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Design and Performance Specifications Raise Hidden Risk Allocation Problems For Construction Contractors

Ronald G. Tate, Jr.
Tate Webpage Bio HS 10-7-13

Contractors face a number of pitfalls in assessing the risks of liability for design defects. A contractor might feel insulated from liability for design problems based on the architect’s or engineer’s design of the project and the design professional’s review of shop drawings. The contractor’s sense of security might be misplaced, however, due to potential dangers lurking within the most commonly used construction contract forms.

One significant risk faced by contractors lies in the interpretation of specifications as either “design” specifications or “performance” specifications. A design specification is one for which the owner and his design professionals are responsible; a performance specification is an obligation of the contractor to fulfill.

It is widely accepted that an owner provides the contractor with an implied warranty of the adequacy of design documents. Where the owner describes in detail the materials to be employed and the manner in which the work is to be performed, courts have determined that a warranty of adequacy arises. The contractor in that situation has no discretion to deviate from the specifications and is required to follow them as one would follow a road map. Blake Const. Co. v. United States, 987 F.2d 743 (Fed. Cir. 1993).

On the other hand, if the design documents are construed to incorporate a performance specification, the contractor may be responsible for accomplishing the intended results. Performance specifications provide an objective standard to be achieved. The contractor is expected to exercise his ingenuity in achieving the objective for the standard of performance. Id. The contractor is responsible for selecting the means and methods to achieve that result and is vested with discretion to do so.

Often, however, the distinction between performance and design specifications is not well defined when applied to a specific contract. It is incumbent on parties and counsel drafting agreements to provide clarity and focus to the contract documents and clearly delineate the nature of the specifications. Many contracts have both design and performance characteristics. Where purely performance specifications are intended, the contract documents should assure that the risk of obtaining the desired result is clearly placed upon the contractor. Similarly, where the contractor is not provided with discretion to deviate from specifications, the contract documents should so provide.

The AIA General Conditions for the Construction Contract form recognizes current industry practices with regard to design delegation. Section 3.12.10 of the AIA A201-2007 document provides, in summary:

  • No professional design services are to be furnished by the contractor unless they are specifically required by the contract documents or unless the contractor needs to provide such services in order to carry out the contractor’s responsibilities for construction means, methods or techniques.
  • If the contractor is required to furnish design services, those design services must comply with applicable licensing laws, including bearing appropriate signatures and seals of licensed design professionals.
  • If the contractor is required to furnish design services, the owner and architect must specify all performance and design criteria that the services must satisfy.
  • The owner and the architect are entitled to rely on the adequacy, accuracy and completeness of the contractor’s design services, provided that the owner and architect have specified all performance and design criteria that must be satisfied.
  • The architect will review and approve contractor submittals only for the limited purposes of checking their conformity to the information given and the “design concept” expressed in the contract documents.
  • The contractor is not responsible for the adequacy of the performance or design criteria required by contract documents.

Thus, the AIA form requires the owner and architect to specify all performance and design criteria that the contractor must satisfy. The intent is to require the owner and architect to be more explicit and detailed in the specification process. On the other hand, where the owner and architect have specified all such criteria, the owner and architect are deemed entitled to rely upon the adequacy, accuracy and completeness of the contractor’s design services. (AIA A201 §3.12.10) The architect is given specific protection, however, in that his role in the review of contractor’s submittals, including shop drawings, is limited to check their conformity to the criteria specified.

In the recently promulgated ConsensusDocs family of contract documents, the trade groups responsible for drafting those forms included design delegation provisions that parallel the AIA documents in some respects. The ConsensusDocs 200 Owner-Contractor contract form addresses design delegation by requiring the owner to provide all design services that are required for the completion of the work, except for those design services that are specifically identified in writing by the parties. (§ 2.3) Both the ConsensusDocs and AIA forms require the contractor to be responsible for design services incidental to the discharge of the contractor’s responsibilities for construction means and methods. (AIA A201 §3.12.10; ConsensusDocs 200 §3.15) This responsibility might include design services for any necessary scaffolding or shoring, for example. Whether a particular design service comes within the means and methods responsibility in other instances, however, may be subject to interpretation.

The owner and architect may delegate substantial design responsibilities on the contractor, and the contractor must meet these responsibilities by (1) recognizing that he may incur the responsibilities and risks of design services, (2) employing or retaining competent design professionals who are licensed in the state where the project is located to discharge the contractor’s design responsibilities, and (3) insuring his liability for design services or contracting with design professionals who carry adequate professional liability insurance.

This article is intended only to provide general information on the subject covered. The contents should not be construed as legal advice or a legal opinion.Readers should consult with legal counsel to obtain specific legal advice based on particular situations.