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ConstructionPro Week, Volume: 3 - Issue: 30 - 07/25/2014

Should Designers Be Liable to Contractors for Drawing Errors?

By Bruce Jervis

 

It has long been controversial: Should design professionals be directly liable to construction contractors for deficiencies in the drawings and specifications? There are arguments on each side. On one hand, contractors necessarily rely on the design documents when bidding and performing the work. And, the architect or engineer knows there will be reliance on these representations. On the other hand, the design professional contracts with the project owner, not the constructors. The designer’s responsibilities – and liabilities – are to the owner.

 

The Texas Supreme Court recently came down on the latter side of this argument. Contractors cannot recover in negligence from design professionals for economic losses caused by errors in the drawings and specifications. The court said risk and responsibility on construction projects is customarily allocated by a chain of contracts. Liability in negligence to non-contracting parties would upset this carefully negotiated balance. A contractor “must look to its agreement with the owner for damages if the project is not as represented.”

 

In so ruling, the Texas high court noted – and documented – that precedent on this question is fairly evenly divided among the states. There clearly are two persuasive arguments to be made. Yet, the court failed to acknowledge that on public works contracts, the contractor has no opportunity to negotiate the allocation of risk. Where do you stand? I welcome your comments.

 

COMMENTS

Does the ruling preclude the Contractor's right to pursue the Owner who would then likely bring in the A/E?
Posted by: Porter Brownlee - Friday, July 25, 2014 11:15 AM


This has been an issue for years as Engineers and Architects are " Designers" as they say. They accept no risk on the performance of projects, and never have.In addition many times the Engineer fees out pace the actual build fees.

I believe from a contractors point of view the Texas decision is in error. If I build a project to an engineers design, their specifications and it fails, while am I as a contractor held accountable. What it comes down to is the Golden Rule the man with the gold rules. Engineer Firms are viewed as smarter, and are paid more. They have the better attorneys. Texas is a State which promotes big business, yet holds the lowest level of the food chain accountable. The contractor always has and always will hold the largest " Risk and Reward" portion on contracts. Engineers get paid for "Professional Services" Contractors get paid for "Performing" I believe this needs to change as the " Professional " needs to hold some accountability for poor performance. If he designs wrong or in error he needs to accept some responsibility. A better solution is 33 1/3 responsibility, divided between the 3, Owner, Engineer and Contractor. Owner messed up by hiring the wrong engineer firm, engineer designed erroneously, and contractor followed poor plans and did not speak up. They all are in fault. Accept 33 1/3 accountability!
Posted by: Pete MIller - Friday, July 25, 2014 11:24 AM


Designers are already liable and typically get paid less than half in gross fees what the contractor earns in profit. The fact is that mistakes are inevitable in any field, including construction. The contractor has a right to and most in fact do pursue a change order with the Owner if a mistake is found. The designer will likely lose clients or go out of business since word of serious errors travels quickly. There is a delicate balance and I have found in over 40 years in this field that many so-called errors are differences in opinion and some contractors want to do Code minimums as opposed to what may be the best decision for a project. The issue does reinforce the need for construction phase involvement by the designer, which could nip most of these issues in the bud before there is a serious issue or litigation.
Posted by: John Teets - Friday, July 25, 2014 11:47 AM


Most general contracts include the nebulous " reasonably inferred" language, which seems to have a broader definition with each passing year. The drawings provided by many of the design professionals are lacking in many respects and the owner and design professionals seem to be leaning on the reasonably inferable language harder than ever to pass responsibility for design omissions down to the contractor. We do projects where the architects fees are equal to or in excess of what we earn as a contractor yet every mistake was either inferable or a means and methods issue. The balance is missing from this equation.
Posted by: David McMahan - Friday, July 25, 2014 12:55 PM


My Company does both. We design and build projects and build projects designed by other professionals. WE are finding that the design today has many more errors than 20 years ago when most work was done manually. The Contractor should be able to hold the Designer accountable for mistakes that cost money.
Posted by: Kenneth Joyner - Friday, July 25, 2014 1:18 PM


Modern economics require an optimal not perfect result from all parties; owner, designer, and builder. As each are likely to miss numerous negative outcomes from their efforts, cooperative and open management of such risks should be the norm even where an IPD is not in place. Singling out one party does not address most project realities.
Posted by: Drake Wauters - Saturday, July 26, 2014 8:39 AM


"The drawings are wrong" is a statement that covers a lot of possibilities. It seems to me of the drawings are wrong, the contractor is not often going to be damaged, If he builds a chair with uneven legs in accordance with the plans, he's complied with the contract. If he prudently calls the problem to the owner's attention, he suggests a change order and marks it up 300%. If the contractor doesn't notice the problem, often, maybe most of the time, the contractor thereby makes a mistake as well. The last remaining scenario I see is a) architect mistake in an area of specialization that a GC isn't obligated to recognize; b) GC builds the bad plan, and c) GC gets sued by owner or innocent user. In most states the GC is going to be able to ask the court to allocate fault to the architect on the verdict form whether the architect is sued or not. So how exactly does the GC get "Damaged" by bad plans in any way not covered by these descriptions?
Posted by: Andrew Showen - Sunday, July 27, 2014 9:50 PM


There is no contract between the designer and the contractor. The contractor's best recourse is with the owner, who does have a contract with both the damaged party and the party at fault. The onus of course is on the contractor to prove damages.
Posted by: Harvey Armstrong - Monday, July 28, 2014 7:39 AM


A question was raised regarding the nature of the damages incurred by the contractor as a result of the drawing errors. Eighty percent of the contract drawings were changed. The contractor's performance was significantly delayed. The project owner withheld $4.2 million in liquidated damages for late completion.
Posted by: Bruce Jervis, Editor - Tuesday, July 29, 2014 5:49 AM


This is an argument that goes as far back as I can remember. Since Architects and Engineers have been directing any responsibility away from themselves in the specifications for the last 30 years to relieve them of any litigation due to errors or omissions, they have affectively protected themselves except in the most grevious instances. The AIA specs cover a lot of this with sections 3.2.2 and state that the contractor is not responsible for design errors that are brought to the attention of the Architect before the bid. The contractor is usually not a "design" professional with a stamp. Prior to the bid is the best time for the contractor to make sure that any mistakes are corrected or noted. I have called AIA in DC and asked them about this and they have stated that it is the obligation of the AIA license holder to correct any errors that have been noted to them. If they do not and they still try and stiff the contractor later by saying that the contractor has to install per code, then just give them a call and that Architect will lose their AIA license. I know. Big talk. But how many contractors call the AIA and complain?

I think there is also a differencer between the drawings and the specs. The drawings always have errors and we look for them during the bid and expect them...then work to get them corrected by addendums or clarifications. But the specs are are often overlooked as the source of many problems. If poor material or equipment is specified or if engineers are not held to specifing three "equal" sources on public jobs, then they cannot reject an item they have clearlky specified or a manufacturer or provider that is clearly noted by them after the bid, without issuing a change directive to the contract. If it costs more at that point, then the owner has to pay and then deal with the engineer or architect that they have a direct contract with.

The Texas decision is overlooking the fairness of the issue, but it is stating the most practicle view for contractors. Don't figure on holding the engineer responsible for his mistakes and collecting money for the mistakes if they cost you money, because you only end up paying the lawyers what you might have made otherwise. Try and take care of the errors before the bid.
Posted by: James Sheedy - Tuesday, July 29, 2014 11:09 AM










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