For years, modular construction stakeholders have struggled with traditional contracts that fail to account for the dual-site nature of prefabrication, the split responsibilities for design between architects and manufacturers, and the complex permitting processes spanning multiple jurisdictions. Now, new agreements from AIA Contract Documents tackle these challenges head-on by clearly delineating responsibilities and risks where they're best managed.
Listen as Sara Betancorth from AIA Contract Documents and Sal Verrastro from Spillman Farmer Architects detail how these new contracts were created through years of collaboration between architects, attorneys, and industry experts. Now available to the public, these contracts represent a balanced approach that acknowledges the realities of modern modular construction. The result? Contracts that reduce risk, clarify responsibilities, and ultimately facilitate smoother project delivery for all stakeholders.
Whether you're an owner, architect, contractor, or modular manufacturer, these new documents promise to transform how modular projects are structured and executed.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Hello and welcome to Inside Modular, the podcast of
commercial modular constructionbrought to you by the Modular
Building Institute.
Welcome everyone.
My name is John McMullen.
I'm the marketing director hereat MBI.
Today I'm joined by SarahBettencourt of AIA Contract
Documents and Sal Verastro withSpillman Farmer Architects.
Sarah and Sal are here to talkabout AIA Contract Documents new
(00:24):
agreements that have beendesigned specifically with
modular project stakeholders inmind.
Sarah and Sal welcome.
Speaker 2 (00:31):
Nice to be here, thank you.
Speaker 3 (00:33):
Thank you so much for having us, John.
Speaker 1 (00:35):
It's my pleasure.
Tell me about AIA ContractDocuments.
What are the reasons behind itsformation?
Speaker 3 (00:42):
Yeah, so AIA Contract Documents were first developed
way back in 1888.
That's when AIA first publishedthe owner-contractor agreement.
So it was at that time that theAIA recognized the need for
standardized agreements and thiswas to help really clarify
roles and responsibilities forproject participants, and this
(01:06):
really includes the owner,general contractor and the
architect.
So our documents have alwaysbeen created by the AIA
Documents Committee.
This is a standing committee ofthe AIA.
It's comprised of about 30 to35 architects who are all AIA
members and who all commit toserve on 10-year terms, which is
(01:31):
absolutely incredible DocumentsCommittee members, along with
our staff of attorneys, and thenwe have outside legal,
insurance and industry advisors.
We all work together andcollaborate to draft and update
our standard form agreements.
Overall, the goal of theDocuments Committee is to create
(01:53):
agreements that are fair andbalanced, while balancing the
competing interests ofcontracting parties and placing
the risk where it's best managed.
Since the time, since 1888,when AIA first published
documents, our library hasexponentially grown and I think
at this time we have about 250agreements and forms in our
(02:18):
suite.
Speaker 1 (02:19):
Wow, I feel like I've learned so much already.
Speaker 3 (02:22):
A little history lesson for you.
I feel like I've learned somuch already A little history
lesson for you.
Speaker 1 (02:25):
What prompted the development of contracts
specific to volumetric modularconstruction?
Speaker 2 (02:31):
I'll jump in there, John volumetric construction
projects using project deliverymethods that were not fully
compatible, let's say, with themodular process, since it was
(02:56):
relatively new to us but itobviously had been done before,
but not for the, I would say,the commercial industry.
But we did do a few and theywere successful.
But we were swimming into whatwe considered unknown territory
and proceeding using just ourpast experiences and trusting
our judgment at the time and,luckily, working in partnership
with a trusted owner and atrusted construction manager at
(03:19):
that time, we were really luckythat the projects were
successful.
I can't stress that enough atthat time.
What I did learn through thisprocess is that modular can be
achieved in a variety of ways.
There's no question about it,even as I worked with Sarah the
last five years or so.
But there is an optimumdelivery method that we came
across and we personally haveused, but I say the committee
(03:42):
came across and that we thoughtit worked best.
We personally have used, but Isay the committee came across
and that we thought it workedbest, but there wasn't any
contract type in our repertoireat the time that can be easily
edited and for this particulardelivery method being modular.
So, as a member of the contractdocuments committee and this is
going back at least five years,maybe six years ago.
The committee members arealways encouraged to discuss new
(04:05):
ideas and potential new trendsin design and construction.
So with that conduit availableto us, we're always throwing
things out.
And, of course, I suggested welook at full volume metric
documents, since I had thatexperience and I know it could
be better when we struggled withit and we gave that feedback
and it was positively receivedby AIA Contract Documents
(04:28):
Committee and they put thewheels in motion to develop the
family of documents for fullvolumetric construction.
The great thing about being onthe edge of developing these
documents is that many of usarchitects and attorneys like
Sarah, who experienced doingmodular we didn't have the
benefit of effective documents,so we knew what to look for, we
(04:51):
knew the pitfalls and thathelped us develop strong
documents.
So that's how it really gotstarted.
Speaker 1 (04:58):
What was the real process for creating these
contract templates?
Obviously, you had someexperience designing for modular
construction committee.
It sounds like 30 plus people,which is seems nuts to me.
But what was?
What was that process dealingwith the formation of that
contract and how did they evolve?
Speaker 3 (05:20):
Yeah, so the documents they underwent the
same process that all of ourdocuments go through and so just
taking a step back, justtalking about the documents
committee and that process as awhole, so our documents are
updated on a 10 year cycle.
So every decade, a group ofdocuments, typically like a
(05:42):
family of documents or adelivery method, are updated and
published.
So when a document comes up forreview, we begin by analyzing
data from so many differentsources.
The lawyer in me we first go tocase law.
We'll see how, over the pastdecade, how have courts
interpreted our documents?
(06:03):
How have they interpretedcertain sections and
standardized language?
Is that something we agree with?
Is that something we want tocontinue?
We also talk to industry experts.
We perform a bunch ofinterviews.
We try to gather as much dataas possible by talking to the
people who are on the groundperforming the work, and then we
(06:27):
attend as much educationalprogramming as possible as well.
And then, once we get aroundafter the research portion,
research is ongoing but we beginthen drafting the documents,
and this is an iterative process.
So for drafting, once a taskgroup, which is about five or
six folks on the committee, oncea task group finishes a draft
(06:51):
of the document, they circulatethat draft for review to the
committee and our outsideliaisons.
The committee and thoseliaisons then provide feedback
on the documents and thatfeedback is discussed, debated,
presented on it is just talkedabout so long by the committee
(07:12):
and the task group andincorporated into our documents,
and then rinse and repeat.
We do that same cycle again.
We send the document out for asecond review to the committee,
to outside liaisons, take a lookat their feedback, incorporate
it to a certain extent and then,ultimately, the documents are
put up for approval by thecommittee and the committee is
(07:34):
the group that actually approvesthe documents and then they're
published.
So, talking about thesedocuments in particular, our
research started about threeyears prior to the publication,
so they were published this year, in 2025.
I vividly remember in 2022,first starting out researching
these documents and figuring outwhat is so different about
(07:56):
modular.
In fact, a little plug to yourown show.
Three years ago, I will neverforget, I stumbled upon this
podcast.
And you know I was living in LAat the time.
It was still like pandemicera-esque, so there weren't many
places to go and I would take adaily walk and I'd put on this
podcast and I'd listen to thefolks that you interviewed to
(08:19):
really understand the nuances ofwhat people were going through
in this industry.
So that's part of theeducational programming that me
and other folks on the taskgroup all attended in
preparation for these documents.
And then, sal, I'll turn itover to you for the other part.
Speaker 2 (08:36):
Yeah, so interestingly enough and I think
I told you how Modular came toget on the list of documents in
the future for AIA but aboutfive years ago the AIA was
approached by another outsidegroup to participate in the
development of what we at thetime coined the first modular
(08:56):
construction guide.
And the AIA was a part of thatalong with other groups, by the
way and so the management at AIAcame to us and said we're
looking for volunteers and theywent right to the Contract
Documents Committee and theysolicited people from my fellow
members to assist in developingthis, what would be a modular
(09:18):
guide, a design guide, andseveral of us myself included,
kevin Miller, peter Noon on thecommittee jumped at the chance
because we all had a little bitof modular experience and we
jumped at the help in writingthis guide and it was a very
collaborative document At thetime.
It was pretty much right beforeCOVID, but we were still doing
(09:39):
Teams meetings or Zoom meetingsat the time and it helped us
because we had experience.
We all gave us our opinions,but there were people on these
calls from the Modular Institute.
There were people, contractorsand fabricators on these calls,
and we all gave our input anddeveloped what is still a pretty
good standard guide and we usedit.
(10:01):
Sarah and our task group usedit heavily.
When we were writing, thedocuments went back and referred
to that and what was said.
So that was really an integralpart of how these developed,
along with the things Sarah saidhow we developed these
documents.
Speaker 1 (10:15):
Well, that's quite a process.
I'm tickled pink that I hadsome small role to play.
Speaker 3 (10:20):
That's a very cool story, Sarah.
Speaker 1 (10:21):
Thank you for sharing that.
So let's dig into thesedocuments a little bit.
How well do these AIA contractsreflect the unique workflows
and delivery methods used incommercial modular construction?
Speaker 3 (10:35):
The documents are definitely tailored for
volumetric modular projects.
So just to give you morebackground, when we first
started looking at this, welooked at our conventional
agreements, we looked at ourdesign bid build.
We looked at our constructionmanager family of agreements.
We took a look at our designbuild documents as well, but our
(11:00):
design build documents werebeing updated by a different
task group simultaneously asthese documents were being
created.
So, anyhow, we took a look atwhat our library already offered
and compared them against thethings that we were learning
during the research.
And you know we didn't want tochange too much the baseline
(11:21):
agreements that we were workingwith because our documents
already set out processes thatare accepted by the industry.
So every time we changed ourdocuments we said to ourselves
this has to be a modular relatedchange.
We have to be able to justifyit to the committee, to outside
liaison, saying hey, we'remaking this change because it's
(11:41):
modular related and we learnedthis through the research.
So we started with ourconstruction manager as
constructor agreements and ifyou're familiar with our library
, that's our A133 and our B133agreements, and going through
this exercise like just makingtweaks saying if we just tweak
(12:02):
this a little bit and tweak thisa little bit, then can we
accommodate VMC projects.
And this exercise made usrealize we cannot.
We cannot just take one of ourbaseline agreements, our very
popular agreements, and simplytweak it for all the unique
workflows that do occur inmodular.
So that is what resulted in thecreation of four new agreements
(12:27):
.
It's a whole new family thatwe've created.
So we have an ownerconstruction manager as
constructor agreement for VMC,we have a new owner and
architect agreement, we have anew general conditions document
and then, of course, in the A133agreement that I was talking
(13:03):
about earlier, our standardizedowner construction manager as
constructor agreement, there's areally robust set of
pre-construction services thatare supposed to be performed by
the CM and that you know.
We took a look at that.
We were like we already have anagreement that has so many
pre-construction phase servicesto be performed.
(13:24):
Can we just use this?
And we couldn't, because itdidn't account for the modular
subcontractors design servicesthat are performed on the module
.
And this all occurs inpre-construction.
And to that end we took a lookat the B133 and we added a whole
new section called pre-designservices.
(13:46):
So it's additional servicesthat are supposed to be
performed well.
Basic services for thearchitect to perform in the
pre-design phase Like these, areall just unique things that
happen on BMC projects thatweren't accounted for in the
other agreements that wecurrently have in our library.
Speaker 1 (14:06):
So, speaking of the differences between volumetric,
modular and traditionalconstruction, I'm sure one of
the things you came upon in yourresearch was the difference in
risk allocation, so I wanted toask about that specifically.
What can you tell me about howthese contracts address risk
allocation between modularmanufacturers, general
(14:26):
contractors, architects andowners?
Speaker 2 (14:30):
I can answer that this was obviously a very key
aspect for these documents, asthe scopes of work can vary
between who's really responsiblefor the design due to the fact
that there's two design entities.
There's an architect andthere's a modular fabricator
who's also doing subcontractorsalso doing design, and in fact
there's two or more contractorson the project.
(14:52):
We have usually a constructionmanager, you have the modular
subcontractor who's thefabricator, and you could have a
site contractor as well.
So with all those differententities there's, obviously you
have to be very careful ondefining on who's doing what.
So the task group created veryclear scopes of work for all the
parties involved.
As I mentioned before, there's alot of ways to do these project
(15:15):
delivery methods, but wesettled on the construction
management, the project deliverymethod, and we wanted everybody
to fully understand theirvarious scopes of work.
This had been a gray area inpast projects and we wanted to
clear that up.
We heard that many times from alot of the people that Sarah
mentioned that we brought intothe liaison.
(15:36):
So, by creating very clearscopes of work for the project,
this helped each partyunderstand their
responsibilities and, moreimportantly, their risks
involved throughout the project.
For an example, we clearlydelegated the design and
engineering for the modules tothe modular subcontractor and in
(15:56):
the past a lot of peoplethought that was the architect's
responsibility.
This was not within thearchitect's scope of work
because we didn't design themodule themselves.
We gave them parameters on whatto use.
But the modular subcontractor,the fabricator, they're fully
responsible for that and thatwas something that was a major
gray area and we even heard thatin our conversations.
(16:17):
This is a coordinatedresponsibility between all the
parties.
Everyone knew who was doingwhat.
Additionally, we elected to use,as I mentioned, the CM project
delivery method in lieu of thetraditional design bid build
method, which could be done, butit would be more difficult with
a general contractor.
Because, well, basically fortwo primary reasons.
(16:39):
One, the owner's risks aregreatly reduced if you'd
introduce a CM, which wouldhappen in the beginning and
early in the early stages of theproject.
This traditionally wouldn'thappen in the design bid build
method.
So with a CM contract, the CM'son board early on the process
and they have much moreexperience in allocating the
(16:59):
work and the responsibilities.
They're used to doing that.
Cms do that all the time withvarious subcontractors and they
deal with multiple sites.
General contractors generallydon't have those
responsibilities in thatsituation.
Also, this project deliverymethod, being the CM, allows the
owners to bring in a CM earlyin on the project to help bring
(17:20):
the connection between a modularsubcontractor and the
coordination of the work moreeffectively, thereby reducing
the risks for the owner.
This would not have occurred inany other project delivery
method.
We even looked at design buildas the project delivery method
and that would be our secondchoice, but the CM process works
very well.
This is a very convolutedsituation because multiple sites
(17:42):
and things like that, so that'show we allocated the risk to
the party who's best suited tohandle that risk.
Speaker 1 (17:49):
We've been talking about the construction, the
delivery, the design which isgreat, by the way, little
sidebar.
This is fantastic information.
I feel like I'm in a modular101 class or something.
I'm reviewing all the stuff Ishould know.
This is fantastic.
But we've been talking aboutdesign and manufacturing and
delivery of the project.
What about issues likeinspection and code compliance?
(18:09):
How do the AIA contracts handlethose Permitting?
How responsibility is splitbetween on-site and off-site
issues like that?
Speaker 2 (18:19):
Yeah, great question.
So we had, I'm going to say, ahalf a dozen major items that
are really unique to modularconstruction, and this is one of
them.
It's the permitting aspect.
The major difference in thepermitting process for full
volumetric construction is thatwe have two project sites the
(18:39):
landing site, as I call it, orthe landing site of the modules,
where they're going to sitpermanently, and then you have
the fabrication site, whichcould be anywhere.
In fact, a lot of times it'sout of the state, but in either
case it's out of themunicipality where its final
resting place is.
The most obvious issue withrespect to construction, the
construction phase, is who's theauthority having jurisdiction?
(19:01):
Who's going to be reviewing theconstruction from a permitting
side?
In volumetric construction, aswe mentioned, it's taking place
in a different jurisdiction.
So the question arises who isthat AHC?
Is it the landing site or is itthe person that's looking at it
at the fabrication place?
And in fact, years ago and thisis kind of a little sidebar as
(19:22):
well the authorities havingjurisdiction, some of them
didn't want to inspect themodules in place if it wasn't
going to be in their locale.
In other cases they said, yeah,we want to inspect them because
they're being built here, whichreally didn't fit the mold.
So what's unique about this iswe're going to in our documents
the requirement to engage earlyon who the AHJ is and who's
(19:46):
going to be coordinating.
All that is set up early andthat's really important.
Typically, the landing siteauthority having jurisdiction is
the person who's going to bestamping and allowing the
permitting process, and they'lldictate whatever is required for
the fabricator to abide by.
The AAR document places theresponsibility of complying with
(20:11):
that AAHJ in the hands of theparty who's best positioned to
do that, and that party is themodular subcontractor who's
actually building these modulesand, although it's in a
different location, that personis responsible for making sure
they coordinate theirconstruction with that AHJ.
This is only for the modularunits, mind you.
(20:32):
It's not for the entirebuilding.
So that's a little bit of theconvoluted issues that always
happens here.
Therefore, there may bemultiple permits required, and
typically there are Very rarely,wouldn't they be.
In fact, there's going to bemore than two, because there
might be if you have sprinklersin the building.
That's another permittingprocess which varies from locale
to locale.
So that's the third one.
(20:52):
That most likely happened aswell.
But the modular subcontractor'sresponsibility regarding
permitting and inspection of themodules is only a portion of
the work, although it's a hugeportion Typically those
subcontractors and we have it inour documents that they're
responsible for stamping,sealing and submitting the
modular design documents intandem with the architect's
(21:16):
drawings during the permittingprocess.
And that's all happened.
All gets bundled up andsubmitted, but the modular
subcontractor is responsible forthat and it's recommended, for
example, in our documents thatthe modular subcontractor submit
these documents on their titleblock and sealed by their own
design professional.
And that's a hard pill for thearchitects to swallow that
(21:36):
somebody else is stampingdrawings, but in fact we do have
design input, we just don'thave to seal.
We're not doing theconstruction drawings.
So that's simply the thing thatwe had to come to a conclusion
on and make sure it was veryclear, because it can get
convoluted, and I also I know welike to mention this, but the
(21:57):
new, or I should say the nextversion of the International
Building Code is supposed toaddress this a little bit more
clear than it has in the past.
I'm sure it will.
It may not be 100%, but atleast they're making an effort
to at least give them somedirection so we can move forward
on these.
Speaker 1 (22:12):
Well, fingers crossed for there, yeah for sure.
How do these documents addresstransportation of the modules?
I know that's a big part of anymodular construction job.
Speaker 3 (22:23):
Yeah, absolutely.
The documents explicitlydelegate this responsibility to
the modular subcontractor, andthe reason we did this is
because it's what we heard fromthe industry.
We heard that modular subs arethe most knowledgeable about the
shipping routes and that theyhave the closest relationship
(22:44):
with the logistics companycompany.
And so because of these factors, as Sal keeps mentioning, as I
mentioned earlier, we determinedthat the modular subcontractors
in the best position to handlethat responsibility.
Speaker 1 (23:02):
How flexible are these documents?
Speaker 2 (23:03):
you know for the installation of the modules
themselves once they arrive onsite.
That's a great question.
So this is another aspect wherewe thought we had a really good
handle on it and after ourinterviews with a lot of the
liaisons, we found outdifferently.
Although the constructionmanagers I think to a T all said
listen, the responsibility forthe installation, the hookup,
the dropping of the modules inplace, that should be all the
(23:25):
responsibility of the modularfabricator or subcontractor.
And we felt that way too.
But, believe it or not, we havea lot of input from fabricators
who felt differently and feltthat the responsibility should
be on the construction managers.
So we went back and forth onthis.
So in the end we wanted to beflexible and we wanted to allow
(23:47):
the users, the owners and theCMs and in fact this case the
modular subcontractors have aset in this.
So we put a little check box inthe A481, I believe is the
document to designate who isresponsible.
You can check the box as the CMor the modular subcontractor
who would have theresponsibility for installing,
(24:08):
connecting and assembling theunits.
If they don't check a box, thedefault is the construction
manager has to take on theresponsibility.
But it's interesting because alot of the construction managers
who get involved in this do notwant to have that
responsibility.
They want everything on themodular subcontractor from
beginning to end Set them,install them, connect them and
(24:30):
have it ready to go forinspection.
But we wanted to be flexible,and I know Sarah's sick of me
saying this, but this is one ofthe beautiful things about AIA
contract documents, because eventhough we thought it should be
one way, the industry says it'sanother way.
So we wanted to at least showthat we were hearing what they
had to say and we put it in thedocuments that way to give them
(24:53):
the option to do that.
And I'm sure it'll work bothways.
But it's a matter of the risk.
Speaker 1 (24:59):
Well, kudos on you for adding in that flexibility.
I know not everybody feels thesame way about it, so it's nice
to have the option there at theend.
What's the best way for projectstakeholders to get started
with these contract templates?
Speaker 3 (25:13):
I would say please visit our website,
aiacontractscom.
At the top there's a littlesearch bar.
You can either just type inmodular or just if you're
looking for a specific contract.
Our owner contract or, I'msorry, owner construction
manager agreement is the A-181.
(25:35):
And the general conditions tothat is the A-281.
The CM modular subcontract orsubcontract, as Sal mentioned
earlier, is the A-481.
And then the owner architectagreement is the B-181.
So you can type in any of thosedocument numbers or just type
in modular and they'll delete atthe top.
Speaker 1 (25:57):
If stakeholders have a question or need to get in
touch with someone, is that apossibility?
Speaker 3 (26:01):
Yeah, you can always go on our website.
We have what's called a learnpage where we have some articles
devoted to modular and then wehave something called doc info
and so it's off of a learn page.
Or we have some articlesdevoted to modular and then we
have something called doc infoand so it's off of that learn
page.
You can type a question to docinfo and we'll be able to handle
some of your requests Excellent.
Speaker 1 (26:21):
Well, thank you both so much, Sarah and Sal.
I really appreciate your time.
It was great speaking with you.
I really appreciate it.
Speaker 3 (26:29):
Thank you so much for having it.
Thank you so much for having us.
Speaker 2 (26:32):
Thank you, my pleasure.
Speaker 1 (26:33):
My name is John McMullen and this has been
another episode of InsideModular, the podcast of
Commercial Modular Construction.
Until next time.
Hello and welcome to Inside Modular, the podcast of
commercial modular constructionbrought to you by the Modular
Building Institute.
Welcome everyone.
My name is John McMullen.
I'm the marketing director hereat MBI.
Today I'm joined by SarahBettencourt of AIA Contract
Documents and Sal Verastro withSpillman Farmer Architects.
Sarah and Sal are here to talkabout AIA Contract Documents new
(00:24):
agreements that have beendesigned specifically with
modular project stakeholders inmind.
Sarah and Sal welcome.
Speaker 2 (00:31):
Nice to be here, thank you.
Speaker 3 (00:33):
Thank you so much for having us, John.
Speaker 1 (00:35):
It's my pleasure.
Tell me about AIA ContractDocuments.
What are the reasons behind itsformation?
Speaker 3 (00:42):
Yeah, so AIA Contract Documents were first developed
way back in 1888.
That's when AIA first publishedthe owner-contractor agreement.
So it was at that time that theAIA recognized the need for
standardized agreements and thiswas to help really clarify
roles and responsibilities forproject participants, and this
(01:06):
really includes the owner,general contractor and the
architect.
So our documents have alwaysbeen created by the AIA
Documents Committee.
This is a standing committee ofthe AIA.
It's comprised of about 30 to35 architects who are all AIA
members and who all commit toserve on 10-year terms, which is
(01:31):
absolutely incredible DocumentsCommittee members, along with
our staff of attorneys, and thenwe have outside legal,
insurance and industry advisors.
We all work together andcollaborate to draft and update
our standard form agreements.
Overall, the goal of theDocuments Committee is to create
(01:53):
agreements that are fair andbalanced, while balancing the
competing interests ofcontracting parties and placing
the risk where it's best managed.
Since the time, since 1888,when AIA first published
documents, our library hasexponentially grown and I think
at this time we have about 250agreements and forms in our
(02:18):
suite.
Speaker 1 (02:19):
Wow, I feel like I've learned so much already.
Speaker 3 (02:22):
A little history lesson for you.
I feel like I've learned somuch already A little history
lesson for you.
Speaker 1 (02:25):
What prompted the development of contracts
specific to volumetric modularconstruction?
Speaker 2 (02:31):
I'll jump in there, John volumetric construction
projects using project deliverymethods that were not fully
compatible, let's say, with themodular process, since it was
(02:56):
relatively new to us but itobviously had been done before,
but not for the, I would say,the commercial industry.
But we did do a few and theywere successful.
But we were swimming into whatwe considered unknown territory
and proceeding using just ourpast experiences and trusting
our judgment at the time and,luckily, working in partnership
with a trusted owner and atrusted construction manager at
(03:19):
that time, we were really luckythat the projects were
successful.
I can't stress that enough atthat time.
What I did learn through thisprocess is that modular can be
achieved in a variety of ways.
There's no question about it,even as I worked with Sarah the
last five years or so.
But there is an optimumdelivery method that we came
across and we personally haveused, but I say the committee
(03:42):
came across and that we thoughtit worked best.
We personally have used, but Isay the committee came across
and that we thought it workedbest, but there wasn't any
contract type in our repertoireat the time that can be easily
edited and for this particulardelivery method being modular.
So, as a member of the contractdocuments committee and this is
going back at least five years,maybe six years ago.
The committee members arealways encouraged to discuss new
(04:05):
ideas and potential new trendsin design and construction.
So with that conduit availableto us, we're always throwing
things out.
And, of course, I suggested welook at full volume metric
documents, since I had thatexperience and I know it could
be better when we struggled withit and we gave that feedback
and it was positively receivedby AIA Contract Documents
(04:28):
Committee and they put thewheels in motion to develop the
family of documents for fullvolumetric construction.
The great thing about being onthe edge of developing these
documents is that many of usarchitects and attorneys like
Sarah, who experienced doingmodular we didn't have the
benefit of effective documents,so we knew what to look for, we
(04:51):
knew the pitfalls and thathelped us develop strong
documents.
So that's how it really gotstarted.
Speaker 1 (04:58):
What was the real process for creating these
contract templates?
Obviously, you had someexperience designing for modular
construction committee.
It sounds like 30 plus people,which is seems nuts to me.
But what was?
What was that process dealingwith the formation of that
contract and how did they evolve?
Speaker 3 (05:20):
Yeah, so the documents they underwent the
same process that all of ourdocuments go through and so just
taking a step back, justtalking about the documents
committee and that process as awhole, so our documents are
updated on a 10 year cycle.
So every decade, a group ofdocuments, typically like a
(05:42):
family of documents or adelivery method, are updated and
published.
So when a document comes up forreview, we begin by analyzing
data from so many differentsources.
The lawyer in me we first go tocase law.
We'll see how, over the pastdecade, how have courts
interpreted our documents?
(06:03):
How have they interpretedcertain sections and
standardized language?
Is that something we agree with?
Is that something we want tocontinue?
We also talk to industry experts.
We perform a bunch ofinterviews.
We try to gather as much dataas possible by talking to the
people who are on the groundperforming the work, and then we
(06:27):
attend as much educationalprogramming as possible as well.
And then, once we get aroundafter the research portion,
research is ongoing but we beginthen drafting the documents,
and this is an iterative process.
So for drafting, once a taskgroup, which is about five or
six folks on the committee, oncea task group finishes a draft
(06:51):
of the document, they circulatethat draft for review to the
committee and our outsideliaisons.
The committee and thoseliaisons then provide feedback
on the documents and thatfeedback is discussed, debated,
presented on it is just talkedabout so long by the committee
(07:12):
and the task group andincorporated into our documents,
and then rinse and repeat.
We do that same cycle again.
We send the document out for asecond review to the committee,
to outside liaisons, take a lookat their feedback, incorporate
it to a certain extent and then,ultimately, the documents are
put up for approval by thecommittee and the committee is
(07:34):
the group that actually approvesthe documents and then they're
published.
So, talking about thesedocuments in particular, our
research started about threeyears prior to the publication,
so they were published this year, in 2025.
I vividly remember in 2022,first starting out researching
these documents and figuring outwhat is so different about
(07:56):
modular.
In fact, a little plug to yourown show.
Three years ago, I will neverforget, I stumbled upon this
podcast.
And you know I was living in LAat the time.
It was still like pandemicera-esque, so there weren't many
places to go and I would take adaily walk and I'd put on this
podcast and I'd listen to thefolks that you interviewed to
(08:19):
really understand the nuances ofwhat people were going through
in this industry.
So that's part of theeducational programming that me
and other folks on the taskgroup all attended in
preparation for these documents.
And then, sal, I'll turn itover to you for the other part.
Speaker 2 (08:36):
Yeah, so interestingly enough and I think
I told you how Modular came toget on the list of documents in
the future for AIA but aboutfive years ago the AIA was
approached by another outsidegroup to participate in the
development of what we at thetime coined the first modular
(08:56):
construction guide.
And the AIA was a part of thatalong with other groups, by the
way and so the management at AIAcame to us and said we're
looking for volunteers and theywent right to the Contract
Documents Committee and theysolicited people from my fellow
members to assist in developingthis, what would be a modular
(09:18):
guide, a design guide, andseveral of us myself included,
kevin Miller, peter Noon on thecommittee jumped at the chance
because we all had a little bitof modular experience and we
jumped at the help in writingthis guide and it was a very
collaborative document At thetime.
It was pretty much right beforeCOVID, but we were still doing
(09:39):
Teams meetings or Zoom meetingsat the time and it helped us
because we had experience.
We all gave us our opinions,but there were people on these
calls from the Modular Institute.
There were people, contractorsand fabricators on these calls,
and we all gave our input anddeveloped what is still a pretty
good standard guide and we usedit.
(10:01):
Sarah and our task group usedit heavily.
When we were writing, thedocuments went back and referred
to that and what was said.
So that was really an integralpart of how these developed,
along with the things Sarah saidhow we developed these
documents.
Speaker 1 (10:15):
Well, that's quite a process.
I'm tickled pink that I hadsome small role to play.
Speaker 3 (10:20):
That's a very cool story, Sarah.
Speaker 1 (10:21):
Thank you for sharing that.
So let's dig into thesedocuments a little bit.
How well do these AIA contractsreflect the unique workflows
and delivery methods used incommercial modular construction?
Speaker 3 (10:35):
The documents are definitely tailored for
volumetric modular projects.
So just to give you morebackground, when we first
started looking at this, welooked at our conventional
agreements, we looked at ourdesign bid build.
We looked at our constructionmanager family of agreements.
We took a look at our designbuild documents as well, but our
(11:00):
design build documents werebeing updated by a different
task group simultaneously asthese documents were being
created.
So, anyhow, we took a look atwhat our library already offered
and compared them against thethings that we were learning
during the research.
And you know we didn't want tochange too much the baseline
(11:21):
agreements that we were workingwith because our documents
already set out processes thatare accepted by the industry.
So every time we changed ourdocuments we said to ourselves
this has to be a modular relatedchange.
We have to be able to justifyit to the committee, to outside
liaison, saying hey, we'remaking this change because it's
(11:41):
modular related and we learnedthis through the research.
So we started with ourconstruction manager as
constructor agreements and ifyou're familiar with our library
, that's our A133 and our B133agreements, and going through
this exercise like just makingtweaks saying if we just tweak
(12:02):
this a little bit and tweak thisa little bit, then can we
accommodate VMC projects.
And this exercise made usrealize we cannot.
We cannot just take one of ourbaseline agreements, our very
popular agreements, and simplytweak it for all the unique
workflows that do occur inmodular.
So that is what resulted in thecreation of four new agreements
(12:27):
.
It's a whole new family thatwe've created.
So we have an ownerconstruction manager as
constructor agreement for VMC,we have a new owner and
architect agreement, we have anew general conditions document
and then, of course, in the A133agreement that I was talking
(13:03):
about earlier, our standardizedowner construction manager as
constructor agreement, there's areally robust set of
pre-construction services thatare supposed to be performed by
the CM and that you know.
We took a look at that.
We were like we already have anagreement that has so many
pre-construction phase servicesto be performed.
(13:24):
Can we just use this?
And we couldn't, because itdidn't account for the modular
subcontractors design servicesthat are performed on the module
.
And this all occurs inpre-construction.
And to that end we took a lookat the B133 and we added a whole
new section called pre-designservices.
(13:46):
So it's additional servicesthat are supposed to be
performed well.
Basic services for thearchitect to perform in the
pre-design phase Like these, areall just unique things that
happen on BMC projects thatweren't accounted for in the
other agreements that wecurrently have in our library.
Speaker 1 (14:06):
So, speaking of the differences between volumetric,
modular and traditionalconstruction, I'm sure one of
the things you came upon in yourresearch was the difference in
risk allocation, so I wanted toask about that specifically.
What can you tell me about howthese contracts address risk
allocation between modularmanufacturers, general
(14:26):
contractors, architects andowners?
Speaker 2 (14:30):
I can answer that this was obviously a very key
aspect for these documents, asthe scopes of work can vary
between who's really responsiblefor the design due to the fact
that there's two design entities.
There's an architect andthere's a modular fabricator
who's also doing subcontractorsalso doing design, and in fact
there's two or more contractorson the project.
(14:52):
We have usually a constructionmanager, you have the modular
subcontractor who's thefabricator, and you could have a
site contractor as well.
So with all those differententities there's, obviously you
have to be very careful ondefining on who's doing what.
So the task group created veryclear scopes of work for all the
parties involved.
As I mentioned before, there's alot of ways to do these project
(15:15):
delivery methods, but wesettled on the construction
management, the project deliverymethod, and we wanted everybody
to fully understand theirvarious scopes of work.
This had been a gray area inpast projects and we wanted to
clear that up.
We heard that many times from alot of the people that Sarah
mentioned that we brought intothe liaison.
(15:36):
So, by creating very clearscopes of work for the project,
this helped each partyunderstand their
responsibilities and, moreimportantly, their risks
involved throughout the project.
For an example, we clearlydelegated the design and
engineering for the modules tothe modular subcontractor and in
(15:56):
the past a lot of peoplethought that was the architect's
responsibility.
This was not within thearchitect's scope of work
because we didn't design themodule themselves.
We gave them parameters on whatto use.
But the modular subcontractor,the fabricator, they're fully
responsible for that and thatwas something that was a major
gray area and we even heard thatin our conversations.
(16:17):
This is a coordinatedresponsibility between all the
parties.
Everyone knew who was doingwhat.
Additionally, we elected to use,as I mentioned, the CM project
delivery method in lieu of thetraditional design bid build
method, which could be done, butit would be more difficult with
a general contractor.
Because, well, basically fortwo primary reasons.
(16:39):
One, the owner's risks aregreatly reduced if you'd
introduce a CM, which wouldhappen in the beginning and
early in the early stages of theproject.
This traditionally wouldn'thappen in the design bid build
method.
So with a CM contract, the CM'son board early on the process
and they have much moreexperience in allocating the
(16:59):
work and the responsibilities.
They're used to doing that.
Cms do that all the time withvarious subcontractors and they
deal with multiple sites.
General contractors generallydon't have those
responsibilities in thatsituation.
Also, this project deliverymethod, being the CM, allows the
owners to bring in a CM earlyin on the project to help bring
(17:20):
the connection between a modularsubcontractor and the
coordination of the work moreeffectively, thereby reducing
the risks for the owner.
This would not have occurred inany other project delivery
method.
We even looked at design buildas the project delivery method
and that would be our secondchoice, but the CM process works
very well.
This is a very convolutedsituation because multiple sites
(17:42):
and things like that, so that'show we allocated the risk to
the party who's best suited tohandle that risk.
Speaker 1 (17:49):
We've been talking about the construction, the
delivery, the design which isgreat, by the way, little
sidebar.
This is fantastic information.
I feel like I'm in a modular101 class or something.
I'm reviewing all the stuff Ishould know.
This is fantastic.
But we've been talking aboutdesign and manufacturing and
delivery of the project.
What about issues likeinspection and code compliance?
(18:09):
How do the AIA contracts handlethose Permitting?
How responsibility is splitbetween on-site and off-site
issues like that?
Speaker 2 (18:19):
Yeah, great question.
So we had, I'm going to say, ahalf a dozen major items that
are really unique to modularconstruction, and this is one of
them.
It's the permitting aspect.
The major difference in thepermitting process for full
volumetric construction is thatwe have two project sites the
(18:39):
landing site, as I call it, orthe landing site of the modules,
where they're going to sitpermanently, and then you have
the fabrication site, whichcould be anywhere.
In fact, a lot of times it'sout of the state, but in either
case it's out of themunicipality where its final
resting place is.
The most obvious issue withrespect to construction, the
construction phase, is who's theauthority having jurisdiction?
(19:01):
Who's going to be reviewing theconstruction from a permitting
side?
In volumetric construction, aswe mentioned, it's taking place
in a different jurisdiction.
So the question arises who isthat AHC?
Is it the landing site or is itthe person that's looking at it
at the fabrication place?
And in fact, years ago and thisis kind of a little sidebar as
(19:22):
well the authorities havingjurisdiction, some of them
didn't want to inspect themodules in place if it wasn't
going to be in their locale.
In other cases they said, yeah,we want to inspect them because
they're being built here, whichreally didn't fit the mold.
So what's unique about this iswe're going to in our documents
the requirement to engage earlyon who the AHJ is and who's
(19:46):
going to be coordinating.
All that is set up early andthat's really important.
Typically, the landing siteauthority having jurisdiction is
the person who's going to bestamping and allowing the
permitting process, and they'lldictate whatever is required for
the fabricator to abide by.
The AAR document places theresponsibility of complying with
(20:11):
that AAHJ in the hands of theparty who's best positioned to
do that, and that party is themodular subcontractor who's
actually building these modulesand, although it's in a
different location, that personis responsible for making sure
they coordinate theirconstruction with that AHJ.
This is only for the modularunits, mind you.
(20:32):
It's not for the entirebuilding.
So that's a little bit of theconvoluted issues that always
happens here.
Therefore, there may bemultiple permits required, and
typically there are Very rarely,wouldn't they be.
In fact, there's going to bemore than two, because there
might be if you have sprinklersin the building.
That's another permittingprocess which varies from locale
to locale.
So that's the third one.
(20:52):
That most likely happened aswell.
But the modular subcontractor'sresponsibility regarding
permitting and inspection of themodules is only a portion of
the work, although it's a hugeportion Typically those
subcontractors and we have it inour documents that they're
responsible for stamping,sealing and submitting the
modular design documents intandem with the architect's
(21:16):
drawings during the permittingprocess.
And that's all happened.
All gets bundled up andsubmitted, but the modular
subcontractor is responsible forthat and it's recommended, for
example, in our documents thatthe modular subcontractor submit
these documents on their titleblock and sealed by their own
design professional.
And that's a hard pill for thearchitects to swallow that
(21:36):
somebody else is stampingdrawings, but in fact we do have
design input, we just don'thave to seal.
We're not doing theconstruction drawings.
So that's simply the thing thatwe had to come to a conclusion
on and make sure it was veryclear, because it can get
convoluted, and I also I know welike to mention this, but the
(21:57):
new, or I should say the nextversion of the International
Building Code is supposed toaddress this a little bit more
clear than it has in the past.
I'm sure it will.
It may not be 100%, but atleast they're making an effort
to at least give them somedirection so we can move forward
on these.
Speaker 1 (22:12):
Well, fingers crossed for there, yeah for sure.
How do these documents addresstransportation of the modules?
I know that's a big part of anymodular construction job.
Speaker 3 (22:23):
Yeah, absolutely.
The documents explicitlydelegate this responsibility to
the modular subcontractor, andthe reason we did this is
because it's what we heard fromthe industry.
We heard that modular subs arethe most knowledgeable about the
shipping routes and that theyhave the closest relationship
(22:44):
with the logistics companycompany.
And so because of these factors, as Sal keeps mentioning, as I
mentioned earlier, we determinedthat the modular subcontractors
in the best position to handlethat responsibility.
Speaker 1 (23:02):
How flexible are these documents?
Speaker 2 (23:03):
you know for the installation of the modules
themselves once they arrive onsite.
That's a great question.
So this is another aspect wherewe thought we had a really good
handle on it and after ourinterviews with a lot of the
liaisons, we found outdifferently.
Although the constructionmanagers I think to a T all said
listen, the responsibility forthe installation, the hookup,
the dropping of the modules inplace, that should be all the
(23:25):
responsibility of the modularfabricator or subcontractor.
And we felt that way too.
But, believe it or not, we havea lot of input from fabricators
who felt differently and feltthat the responsibility should
be on the construction managers.
So we went back and forth onthis.
So in the end we wanted to beflexible and we wanted to allow
(23:47):
the users, the owners and theCMs and in fact this case the
modular subcontractors have aset in this.
So we put a little check box inthe A481, I believe is the
document to designate who isresponsible.
You can check the box as the CMor the modular subcontractor
who would have theresponsibility for installing,
(24:08):
connecting and assembling theunits.
If they don't check a box, thedefault is the construction
manager has to take on theresponsibility.
But it's interesting because alot of the construction managers
who get involved in this do notwant to have that
responsibility.
They want everything on themodular subcontractor from
beginning to end Set them,install them, connect them and
(24:30):
have it ready to go forinspection.
But we wanted to be flexible,and I know Sarah's sick of me
saying this, but this is one ofthe beautiful things about AIA
contract documents, because eventhough we thought it should be
one way, the industry says it'sanother way.
So we wanted to at least showthat we were hearing what they
had to say and we put it in thedocuments that way to give them
(24:53):
the option to do that.
And I'm sure it'll work bothways.
But it's a matter of the risk.
Speaker 1 (24:59):
Well, kudos on you for adding in that flexibility.
I know not everybody feels thesame way about it, so it's nice
to have the option there at theend.
What's the best way for projectstakeholders to get started
with these contract templates?
Speaker 3 (25:13):
I would say please visit our website,
aiacontractscom.
At the top there's a littlesearch bar.
You can either just type inmodular or just if you're
looking for a specific contract.
Our owner contract or, I'msorry, owner construction
manager agreement is the A-181.
(25:35):
And the general conditions tothat is the A-281.
The CM modular subcontract orsubcontract, as Sal mentioned
earlier, is the A-481.
And then the owner architectagreement is the B-181.
So you can type in any of thosedocument numbers or just type
in modular and they'll delete atthe top.
Speaker 1 (25:57):
If stakeholders have a question or need to get in
touch with someone, is that apossibility?
Speaker 3 (26:01):
Yeah, you can always go on our website.
We have what's called a learnpage where we have some articles
devoted to modular and then wehave something called doc info
and so it's off of a learn page.
Or we have some articlesdevoted to modular and then we
have something called doc infoand so it's off of that learn
page.
You can type a question to docinfo and we'll be able to handle
some of your requests Excellent.
Speaker 1 (26:21):
Well, thank you both so much, Sarah and Sal.
I really appreciate your time.
It was great speaking with you.
I really appreciate it.
Speaker 3 (26:29):
Thank you so much for having it.
Thank you so much for having us.
Speaker 2 (26:32):
Thank you, my pleasure.
Speaker 1 (26:33):
My name is John McMullen and this has been
another episode of InsideModular, the podcast of
Commercial Modular Construction.
Until next time.
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