Civil Engineering Reference
In-Depth Information
communicate directly with the designer at any time and without having to go through the
design-builder.
Although the designer should be free to communicate with the owner, it is very impor-
tant for the designer-builder to make clear to both its designer and the owner that the
design-builder should be given the opportunity to attend any meetings between designer
and owner. Moreover, if the design-builder does not attend a meeting, it should require
the results of that meeting to be communicated immediately in writing to the design-
builder. Perhaps most importantly, all parties must understand that the designer is not
authorized to make any decisions that bind the design-builder. The design-builder simply
cannot be put in a situation where the designer, without the design-builder's knowledge
and consent, authorized changes to the scope of work. This can have disastrous conse-
quences for the design-builder, as it is the design-builder that is ultimately guaranteeing
the design and cost of the project to the owner.
Addressing Design and Construction Errors
It is a given that both the contractor and designer will make mistakes. The designer may
fail to include work called for in the owner's requirements, fail to design to applicable legal
requirements, or fail to coordinate the design documents resulting in omission of work
from a particular trade package. Contractors will also inevitably make mistakes through-
out the course of the project. For example, they may fail to follow the construction docu-
ments or fail to procure all work required by the project documents. The parties have a
number of different options and strategies for dealing with the costs associated with these
mistakes. While an integrated firm will assume both design and construction risks, it still
must negotiate how these risks will be shared with its subconsultants and subcontractors.
First, each party may agree that it will be responsible for its own mistakes and that it
will reimburse the other for losses caused as a result of its errors. Thus, the designer would
reimburse the contractor for losses caused by the designer's failure to perform consistent
with its contractual obligations and the applicable standard of care; the contractor would
reimburse the designer for losses caused by the contractor's actions. Designers involved
in complex DB projects may be unwilling, however, to assume unlimited liability to the
design-builder for their errors or omissions. They may simply refuse to risk their com-
pany's future on one project and may insist that their contract contain a provision limiting
their liability to a predetermined amount. These provisions, known as limited liability
clauses, cap the designer's liability at a specified amount, the amount of its fee, a percent-
age of construction costs, or the limits of applicable insurance coverage.
Still another strategy team members use to protect themselves is obtaining compre-
hensive insurance coverage. In fact, depending on the type of insurance available, design-
builders may agree to limit the designer's liability to the limits of applicable insurance if
they have obtained a comprehensive errors and omissions policy with sufficient limits.
The DB team can also manage the risk of its mistakes by establishing a contingency
account that can be used to respond to increased costs resulting from design and con-
struction errors. The amount of the contingency will have to take into account the size
and complexity of the project and fit within the overall budget for the project. The parties
also have to agree on the specific ground rules for obtaining access to the contingency.
For example, the designer could use a specified amount of the contingency to respond to
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