Most of my job involves helping design professionals with loss prevention. The first step in that process is understanding where the potential for expensive claims originates. The logical answer is to begin at the beginning: a review of the nature of the relationship between the design professional and their client. That begins with a look at the nature of the parties’ agreements, and in particular, with a focus on the “project delivery mechanism.”
My first entry in this series of articles details a traditional system in which the “tripartite” relationship is on full display, as between the Owner, at the top of the triangle, with the Contractor and Design Professional at separate vertices. The parties to this arrangement are not in “privity” of contract with each other, but the Contractor and Designer are in privity with the Owner only.
For all of the innovation in the construction industry, this “Design-Bid-Build” (DBB) system remains the project delivery mechanism most familiar to owners, architects, engineers, contractors and their consultants. Its apparent simplicity is part of its appeal: the owner hires the design professional, the design is fully developed, the work is bid, and the owner separately hires a contractor to build it. During construction, the architect or engineer may remain involved through construction administration.
But familiarity should not be confused with simplicity. DBB places the design professional outside the construction contract while simultaneously positioning that professional at the center of the project’s information flow. The end of design does not end the risk profile, and in fact, most claim triggers will occur during construction, even though the originating act happened before. Requests for information, submittals, proposed substitutions, pay applications, change orders, site observations and disputes over design intent often pass through the architect or engineer. That makes the delivery model a useful reminder that a risk analysis should also be an ongoing process. The contract structure determines who controls information, cost, schedule and construction, and those allocations shape where claims eventually arise.
This series of articles hopes to highlight my experience derived from 30 years of representation of design professionals in the hopes that future potential claims can be avoided completely.
Start With Coordinated Contract System
One of the most effective loss-prevention steps is also one of the earliest: begin with a coordinated family of industry contracts. AIA, EJCDC and comparable industry forms are valuable not because every provision is perfect for every project, but because the documents are designed to work together, hand in hand, across the owner-designer, owner-contractor and other consultant relationships.
Problems often arise when one agreement is heavily edited without corresponding changes to the others. The architect may be assigned authority over the contractor that the owner-contractor agreement never gives it. One document may say the architect merely observes the work for general conformity to a design intent, while another appears to require the architect to “ensure” (or stronger language) complete compliance with the contract documents. The owner-contractor agreement may establish one process for review of submittals, RFIs, and product substitutions, while the owner-designer agreement assumes another. These inconsistencies create ambiguities that lend credence to arguments by the owner, later, that the design professional had more responsibility than they should have or actually did have.
Standard forms should not be signed blindly. They are starting points that need to be reviewed for consistency across the board. The goal is to understand the system before changing individual parts of it and to make sure the final documents tell a consistent story about who is responsible for what, using consistent language and obligations. One way to ensure this is to make sure, as the designer, you have access to the owner-contractor agreement, and include language in your agreement that mirrors the description of the designer’s role in that agreement. Require any revisions to the owner-contractor agreement be provided to you in advance, to the extent it could alter your obligations in any way.
The same discipline applies to scope. The design agreement should identify the services the professional will perform during design, bidding and construction, including the specific expected frequency of site observations, submittal review, RFI response, change-order involvement (including a reasonable time frame with which you can review these submissions), pay-application review, substantial completion and closeout. Equally important, it should identify services the designer is not undertaking, or only would as an additional service. The owner may be expecting you to provide a certain level of service based on the language of the owner-contractor agreement that was not contemplated by your agreement.
Preserve the Professional Standard of Care
Contract language can quietly transform a professional obligation into something much more absolute. A conventional professional standard of care focuses on the skill and care ordinarily exercised by similarly situated professionals under similar circumstances. That is fundamentally different from promising a perfect result.
Words such as “warrant,” “guarantee,” “ensure,” “error-free,” “complete and accurate,” “fit for intended purpose,” “highest standard” or “best practices” should trigger careful review. So should broad certifications and absolute promises to comply with every law or code without qualification. Using your “best efforts,” or defining the expertise required to a “highly skilled professional in [the specific end-use of the structure]” tends to expand upon the standard of care such that it creates an impossible situation.
The point is not semantic. A design professional should be accountable for negligent professional services. The contract should not create liability for outcomes the professional cannot provide, control, or convert professional judgment into a warranty.
Scope creep presents the same problem after the contract is signed. A request that begins as a courtesy can become an asserted duty if it is performed repeatedly without clarification. When the owner asks for services outside the agreed scope, the project team should determine whether an additional service, amendment, or other written clarification is appropriate.
I hope that these articles are a good refresher on the issues to be explored with this project delivery system, and I will issue several others on the topic of DBB before moving on to other project delivery mechanisms, such as Design-Build, and exploring the issues posed in those arrangements.
For anyone wanting a consultation on their contracts, please feel free to reach out to arrange for a meeting and discussion about your specific project circumstances.