Claims Retrospective: Design-Build Projects Can Present Unique Challenges for Design Professionals.
In a typical construction project, the owner contracts with a design professional (typically an architect or engineer) to design the building, structure, infrastructure, etc., and the owner then contracts with a general contractor to have those items built. Accordingly, there are two separate branches of contracts: one covering the design from the owner to the design professional to subconsultants and one covering the construction from the owner to the general contractor to the subcontractors.
In a design-build project, the owner contracts with one company to complete both the design and construction. While design-build projects certainly have some advantages in certain circumstances, they can also present some unique challenges for design professionals. Many of the challenges presented in the design-build context arise from the fact there is another entity or company between the design professional and the owner, which can lead to less control over the design than the professional may be used to. Moreover, the design-build company, which has ultimate control over the design, may not have as much experience in design work because it is often more of a construction-oriented firm.
Design professionals typically become involved with a design-build project when the design-build company subcontracts the design, or some portion thereof, to the design professional. Design professionals should approach such subcontracts with great attention to detail, especially in the situations where the design-build company is subcontracting only a portion, but not all of the necessary design work to the design professional.
Although it is generally beneficial to have a written contract on all projects, a written contract that establishes the design professional’s scope of work is very important in the context of a design-build project. The written contract between the design-build company and the design professional should not only help the parties involved make certain that all aspects of the design are being addressed appropriately, but also assist the design professional in defending themself from claims in the event that a design issue beyond their scope of work is overlooked or done improperly.
In that regard, claims often arise where some part of the design gets overlooked or is not addressed by the appropriate professional. Claims may also arise where the design-build company bases its bid/proposal on preliminary design work and then sues the design professional for its cost overruns, claiming the design professional’s preliminary design was incomplete or subject to creep scope. Without a clear written contract, the design-build company almost always alleges that any error or change in the scope in any portion of the design is the design professional’s fault given that it is responsible for the “design” portion of the design-build project.
For example, a design-build company hired a structural engineer to provide certain structural drawings, but excluded certain details thereon, which were intended to be provided by engineers hired by the various subcontractors or other engineers hired by the design-build company. When errors surfaced in the subject details, the design-build company blamed the structural engineer, claiming they were responsible for the details. The fact that there was no written contract excluding the details from the structural engineer’s scope of work allowed the design-build company to create an issue of fact regarding the structural engineer’s scope of work despite the fact that the structural engineer specifically identified they were not responsible for the applicable details on its drawings.
Another issue that should be addressed in a design professional’s contract with a design-build company is the “chain of command,” or to whom the design professional is supposed to communicate and how during the duration of the project. In many cases, the design professional will be prohibited from communicating directly with the owner, at least without also communicating with the design-build company. If the design professional believes that such a limitation will be unworkable or prove problematic, they should address the issue at the contracting stage as, once in place, failure to follow the assumed chain of command can lead to claims.
For example, an engineer was required to send all communications to the owner through the design-build company unless instructed otherwise in writing. During the project, the engineer discovered that the design-build company made many mistakes in the construction of the project. At some point, the engineer began communicating directly with the owner, who eventually terminated the design-build company based—at least in part—on the reports of the engineer and thereafter contracted directly with the engineer to complete the project with the use of a different contractor. In the ensuing claim, the trier of fact found that the engineer not only breached their contract with the design-build company, but also negligently interfered with the design-build company’s contract with the owner.
As the two examples above illustrate, design professionals should approach design-build projects with careful consideration. Particular attention should be paid to the design professional’s contract as the scope of work, expectations, and lines of communication should be addressed from the beginning and carefully documented. Thereafter, design professionals should take care to follow their contract and document any issues or deficiencies and report them to the correct party(ies).
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