Construction Engineering 380

1. Construction Engineering 380 Professional Design Services Chapter 12 Appendix G

2. Professional Design Services • Range of Service has expanded due to: • Public control & oversight • Greater participation in financial and economic aspects of the project • Greater demands by owners • More litigation and disputes • Risk-sharing and risk-shedding • Move toward integrated project management (no longer viewing construction in “phases”)

3. Professional Design Services • Professional service contracts include services under a “basic fee” • Basic fee typically calculated at a percentage of total project cost • Fees for “additional services” are calculated on an hourly or other time-based factor • What is included in the Basic fee and what constitutes additional service must be spelled out in detail in the contract for services

4. Professional Design Services • Professional liability insurance covers only routine professional services (needs analysis, design, site inspections, etc.) • Professionals will frequently need a liability rider to engage in non-routine services (financial guarantees for municipal bonding, market studies, etc.)

5. Professional Design Services • Traditional role of design professional in construction • Project administration • Supporting service • Evaluation and planning • Design • Construction procurement (bidding) • Contract administration • Facility operations

6. Professional Design Services • AIA form B141 is shown in Appendix “A” • Specifically for construction • Designed for use by architects • Another standard agreement has been prepared by a joint committee of American Consulting Engineers Council (ACEC), National Society of Professional Engineers (NSPE), and American Society of Civil Engineers (ASCE)

7. Professional Design Services • Joint committee standard form is shown in Appendix “G” (1996 edition) • More generic- can be applied to a variety of engineering projects outside of construction • Not as much emphasis on design- more on advising and cost opinions • Can be used for environmental remediation service • Can be used for power, energy, materials, information system designs, etc.

8. Professional Design Services • Review samples of joint committee forms in Appendix “G” • Cost predictions can be troublesome for design professionals • Clients often use consultants to verify designer cost estimates • Can get contractors involved early (pre-bid), sometimes evolves into design-build project • Many designers use rough estimate based on area or volume • Leads to bulk of cost-related litigation

9. Professional Design Services • Designers can create a cost-condition by failing to design a project within the cost estimate they provided • “Michigan rule” is the precedent that will likely be followed by the majority of courts • Forfeiture of design fee is permitted if cost exceeds representation by design professional • AIA is trying to include protective language in its standard forms to prevent loss of fees in the case of substantial cost over-runs

10. Professional Design Services • Assistance in obtaining financing • Frequently required • Can create a risk/liability for designers • May be best to structure as a separate activity • Performing economic feasibility studies • Not part of basic services • Most architects/engineers not trained or experienced in this area • Can be very risky for designers to offer this service

11. Professional Design Services • Government approvals (zoning, planning, permits) • Reasonable cooperation in getting government approvals is expected under basic services • Anything outside cooperation (such as attending a meeting, making a presentation, or preparing a report) is considered additional service

12. Professional Design Services • Legal advice and representation • The line between legal services and design services can be difficult to establish (for instance, if an owner asks if an existing floor plan is ADA compliant) • Design professionals use of standard contract forms should be viewed as a “legal service” with appropriate disclaimers and review by counsel

13. Professional Design Services • Legal services continued • Design professionals need to be knowledgeable of the law • Important to know when you need legal advice and what types of “legal services” should be turned over to legal experts • Practically impossible (and costly) for all “legal practices” to be handled by lawyers (for instance, writing a subcontract is technically “practicing law” because it is a contract). Therefore all designers, engineers, and other professionals should have some basic legal knowledge

14. Professional Design Services • Site services • Observation versus supervision • Acceptance of the work versus approval of the work • Inspection versus discovery • In general, the architect/engineer cannot be held as a guarantor of contractor’s work • The trend is for issues of fact to determine liability (go to trial) rather than summary judgments based on contract deficiencies

15. Professional Design Services • Review of submittals, shop drawings, and other performance verification documents is related to site inspection • However, because this is a design review, rather than a construction review, the design professional is usually held to higher liability • Courts use a “balance of expertise” (design versus execution) standard to determine responsibilities

16. Professional Design Services • Other issues of contractual concern: • Design delegation & use of consultants • Ownership of drawings and designs • Time to perform services • Cessation of service clauses • Judicial remedies for breach • What happens if a design defect is uncovered