Architect Contracts: Everything You Need to Know
Architect contracts are contracts governing the relationship between the person designing and/or constructing the building and the company or person that owns it.3 min read
Architect contracts are contracts governing the relationship between the person designing and/or constructing the building and the company or person that owns it. Regardless of whether you're starting from scratch or adding to an existing building, you can find a template of an architect contract online. Architects may also find this template useful.
Types of Architect Contracts
There are four types of contracts -- five if you count a handshake, but almost no architect deals in this way anymore as it offers no legal protection and is not legally binding. They are:
- Letter of Intent. This is prepared by the architect and sent to the owner and details the services proposed and the terms and conditions. While it is signed by the architect, the owner is not required to sign it. This is the written equivalent of a handshake. It is often followed by more formal legal documents.
- Letter of Agreement. This is prepared by the architect and signed by both parties. This document, which rarely exceeds two pages, is an outline of the project, the terms and conditions of the agreement, rights and responsibilities of each party, and compensation structure.
- Architect-Prepared Contract. The architect drafts the contract, which is then reviewed by an attorney. These evolve over time based on the architect's experience. It is easily customizable and offers sufficient legal protection for both parties. This is often the most effective, easiest to understand, and has a short turn-around time, which enables the project to start faster.
- American Institute of Architects Contract Documents. The American Institute of Architects, or AIA, has offered legal documents since 1888. The organization released the Standard Documents of the American Institute of Architects in 1911, and currently go by the 2007 edition, which offers more than 100 documents. They are industry standard and fair to both parties, but the legalese can make them confusing. Also, special software is required to prepare and edit the documents, making this the most expensive form of contract.
The Contract's Role
Architecture contracts are joint agreements between the project's sponsors and development partners of an architecture. Communication is essential to a successful project. A contract ensures:
- There will be a consistent monitoring system of the project.
- Principles, requirements, and standards will be followed.
- All risks will be identified.
- There will be standards of accountability, discipline, and responsibility.
Traditionally, the architecture contract was between the sponsor and the architect or IS department. However, the industry has evolved, and many services are now provided by systems integrators, applications providers, and services providers. Therefore, the need for a contract to establish a joint system of communication and understanding cannot be overstated.
Why You Need a Contract
Regrettably, contract disputes can happen. A written contract ensures that each party has recourse if a dispute arises. A standard contract will include the owner's requirements, the architect's scope of services, the compensation to be provided, who owns the service instruments, and termination.
Small business owners will want to cover the scope of the work, the compensation provided and its terms, the project schedule, insurance requirements, correction of work terms, and terms associated with changes in the scope of services or work.
The contract should cover the owner's basic project requirements, the owner's budget, the owner's schedule, the architect's design and construction phase obligations, basic and additional compensation such as an early completion bonus, ownership of service instruments, right to terminate services for both parties, and the standard operating procedure of a termination.
When each of these points is clearly stated, communication is clear and easy and disputes rarely arise. However, do not assume that a shorter contract is a better contract. Contracts should be detailed and specific, and tailored to the scope and size of the project. A case in point: the described responsibilities in the contract between the owner and contractor should also be coordinated with the construction administrator.
The AIA has a template for small projects such as residential or small commercial projects. There are two Small Project agreements available in writing, software, and in the AIA's Documents on Demand. You can view a sample contract here.
When the Contract Is Signed
Architecture contracts can occur at any point in the Architecture Development Method, or ADM:
- The Statement of Work, which is created in Phase A of Part 2 of the ADM.
- The subcontracting of a domain, such as business or technology.
- At the beginning of Phase G, also known as the Implementation Governance phase.
- At the end of Phase G.
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