Associated Owners and Developers (AOD) announced today the release of the AOD 2002 GC – Standard Form of Agreement between Owner and Contractor for Work on a Cost Plus Fee Basis with a Guaranteed Maximum Contract Price (the “Agreement”). The Agreement is the second in a series of standard form construction documents that AOD will soon make available for use throughout the industry.
“Not unlike AOD’s Fixed Price Agreement, this Agreement will continue to change the way in which standard form agreements are used on construction projects,” according to Ira Genberg, AOD’s general counsel and chairman of the overseeing committee for the drafting of the Agreement. Genberg leads the construction law and litigation department at Smith, Gambrell & Russell, LLP, the century-old Atlanta law firm that drafted the Agreement.
Genberg explains that, “We drafted the Agreement with a deep respect for what had been achieved in the past, but with an unwavering belief that those achievements could be the foundation for a leap forward.” We took a hard look at the provisions in other standard form agreements, and asked how we could better promote the success of the project and the interests of all parties involved. We wanted a standard form contract that is both project driven and fundamentally fair to the parties.”
This approach led to many innovations, including the use of a menu system that provides the building team with a choice in how they address some of the more commonly negotiated contract provisions. The menu system allows the parties to review several alternate provisions and select the standard provision that best fits the project and their concerns. As a result, said parties can customize the Agreement using standard form language. Other standard form agreements may be customized only by using non-standard language, which often leads to inconsistencies, prolonged negotiations, and uncertainty as to the legal interpretation of such language.
Despite allowing customization, the Agreement does not fundamentally alter the traditional balance of risk between parties. Traditionally, risk is assigned to the party best able to manage it. However, while other standard form agreements have increasingly shifted more risk to the Owner, the AOD Agreement does not automatically assign to the Owner risks that cannot be fairly assigned to other parties. Rather, the Agreement splits these risks between the parties.
AOD’s Standard Form of Agreement Between Owner and Contractor for Work on a Cost Plus Fee Basis with a Guaranteed Maximum Price is now available to the public.