Claims Retrospective: Designs Based on the Assumption that Certain Permits/Approvals Will Be Waived or Not Required
Design professionals will occasionally create designs, plans, and/or drawings (collectively, referred to herein as “designs”) with the assumption that its designs will not need to be submitted or approved to the agencies normally required. For example, we have recently received multiple claims in relation to projects where the design professionals have tried to avoid the need to obtain approval or a permit from the California Coastal Agency. In other words, the design professionals attempt to bypass the Coastal permit process altogether, which is sometimes allowed depending on the circumstances involved.
Typically, these designs are completed to meet the specific requests of a client, who is seeking to save money or expedite a project. There is certainly nothing wrong with trying to save a client money or trying to expedite a project. However, issues often arise when the attempts to bypass these agencies fail and the design professional must then adjust or even create a new design to satisfy said agencies.
In these situations, it is not unusual for the client to blame the added costs of both the design/redesign and more expensive construction attendant thereto on the design professional even though, in most instances, the client was fully aware of the risk that any attempts to bypass said agency might not be successful and thus that the project costs might be higher than contemplated with the initial design. However, without anything in writing documenting the client’s awareness, the client may feign ignorance and assert a claim against the professionals.
When a design professional creates a design based on the assumption that certain permitting will not be required or waived, it should document same in its contract with the client. The design professional should also spell out the risk and higher project costs if the further permitting is required. As a best practice, the design professional should provide the cost of its services if the permit is required as well as the costs of its services if the permit is not required. The design professional should also include a disclaimer that it cannot guarantee whether or not certain permits/approvals will be required as those decisions are made by the municipalities involved.
If the risks of proceeding based on the assumption that the design professional will be able to bypass the permitting requirements of certain agencies is spelled out in writing for the client, the client will have a difficult time passing those risks onto the design professional.
