March 29, 2007

Design-build construction offers risk relief

Jordan Schrader

When an architect advises her owner-client on how to get a project built, she creates construction documents for the owner to direct the contractors. As long as the contractors have followed these directions, they will not be held responsible if the owner turns out to be dissatisfied with the results. And as long as the architect has not been careless in performing her services, neither will she be held responsible. The owner simply takes the risk that a competently designed and well-constructed building may not meet his expectations.

Design-build construction offers some relief from this risk. The risk of an unsuccessful design-build project falls upon the contractor, which warrants the project will meet the owner’s expectations as expressed in the contract’s performance parameters. The contractor includes design and documentation services in its construction package, allowing the owner to look to a single entity, the design-builder, to resolve project problems and to a single agreement, the design-build contract, to allocate responsibility when problems arise.

Changing responsibilities

Design-build construction is not considered unlawful under most jurisdictions’ laws so long as the services included in the contractor’s construction package are “appurtenant” to the construction. This often means that the architect will work at the behest of and for the benefit of the general contractor, which is not a licensed design professional. This fundamentally changes the architect’s responsibilities to those involved in the project. In this environment, an unwary architect may find herself facing circumstances over which she has little control.

An architect in a design-build contract becomes responsible for the business interests of the contractor-client, which means she may be liable for the contractor’s economic losses if they result from her errors or omissions. These considerations may be new to some architects and should always be approached deliberately if they are to be properly managed.

For example, on a design-build project, the contractor relies on the architect’s guidance to price the proposals and to complete the construction. If the guidance is inadequate, in light of the contractor’s requirements and the project fails to meet contract standards, the contractor may assert its liability to the owner for the breach of contract as economic damages in a professional liability claim against the architect. Even if the project meets the owner’s expectations, the contractor’s additional construction costs incurred as a result of the architect’s errors or omissions may be claimed as damages. Although the architect’s responsibility is still measured against a professional standard of care, her responsibility for the contractor’s economic risks is new.

Architect serves contractor

On a design-build project, the architect will often have opportunities to communicate with the owner and project users as the design is developed. Although these encounters are similar to traditional project meetings, the architect should not forget that the duty of professional care runs to the contractor — not the owner. As a consultant, the architect gathers and interprets information so that the contractor can make an acceptable proposal to the owner. The architect presents design proposals to the owner on the contractor’s behalf so that the owner can better understand what the contractor will provide.

The beneficiary of the architect’s service is the contractor, who makes a proposal that results in a profitable project and a satisfied client, if all goes well. The architect who ignores or blurs this distinction may find herself liable to the contractor and owner, both of whom may claim they relied upon her guidance.

Documents and other services prepared for a design-build team can be quite different from those prepared for a traditional project. Traditionally, the documents are detailed instructions against which the contractor’s performance is measured. Design-build documents assist the contractor to meet the performance standards contained in the design-build contract. An experienced contractor may require far less detail instruction to build the project.

Much of the efficiency of the design-build method comes from the collaboration among the construction team members. This may result in specialized forms of communication that can easily be misused or misunderstood outside the team. Architects should be careful about licensing the use of such documents and should take steps to protect themselves from their misuse by others, including owners.

John H. Baker, AIA, is a shareholder and vice president of the Portland law firm of Jordan Schrader, where he practices construction-related law.

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