AIA A133 and A102: the GMP clauses owners should know by heart

Most CM at risk projects in the United States run on one of two AIA forms. The A133 is the agreement between owner and construction manager where the construction manager is also the constructor, with a GMP set by amendment. The A102 is the cost plus fee agreement with a guaranteed maximum price, used when the contractor is engaged after design rather than during it. They share most of their cost and payment mechanics.

Both are modified on nearly every project. What follows is a tour of the clauses that matter most to an owner's monthly oversight, written in general terms. Your contract will differ in the details, so check it. This is not legal advice.

The cost of the work and what it excludes

Both forms contain a long article defining the cost of the work: labor, subcontracts, materials, equipment, certain insurance and bonds, and a list of miscellaneous costs. Equally important is the article listing costs not to be reimbursed, which typically includes the contractor's principal office overhead, capital expenses, and costs due to the contractor's negligence. Anything in the second list is paid from fee.

Read both lists once, carefully. When a pay application or a change order includes an item, the question is which list it belongs on. An owner who knows the lists can answer that question in a minute.

The GMP amendment and the contingency

In the A133, the GMP is established by an amendment, often called Exhibit A, which states the guaranteed maximum price, the date of substantial completion, and the documents the price is based on. The amendment also sets out the contractor's contingency. The standard language describes the contingency as a sum for costs that are properly reimbursable as cost of the work but not the basis for a change order. In plain terms, the contractor's contingency covers the contractor's own risks within the scope.

The standard text does not require owner approval of contingency draws. Many owners add that requirement, or at least a notice requirement, in their modifications. Whether your contract has it decides how your contingency log works. Find the clause before the first draw.

Allowances in the amendment

The amendment typically lists allowances as part of the GMP. The general conditions of the contract, the A201, set the rules for allowances: what they include, how they are adjusted, and that the owner pays the difference if the actual cost exceeds the allowance. The interaction between the A133 amendment and the A201 allowance article is worth reading together.

Fee, changes and the markup

Both forms allow the fee to be a fixed sum or a percentage, and both include a separate provision for how the fee is adjusted on changes in the work. The provision usually references a percentage markup on the cost of changes. The markup on changes may differ from the base fee percentage, and the two should be recorded separately in the owner's baseline.

Changes in the work themselves are governed by the A201, which sets out the change order, construction change directive and minor change mechanisms, along with the notice requirements for claims. The notice clock in the A201 is the one that owners most often fail to watch.

Savings, audit and final payment

The standard A133 and A102 text provides that if the cost of the work plus fee is less than the GMP, the difference belongs to the owner. Shared savings is not in the base form. It is added by modification on many projects, with a split, sometimes a cap, and sometimes carve outs for unused allowances or owner contingency. If your contract has a savings clause, it is one of the modifications, and its exact wording matters at closeout.

The audit clause gives the owner access to the contractor's records relating to the cost of the work, with a retention period after final payment. Final payment is conditioned on a final accounting, and the A102 in particular describes an audit of the final accounting by the owner's accountants before the final certificate. That audit is the owner's last check on the whole account.

Reading the modifications

A standard form is a starting point. The project's real contract is the form plus the modifications, and the modifications are where contingency approval, shared savings, buyout transparency and owner reporting usually live. When you record the baseline, record the modified clause rather than the standard one.

Costwitness is built around the structure these forms share: cost of work, fee, general conditions, contingency, allowances, change orders and savings. The rules it applies are the ones from your contract as you enter them, and the flags it raises point back to the clause they came from. Interpreting the clause remains a job for the owner and counsel.

In the product

GMP baseline, Contingency ledger, Shared savings. Free tool: Pre-GMP Readiness Score, Shared Savings Calculator.

Keep reading

Earlier: A GMP contract glossary for owners and boards. Later: Freezing the baseline: why the GMP should be versioned, never edited. All articles on gmp contracts.