreement have to be clear about what the owner wants in order to avoid conflict later in the construction of the building.
The owner has the right to select the architect. This is, after all, the person responsible for constructing the design/plan that the owner envisions. The owner should be able to establish how long the project will take. Part of the right to decide the timeline is the right to ask the architect to change something in the plan if it is not working the way it was thought out. The owner has the right to have the architect decide upon substitutive materials at the request of the owner at any time during construction. Furthermore, if there are unforeseen conditions (e.g., groundwater, soil conditions, environmental issues) the owner has the right to issue a directive to the architect to address the new issue. An estimate of costs for this change will be provided to the owner by the architect.
The owner’s responsibilities include providing full information to the architect about the owner’s requirements for the project. The owner also has the responsibility of informing the architect of their representative and the representative’s authority (e.g., approve payment on the owner’s behalf).
Architect’s Duties and Responsibilities
The Owner Architect Agreement documents the obligations and duties of the architect with respect to the design of the project and the services to be provided. Clearly, an architect is obligated to provide design services at a high level of professionalism and expertise. Guiding the design process from conception to completion by performing all of the required services and ensuring that completed documents are in compliance with the requirements of the Owner is an essential component of the agreement.
The agreement sets forth that the architect is responsible for the overall design and coordination of all aspects of the project. Additional professional services include, but are not limited to: establishing the basic requirements of the project; preparing schematic design documents after receipt and review of the Owner’s program and other requirements for the project; preparing design development documents following the Owners approval of the schematic design document; preparation of construction documents following the Owner’s approval of the design development documents; providing technical assistance including reviewing and check shop drawings, samples, and other data which the contractor is required to submit to the architect and ascertaining that the contractor has complied with the Contract Documents in preparing shop drawings; reviewing and approving applications for payment submitted by the contractor; and identifying and resolving conflicts among the Contract Documents and any discrepancies between the requirements of the Contract Documents and public entities.
It is critical that the services to be provided by the architect are clearly spelled out in the Owner Architect Agreement.
Legal Pitfalls and Preventing Them
Owner-architect agreements can present a number of legal issues. Some key issues include the following:
Licensing/registration
Designers may work under different types of agreement, such as professional services and consulting agreements. Depending on the jurisdiction and agreements, it may not be legal for a business to contract for services with a person who is not appropriately licenced or registered with the respective licensing or registration body. The result is that entering into an agreement with a designer who is not qualified to provide the services may lead to invalidity of the contract. Additionally, it is a criminal offence or quasi-criminal offence to provide services without appropriate licensing or registration.
In order to avoid issues in this area, care should be taken to ensure the designer you are contracting with holds appropriate licenses and/or registrations. In some cases , the correct licensing/registration of the designer may be included in the agreement by way of a representation and warranty.
Intellectual property
It is important to ensure that the intellectual property rights of both parties are protected and to clearly identify who owns the various aspects of the design. In some cases, it may be appropriate to assign all rights in the work product to the owner, in other cases it may be more appropriate to grant a license to the owner, and in some cases a combination of both methods may be appropriate.
Scope
Care should be taken to ensure that the scope of work is sufficiently detailed in the agreement to allow the designer to proceed with the work, while not making is so detailed as to restrict the ability of the designer to innovate.
Termination
A properly drafted termination clause can head off many of the problems which lead to litigation between the parties. Depending on the circumstances, it may be appropriate for the parties to choose to terminate the contract for convenience, or for cause, depending on the level of compliance with the contract required.
The Role of Mediation and Arbitration
Some owner architect agreements include mediation and/or arbitration clauses that are triggered once a dispute arises. Mediation is a fairly quick method of dispute resolution. Generally, it takes about three hours. Mediation requires both parties to a dispute to appear in front of a neutral mediator, and work to resolve all issues in the case. During a mediation, the parties to the dispute decide who will fund the mediator, where the mediation will be held, and at what time the mediation will occur. The parties may change the timing and location of the mediation. The drafting owner architect agreement does not control these issues. Mediation is a cooperative process, with the intent of making progress toward a resolution. The goal of all participating in a mediation is to resolve the pending litigation. The mediator assists in this role by conveying offers and counter-offers between the parties. In most situations, each party is separately placed in a room during the mediation. The mediator will go from one room to the other with offers and counter-offers. These offers and counter-offers can involve many issues and be relayed many times in order to try to reach a global resolution that addresses all of the issues in the case.
Arbitration is a binding legal relationship, usually requiring at least one hearing (but sometimes more than one). A full evidentiary hearing occurs during an arbitration, in front of at least one neutral party called an arbitrator. An arbitration hearing is not as formal as a trial. However, it is similar. Witnesses are called to testify and can be cross examined. There are exhibits that are admitted by the arbitrator. Testimony during the arbitration is less formal than testimony during a trial. It is permissible during an arbitration to study for quizzes and take notes. With an arbitration, the parties to the dispute decide where in the country to hold the hearing, how long the hearing will last, and how the fees of the arbitrator will be paid.
Due to the cost of going forward with arbitration and the informal nature of the process, if the parties have a dispute that cannot be resolved between them, they must petition a Court to compel arbitration. Once a Court orders an arbitration hearing, the arbitration hearing must be held unless the Court grants a party’s motion to vacate the arbitration and sends the dispute back to the courts to be resolved through litigation. But, arbitration is a binding process. Once an arbitrator has determined that an arbitration hearing has been properly held, and issues a decision, the arbitration hearing is final even if there were problems during the arbitration process. Unlike mediation, where parties can return to the negotiating table if an impasse is reached, if an arbitrator finds that there was a problem during the arbitration hearing, the arbitrator will not necessarily or automatically undo his or her previous decision. Instead, the arbitrator will make a separate decision on whether to continue with enforcement of the previous decision or to rescind that decision due to problems that occurred during the arbitration hearing.
Change and Modification of the Agreement
A project constantly evolves and there are various reasons to update your Owner Architect Agreement and incorporate the input from all the players involved. If you’re working with consultants on your project and will be for months to come, it’s important to make sure they are included, at least at some level, in any changes made to the Owner-Architect Agreement. Since they all will in one way or another be incorporated into the project, whether though the design or in a supporting role in the appropriate areas, it will always be better for everyone if you are all on the same page and understand the project and its evolution.
If you have consultants, then it is advisable that you and the architect and any other consultants discuss these issues, either together or separately. It is also wise for all of you to have a meeting about what has changed since the "original" drawings were first produced (any and all updates), to talk about any problems you might be having with the project as it now exists and has evolved, and to discuss what your expectations are going forward in regard to the evolution of the project.
For instance , at what point does the architect have to do more design work or make changes to any old designs, all based on input from the owner, because the original design isn’t working for one reason or another, and the architect will have to redo certain aspects of the building? Or if some design aspects aren’t working together properly, so some will need to be redone or rethought about, who’s going to be responsible for that changed work? Always try to come to an agreement amongst everyone about this type of issue, and if necessary include it in a written addendum to the Owner-Architect Agreement.
The initial contract and design phase will only include the original plans and specs at the time, but as work progresses, there are always changes, tweaks, or redesigns all the way up to the completion of the project. What happens if additional plans and spec changes are involved, for example? Who will be responsible for getting those together and assuring that they are uploaded into the electronic plan room properly so that all parties can have access to them?