The Dotted Line: How to manage the risks of delegated design
Taking responsibility for even a small portion of the design can expose contractors to increased liability. Here's how to limit the risks.
This feature is a part of "The Dotted Line" series, which takes an in-depth look at the complex legal landscape of the construction industry. To view the entire series, click here.
Delegated design comes into play in construction when a general contractor or subcontractor assumes responsibility for some aspect of a project’s design. This can occur with any project delivery type, and adds a new layer of responsibility — and potential liabilities — for construction companies.
Delegated design, though, shouldn't be confused with the methods a contractor uses to perform its work. As long as a contractor meets the requirements laid out in the plans and specifications — and as long as the contract doesn't state otherwise — then the construction company can use the building practices it deems necessary. This includes design changes incidental to the work such as moving a door frame a few inches.
The transfer of design responsibility is a standard industry practice for scopes of work like deep foundations and shoring systems, said Tyler Isgett, senior preconstruction manager at New South Construction in Atlanta. The companies performing this work typically engineer elements using systems and equipment — sometimes patented — that they’ve developed and fine-tuned over the years.
It is also not unusual, said Christopher Wilson, senior principal of architecture in Stantec's Sacramento, California, office, for a portion of the project's mechanical, electrical and plumbing work to be delegated to subcontractors because there is a close relationship between design documentation and fabrication of those systems.
Wilson thinks a more accurate phrase for delegated design is "delegating a piece of the process" — the next steps that a contractor takes into the details about how to build certain parts of the project. There will always be, he said, a design professional to coordinate design elements and make sure the project comes together with no conflicts.
In fact, according to an American Institute of Architects commentary on AIA Document 201, General Conditions of the Contract for Construction, the architect can’t delegate design to the contractor as long as the architect’s contract is with the owner. The institute refers to the process as “design allocation” on the part of the owner.
Delegation of project pieces
The trend during the past several years, Isgett said, has been toward delegation of design for even more pieces of a project like metal framing and curtain walls. Typically this requires that the contractor or subcontractor take the relevant plans to a design firm to review them, make any necessary changes and then stamp them.
For Isgett, the reasons designers pass this task to contractors falls into two primary categories — the design firm’s desire to keep its costs down and its recognition that construction companies are the installation experts.
But sometimes the reasons for delegating design are driven by the owner. “Clients are always interested in seeking a predictable outcome,” Wilson said. Owners are focused on the budget, schedule and increasingly on maintenance and operations. Having contractors participate in design decisions gives them a better understanding of the project and its goals, reducing the risk of a rocky construction process with schedule delays and cost overruns.
Further, although using delegated design upends the traditional process of fully documenting the project before handing it over to the general contractor and subs, Wilson said it can accelerate speed to market, which is a constant concern for most owners no matter what firm is responsible for the design.
Whatever the name, Isgett said not everyone on the project team will be on board with delegated design right away, especially subcontractors that have never participated in a formal design process. However, say a general contractor is handed the ultimate responsibility for the metal framing, for example: Unless that company performs the work, the framing subcontractor will likely have little choice other than to find an engineer to verify any framing plans the architect produced.
Protection from design-related issues
When contractors tread into design territory, there are some measures they should take to protect themselves. The first thing a construction firm should do is engage a licensed professional to do design work, which a contractor’s insurance might not cover.
“A contractor would have commercial general liability insurance,” said attorney Paul Casowitz of Sive, Paget & Riesel in New York, “but would not [likely] be carrying professional insurance" for design and engineering services.
In addition, many state and local regulations, Casowitz said, require the entity performing design work to be licensed to do that work. For example, Florida allows contractors to offer design-build services, but a statute requires them to engage an architect to perform the design.
“A contractor who wings it has created a potential hazard,” he said.
The construction firm must submit its engineered, stamped plans to the primary design team, which will check for any conflicts with other aspects of the work and make new documents as part of the project record. Some architects or engineers, Isgett said, will insist on reviewing the new plans, which could hold up the project and defeat the purpose of delegating design duties.
“It becomes a bit of a battle,” Isgett said. “We’ve had submittals out there for six months because of a disagreement.”
The key to avoiding this scenario, he said, is to have a conversation in advance with the design team about how the delegated design process will proceed.
It also doesn't hurt, Casowitz said, to run the construction contract by an attorney, because confusion can create ambiguity around what company is ultimately responsible for the design. “That’s when the lawyers are going to come in,” he said, “because it’s not clear. It’s important to make sure that there is an understanding and a clear delineation of responsibilities and that the contract documents express that.”
It’s also critical, Casowitz said, for contractors to know their responsibilities so that they can charge clients for extra insurance coverage and design services they will have to buy.
As contractors become more involved in the design process through the design-build method, integrated project delivery and other collaborative construction methods, the issue of delegated design will likely become more pervasive, Isgett said. But he sees it as a part of an evolution back to the days when contractors were master builders.
“Let the technical expertise come from folks who have the expertise,” he said.
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