Design build contractors are generally familiar with the risk they are assuming under the traditional design-build model in which the contractor is responsible for the design, as well as the construction of the design his team has created. However, contractors are less familiar with the risks that are assumed under a design-bid-build model in which there are some elements of design delegation.
Typically, under the design-bid-build model, the owner assumed all responsibilities for the design and might even have impliedly warranted the sufficiency of that design under the Spearin Doctrine or otherwise. Under this scenario, the contractor could rely on the plans and specifications that were provided to him and if he constructed them in accordance with the plans and specifications, he would have an absolute defense should there be a problem later. However, in recent years there has been some shifting of that risk where more design delegation is being transferred from the Owner and design professional to the contractor by agreement.
For example, AIA documents now include a design delegation clause in A201, section 3.12.10. Under that section, if specified by the contract documents, the contractor is responsible for the specified design components including providing proof through a designer’s seal that the design satisfies the performance and/or design criteria provided in the contract documents, and the Owner and its designer can rely upon that delegated design.
In addition, there are many design elements, whether it would be shoring, connections, or loads that are traditionally handled by the contractors, subcontractors, or suppliers performing the work. Architects are increasingly using the contract documents to try to shift those risks to the specialized provider of those services through some form of design delegation. In addition, there are other opportunities to shift the risk of performance to the providers with a “performance spec,” where the contractor is promising that its components will reach the performance criteria specified in the contract documents. When the contractor, or its subcontractors and suppliers, are assuming these risks, there should be a concerted effort to price and insure that additional risk.
For example, the risk of design liability under delegated design is likely not covered by a contractor’s traditional CGL policy, and a separate design errors and omissions policy should be provided. In addition, should shop drawings, submittals, or the like vary from the contract documents, they should be specifically called out to the project designer for his or her express approval and “sign-off.” Contractors should also be careful to seek errors and omissions insurance from the design professionals they are relying upon with respect to any portion of the delegated design, including all designers’ stamping or sealing documents.