A101 Is the Most Common Owner-Contractor Contract for Competitively Bid Projects
AIA Document A101 is the Standard Form of Agreement Between Owner and Contractor where the basis of payment is a stipulated sum (fixed price). It is the most commonly used owner-contractor agreement in the AIA family for projects delivered through competitive bidding. The stipulated sum means the contractor agrees to complete all the work in the contract documents for a fixed price - regardless of the contractor's actual costs. The risk of higher-than-expected costs falls on the contractor; the risk of scope ambiguity falls on both parties. The ARE CE exam tests the A101 because the architect is a party to the administration of this contract even though the architect is not a signatory.
What Makes a "Stipulated Sum" Contract
In a stipulated sum contract, the contract sum is fixed at the outset. The contractor's profit or loss depends on whether actual costs come in below or above the bid. The contractor has incentive to be efficient. The owner knows the project cost from the start (absent changes). This contrasts with cost-plus contracts (AIA A102, A103), where the contractor is paid actual costs plus a fee - the owner bears the risk of cost overruns but benefits if costs come in below estimate.
Key Articles of AIA A101
- Article 3: Date of Commencement and Substantial Completion. Sets the start date and the required substantial completion date (or number of calendar days from commencement). The contract time is the legal clock for liquidated damages and extensions.
- Article 4: Contract Sum. States the fixed contract sum and lists all unit prices and allowances included. All changes to the contract sum require formal change orders.
- Article 5: Payments. Defines the schedule of values basis, payment application due dates, owner's payment period (typically 28 days to process), and retainage percentage (typically 10%, or 5% after 50% completion).
- Article 6: Dispute Resolution. Selects the dispute resolution method - typically initial decision by the architect, then mediation, then arbitration or litigation. The method must be selected at contract execution.
- Article 7: Enumeration of Contract Documents. Lists by name every document that forms the contract - the agreement, A201 General Conditions, supplementary conditions, specifications (by division and section), drawings (by sheet number), and addenda.
Retainage
Retainage is a percentage of each payment application withheld from the contractor as security against contractor default or defective work. Standard retainage is 10% of the contract sum earned to date, reduced to 5% after 50% completion if the project is on schedule and work quality is satisfactory. Retainage is released at final payment (after all closeout requirements are met). Some states limit retainage percentages or require release at substantial completion.
Key Exam Points
- A101: stipulated sum (fixed price); contractor bears cost risk; owner knows cost from start.
- Article 3: contract time. Article 4: contract sum. Article 5: payment provisions and retainage. Article 7: enumeration of contract documents.
- Retainage: typically 10% withheld; may reduce to 5% after 50% completion.
- Dispute resolution method must be selected in Article 6 at execution - typically mediation, then arbitration.
- A101 is paired with AIA A201 General Conditions, which govern the conduct of the parties.
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