The Design & Construction Management Professional Reporter: December 2016

Inside this issue:

Diverse and Bifurcated Design Roles: Distinguishing Design Responsibility and Design Risk Allocation

Introduction

Increases in both complexity of the design process and utilization of design-build (“DB”) involve situations in which two or more design professionals (“DPs”) contribute in differing ways and degrees to the design of a particular component of permanent project work (“project component”). These situations create the need to distinguish between the concepts of design responsibility and design risk allocation.

More specifically, in design-bid-build (“DBB”) a preliminary (or bridging) DP retained by the owner (“owner’s DP”) may prepare performance or design criteria for a project component that is used by the owner as a basis for delegating to a constructor (effectuated through the latter’s DP subconsultant – the “constructor’s DP”) the responsibility for final and stamped (sealed) design (“final design”) of that component. This practice is usually described as design delegation.^[1]

Further, in DB, the owner typically delegates to the design-builder the responsibility for preparing and stamping, by a DP subconsultant retained by the design-builder (“design-builder’s DP”), final design of project components.

In both the DBB design delegation and DB contexts, the owner typically will contractually require that the delegatee constructor or design-builder, and their respective DP subconsultants, develop and stamp final design of project components consistent with the mandated performance or design criteria prepared by the owner’s DP.

The involvement of multiple DPs in the design development and finalization processes relating to specific project components often leads to a myriad of disputes over the varying roles, responsibilities and risks (“3Rs”) of the various project participants, especially as to the respective DPs retained by the numerous other project participants. The result is often diffusion, fragmentation and lack of clarity in demarcation and accountability in design responsibilities; and uncertainties and complications in the realization and enforcement of contractually defined expectations as to risk allocation for design inadequacies. At another (and perhaps even more important) level, ineffective contractual provisions and certain practices of project participants may produce a fracturing of design responsibility that is not in the public interest.

2016 in Review

Industry Expectations as to Roles, Responsibilities and Risk

In the design delegation approach in DBB, and in DB, a prevalent and eminently reasonable industry expectation is that the DP engaged as a subconsultant by either the constructor or the design-builder, who prepares and stamps the final design of a project component, will be professionally responsible for that design. The scope of that responsibility typically is defined in contract documents.^[2]

Implicit in that expectation is the principle that the DP who prepared the design criteria (mandated as a basis for the final and stamped design) is not responsible for the final design prepared and stamped by a different DP. Most DPs engaged by owners to prepare such design criteria would agree with that principle and reinforce it by readily pointing to the relatively insignificant design fees paid to them as compared to the fees paid to the DP who prepares and stamps the final design.

Do Industry Expectations as to the 3Rs Conform to Contractual and Practice Realities?

Any discussion as to professional responsibilities of the respective DPs in DBB delegated design and in DB needs to occur in the context of principal and contractual risk allocation for final design adequacy as between (a) the owner and constructor in DBB design delegation and (b) the owner and the design-builder in DB.

As a preliminary matter, there is an important distinction in the context of this discussion between (a) design responsibility and (b) design risk allocation.

Design responsibility refers to a DP’s professional and contractual responsibilities, as a registered professional, for the adequacy of its final and stamped design and the conformance of that design to contractually-prescribed and mandated criteria or standards, and applicable codes and other regulatory standards. As a general matter, only registered DPs may be responsible for design.

Design risk allocation refers to the manner in which risk for design adequacy is contractually (or by legal implication) allocated among project participants. Risk for design adequacy typically is allocated between the owner and non-registered professionals, such as a constructor in DBB or design-builder in DB, according to specified contractual standards.^[3]

There is another important distinction between design responsibility and design risk allocation. The DP who prepares and stamps the final design in the DBB design delegation and DB contexts should not (some will say cannot legally and professionally) disclaim or qualify responsibility on the basis that it did not prepare the performance or design criteria upon which the final design is predicated. In contrast, non-DPs and DPs (who do not prepare and stamp the final design) may explicitly qualify or restrict risk allocation to them as relates to design adequacy.^[4]

In the construction-manager-at-risk (“CMR”) delivery approach, the CMR in many instances does not have the obligation to engage a DP who will be responsible for the preparation and stamping of final design of any project component. Thus, the issue of a CMR’s design responsibility reasonably is not presented in that approach.^[5]

That said, depending upon its preconstruction roles and obligations relating to design development, the CMR may contractually (or impliedly) assume some or all of the risk of design inadequacies of a particular project component.

The latter situation was presented in Coghlin Electrical v. Gilbane Building Company.^[6] In Coghlin, the SJC acknowledged the long history of legal precedent in Massachusetts (and in most states and under federal law) declaring that in DBB an owner impliedly warrants to a constructor the adequacy of final design furnished by the owner and, the owner consequently bears the risk of additional costs due to defects in that design. In DBB, the rationale supporting that owner’s implied warranty obligation is based on the premise that the owner controls the design development and finalization process, and retains a DP who is professionally responsible for preparing and stamping the final design; ^[7]and, further, that typically the constructor has no opportunity to participate or otherwise provide meaningful input in the development of that design and is obligated to construct in strict conformance with that design.

In contrast, generally, in DB, the rationale supporting the owner’s implied warranty obligation for design adequacy (applicable in DBB) is inapplicable because, in DB, the design-builder is contractually, and, through its DP subconsultant, professionally responsible for the final design (based on the owner’s conceptual or preliminary design and/or mandated criteria or standards).^[8]

With that context as to the differential applicability of the owner’s implied warranty in DBB and DB, the precise issue presented for decision in Coghlin was whether the owner’s implied warranty obligation applies in the CMR delivery approach. In CMR, unlike DBB, the CMR typically has contractual roles and responsibilities in the design development process (whether labeled “preconstruction” services, design assist, integrated or collaborative design, design consultation, value engineering, or otherwise); but, unlike the design-builder in DB, the CMR is not responsible for the final design. Notably, the CMR agrees to a guaranteed maximum price (“GMP”) and is generally responsible for any costs within project scope that exceed the GMP; and when negotiating the GMP, the CMR has the opportunity to consider the risk of incurring additional costs and protecting itself through the inclusion of contingency in the GMP.

So, what do those distinctions in the roles and responsibilities of the CMR in the design development process – relative to the constructor in the DBB and design-builder in DB – mean in terms of the applicability of the owner’s implied warranty in CMR? Specifically, the Supreme Judicial Court in Coghlin, (“SJC”) stated:

Although the owner’s implied warranty applies in a public construction management at risk contract, the differences between the responsibilities of a general contractor in a design-bid-build project and those of a CMAR affect the scope of the implied warranty. The general contractor in a design-bid-build project may benefit from the implied warranty where it relied on the plans and specifications in good faith, but the CMAR may benefit from the implied warranty only where it has acted in good faith reliance on the design and acted reasonably in light of the CMAR’s own design responsibilities. The CMAR’s level of participation in the design phase of the project and the extent to which the contract delegates design responsibility to the CMAR may affect a fact finder’s determination as to whether the CMAR’s reliance was reasonable. The greater the CMAR’s design responsibilities in the contract, the greater the CMAR’s burden will be to show, when it seeks to establish the owner’s liability under the implied warranty, that its reliance on the defective design was both reasonable and in good faith. See generally Sweet & Schneier, supra at §14.04 (“all of the modern variations [on the design-bid-build method] have as a common denominator: a blurring of the lines of responsibility”). …The amount of recoverable damages may be limited to that which is caused by the CMAR’s reasonable and good faith reliance on design defects that constitute a breach of the implied warranty.

Based on the minimal record before it in Coghlin, the SJC was not able to determine whether the CM in that particular case could meet its burden of establishing entitlement to any recovery for any proven breach of the owner’s implied warranty.

The SJC left open the possibility that – even if an owner’s implied warranty obligation were established in CMR – the owner could negate any such warranty and abrogate any potential for CM recovery of costs due to design defects through the use of express and explicit contractual disclaimers.^[9]

In virtually all instances, the DP who prepares and stamps the final design of a project component is professionally responsible for that design.^[10] Design responsibility for a single project component should not be assigned or attributed to non-DPs including those who participate, provide input or collaborate in the development of final and stamped design, or to DPs other than the DP who prepares and stamps the final design. As such, design responsibility should be singularly attributed to the DP who prepares and stamps the final design.

That said, an independent question is whether the non-DPs who participate or collaborate in various ways in the design development process regarding a project component – the design for which is prepared and stamped by a DP – may be allocated risk associated with defects in final design based on their input or on design criteria or standards prepared by a DP (other than the final designer) retained by one or more of those non-DPs.

In the opinion of this author, the answer to the preceding question is “yes.” In other words, while non-DPs and DPs who do not stamp the final design should not be held responsible of the adequacy of that design, they may be allocated risk for inadequacies in that design to the extent based upon their participation, input or collaboration in the development of the final design.^[11]

Much of the published articles on the subject of “shared,” distributed and delegated design confuse and blur the distinction between design responsibility and design risk allocation and may be understood to state that non-DPs may be responsible for design and/or that DPs who prepare merely performance or design criteria (upon which final design of a project component is based) may be “responsible” – at least in part – for the final design prepared and stamped by another DP. This lack of distinction and clarity could lead to diffusion and fracturing of design responsibility that is not consistent with most professional registration and licensing laws and regulations, and in derogation of the public interest and safety.^[12]

DBB Design Delegation: Design Responsibility and Design Risk Allocation

Project owners adopting the design delegation approach utilize various contract provisions to address responsibility and risk allocation for adequacy of the delegated design. In many instances, contracts explicitly and clearly state that the constructor and its DP subconsultant are responsible for and bear all risk (subject to contractually-specified standards or limitations) of the adequacy of the delegated design.

Since 1997, the American Institute of Architects (“AIA”) has adopted an approach that blurs and confuses the important distinction between design responsibility and design risk allocation as articulated in section 3.12.10 of AIA Document A201, General Conditions of the Contract for Construction. Section 3.12.10 states:

The Contractor shall not be required to provide professional services that constitute the practice of architecture or engineering unless such services are specifically required by the Contract Documents…If professional design services or certifications by a design professional related to systems, materials or equipment are specifically required of the Contractor by the Contract Documents, the Owner and the Architect will specify all performance and design criteria that such services must satisfy… The Contractor shall not be responsible for the adequacy of the performance and design criteria specified in the Contract Documents [emphasis added].

The underscored sentence states that the constructor will not be responsible for the adequacy of the performance and design criteria furnished and mandated for use by the constructor and its DP subconsultant. Arguably, that sentence may be understood to establish that as a matter of risk allocation as between the owner and the constructor, the owner bears the risk as to the adequacy or suitability of the design criteria. Understood in that way, section 3.12.10 reflects a principle of risk allocation as distinct from a principle of design responsibility.

That said, it is possible to interpret the underscored sentence in section 3.12.10 as stating that neither the constructor nor especially its DP subconsultant is responsible for the final design prepared and stamped by the latter to the extent based on inadequate performance or design criteria (furnished by the owner and prepared by the Owner’s DP). Such an interpretation, however, in the opinion of the author, would result in significant risks of non-accountability and ambiguities as to responsibility for the adequacy of the final design, potentially compromising public safety or welfare. As drafted, section 3.12.10 has led to many disputes as to design responsibility and design risk allocation centered around the following questions:

Is the Owner’s DP responsible for adequacy and suitability of the design criteria even though not responsible for the final and stamped, delegated design?
How does one distinguish and bifurcate responsibility for (a) adequacy of design criteria and (b) final and stamped design?
Is such a distinction and bifurcation consistent with professional obligations as to design responsibility and in the public interest?
What should be the scope of the Owner’s DP’s review of the delegated DP’s design submittals?
Who is responsible for the coordination, integration and compatibility of the Owner’s DP’s design of the non-delegated portion of the permanent project complete with the delegated design portion stamped by the Constructor’s DP?
Who should review the constructor’s shop drawings and respond to RFIs regarding the delegated design? Owner’s DP, Constructor’s DP, or both? And for what purposes?
Does the Spearin implied warranty doctrine apply in the context of delegated design responsibilities?^[13]
Does the blending of bifurcated design functions diffuse and blur lines of professional responsibility for design, and increase the risk of compromise in public safety, health, or welfare?^[14]

AIA A201, §3.12.10 adds to the confusion in stating that “[t]he Contractor shall not be responsible for the adequacy of the performance and design criteria specified in the Contract Documents.” What does that sentence mean? Possibilities include:

The Constructor’s DP (who prepares and stamps the final design) shall not be professionally responsible for the final design to the extent based upon inadequate performance and design criteria furnished by the owner and prepared by the Owner’s DP.
As between the constructor and the owner, the owner assumes the risk of inadequacies in the performance and design criteria prepared by its DP and furnished to the constructor for use by the latter’s DP.

(1) is a statement of design responsibility. (2) is a statement of design risk allocation. In the opinion of the author, statement (1) is problematic and could result in diffusion and fragmentation of design responsibility that is neither in compliance with professional registration laws and regulations, nor in the interest of public safety. Statement (2) reflects a fair discussion point as to a potential basis for allocation of design risk as between owner and constructor in DBB design delegation.

DB: Design Responsibility and Design Risk Allocation

Most project owners in DB projects utilize contract provisions explicitly assigning to the design-builder and its DP subconsultant responsibility and risk for adequacy of the final design.

Most design-builder DPs understand both the significance of design responsibility and their professional and registration obligations to accept that responsibility for the adequacy of final design prepared and stamped by them.

That said, in many DB disputes, the design-builder will contend that its contractual design responsibility should be qualified, limited or discharged to the extent based upon deficiencies in owner-furnished and mandated performance or design criteria. In many of those instances, however, the design-builder essentially is contending that risk for those deficiencies should be re-allocated or assigned to the owner and that the latter, based upon an alleged breach of implied warranty, should bear the cost and time impacts associated with those deficiencies. In such instances, should the design-builder believe that it has a claim against its DP who prepared and stamped the final design, it may pursue such a claim, principally based on the latter’s alleged failure to meet the professional standard of care. However, in that context, it must be understood that the design-builder’s breach of implied warranty claim against the owner involves a different and lesser standard of proof than the design-builder’s professional negligence claim against its DP.^[15]

Design Delegation and DB: Practices that May Alter or Subvert Contractual Provisions Relating to Design Responsibility and Design Risk Allocation

Notwithstanding the clarity of contractual intent and provisions as to the responsibility for adequacy of final design, certain practices of owners in DB may result in a “re-allocation” to the owner of design responsibility and risk. These practices include:

Developing and mandating a relatively high degree of prescriptive detail in the “design criteria” (or basis of design) furnished to the constructor or design-builder
Engaging in overly broad reviews of design submittals beyond evaluation for conformance with contractually-mandated criteria or standards
Imposing professional judgments upon, or limiting professional discretion or judgments of, the constructor or design-builder’s DP subconsultant

The “re-allocation” that may legally result from such practices could have the effect of undermining and subverting otherwise clear contractual provisions pertaining to design risk allocation. ^[16]

Implications for Owner’s DP

The owner’s choice of contractual provisions with the constructor or design-builder, and owner practices pertaining to design responsibility and design risk allocation in DBB design delegation and in D-B, could have significant and adverse implications for the professional liability risk of the Owner’s DP. More specifically, note the following:

In the AIA approach to design delegation, disputes will often focus on the adequacy of and the owner’s responsibility for the Owner’s DP’s design criteria.
In circumstances in which “conceptual” design is developed (and mandated to a relatively high level), the adequacy of the performance of the Owner’s DP who prepared the latter will likely be as relevant in the determination of legal liability and risk as the adequacy of performance of the DP who prepared and stamped the final design.
Overly broad reviews of design submittals – often directed by the owner – will in many instances be conducted by the Owner’s DP, thereby placing the latter in a high profile position in any ensuing disputes between the owner and either the constructor or design-builder regarding design responsibility and risk relating to the scope and appropriateness of those reviews.
In those situations in which responsibility and risk is “re-allocated” to the owner allegedly or actually based on some deficient performance of the Owner’s DP, the owner may seek indemnification (and/or defense) from its DP and/or the constructor or design-builder may assert “third-party” negligence or negligent misrepresentation claims against the Owner’s DP.^[17]

In those scenarios, the Owner’s DP will likely protest and defend such claims, on the bases that:

The Owner’s DP never agreed to prepare and stamp, or assume responsibility or risk for, the adequacy of the final design; nor was it compensated for that responsibility and risk.
The Constructor or design-builder’s DP is contractually and professionally responsible for the final design.
Professional practice standards and registration requirements do not allow the final designer to disclaim or otherwise qualify, restrict or disclaim or negate responsibility for design criteria or standards upon which the final design is based.
Neither the constructor nor design-builder reasonably may rely upon the adequacy of merely performance or design criteria.
The Constructor or design-builder’s DP has the professional responsibility to satisfy itself as to the adequacy and suitability of owner-furnished design criteria, standards or preliminary design upon which that DP will (or must) base its final and stamped design.
If the DP engaged by the constructor or design-builder had reservations about owner-furnished design criteria, it should have taken exception, during procurement or in the design submittal process.

The issue whether the Owner’s DP has complied with the professional standard of care in the preparation of the design criteria will, in most instances, require collateral, but highly relevant, inquiries as to the adequacy of performance and responsibility of other project participants.

The standard of care, as applied in the context of preparation of merely design criteria is bound to be relatively forgiving. The professional and contractual obligations of other project participants to verify and validate the appropriateness, adequacy and suitability of the design criteria in the preparation of final design should be a relevant if not determinative factor in the standard of care application.

The AIA approach to design delegation produces various scenarios in which the Owner’s DP may be subject to professional liability claims from the owner. As one commentator has stated:

… [I]n some cases the owner may have a claim against the project architect or the architect’s engineering consultant for specialty design defects. The owner may establish a professional negligence claim against the project architect by proving the project architect’s professional negligence in performing services under the architect’s contract that relate to the specialty work. Several factual possibilities might emerge.

The owner might be able to show that the project architect or the architect’s engineering consultant negligently approved the specialty engineer or negligently failed to review or question the qualifications of the specialty engineer. The contract for the project architect’s services is likely to leave considerable doubt about the role of the architect and its consultants in selecting or approving design professionals retained by a design-build subcontractor. In an appropriate circumstance, however, the owner might successfully argue that either the contract language or the surrounding circumstances imply a role. For example, if the plans provided by the owner’s architect and its engineering consultants provide that a subcontractor must furnish critical structural design details, a court might conclude that the project architect’s professional responsibility includes, by necessary implication, at least the obligation to confirm that the subcontractor retains a qualified structural engineer.

The project architect and its engineering consultant might also incur liability if they failed to convey adequately to the design-build subcontractor the design concept or inadequately established the design criteria for the subcontractor to meet. It is difficult to assess in the abstract how to address claims of this nature because it is not clear how a court should interpret a contractual requirement that the project architect must provide the design concept and the design criteria. Presumably, even though the project architect’s design services agreement completely excludes the specialty design, the project architect and its engineering consultant still may need to specify certain critical details. For example, if the specialty work involves structural components, the owner’s design team may be responsible to provide such critical design details as the load-bearing requirements of connections or the materials to be used. In some cases, the design professionals on the owner’s design team might be subject to liability for failing to specify that the specialty engineering submittals must meet certain industry standards or must include certain supporting documentation or calculations.

The process involved in approving or otherwise permitting the specialty design to become final may provide the most fertile ground for a claim against either the project architect or its engineering consultant. No matter how the contract documents describe the actions of the owner’s design team in relation to the specialty work, one or more members of the team will probably have some responsibility with respect to a significant number of submittals that require action on behalf of the owner. Each of those responsibilities must be performed in conformity with the professional standard of care. For example, the architect might incur liability based on a limited obligation to review the construction drawings for conformance with the requirements or information the architect furnished or based on an obligation to coordinate the specialty design documentation with the other design documents for the project. A claim of that nature might succeed, for example, if the architect’s plans show inadequate details to guide a manufacturer in the manufacturing process or if the architect accepts drawings submitted by the subcontractor that bear no professional seal, or if a process or documents essential to proper coordination are missing or inadequate.

The owner might even be able to develop evidence that the project architect breached the professional standard of care by leaving responsibility for this specialty design to a design-build subcontractor in the first instance. This would probably require expert testimony that under the circumstances it was not professionally prudent to divide design responsibility in the manner contemplated by the project architect’s plans. There must be circumstances in which a project architect should not allow division of design responsibility or should do so only with the added protection of a comprehensive review on the owner’s behalf by an independent engineer who is part of the owner’s design team. At a minimum, the project architect should be responsible in most cases to establish a process that assures that appropriately licensed professionals provide or approve all critical design services and that coordinates all design services for the project.

In some situations, a court might identify a non-delegable duty of the project architect or one of the architect’s engineering consultants. Even if a court would recognize a non-delegable duty of a member of the owner’s design team for certain aspects of the project, one might question whether that duty should extend to a specialty design that is expressly excluded from the contract between the owner and the project architect. In an appropriate case, a court might explicitly or implicitly impose a non-delegable duty on the project architect or the architect’s engineering consultant as the design professional of record for the project or on the basis of ordinances governing approval of design plans under the applicable building code.^[18]

The professional liability exposure of the design-builder’s DP has been extensively discussed elsewhere.^[19] The subject of the professional liability exposure of the Owner’s DP has not received substantial attention in judicial decisions or other published materials.^[20] The bottom line is that the law as to design responsibility and design risk allocation in DBB design delegation and in the various roles of DPs in DB is in a developmental stage. That said, at this point the following observations may fairly be stated:

The lack of clarity – contractually and in actual practice – as to the important distinction between design responsibility and design risk allocation is problematic, and creates opportunities for “mischief” and avoidance of professional responsibility.

The terms of contracts between the owner and constructor in DBB (relating to design delegation) and between the owner and design-builder in DB often do not clearly distinguish between design responsibility and design risk allocation.
Actual practices of the owner and the Owner’s DP in both DBB design delegation and DB may result, as a legal matter, in the re-allocation of design adequacy risk to the owner and, further, may potentially impact and influence the Owner’s DP’s professional liability exposure.
The owner typically decides the level of detail development to be furnished to the constructor in DBB delegated design and to the design-builder, and the extent to which that design is prescribed or mandated for use by the DP who prepares the final design. That said, when issues are raised or claims made concerning the adequacy of that owner – furnished design, the Owner’s DP is often at the center of controversy and the target of allegations or claims.
In circumstances in DBB design delegation and in DB in which a constructor or design-builder alleges excessive or overly intrusive or obstructive design reviews, the owner as well as potentially the Owner’s DP may be the focus of such allegations and be subject to claims.

Conclusion

The issues raised in this article are important to all DPs, especially given the increasing utilization of DBB design delegation and DB. At present, there are few clear or definitive answers in many contracts, legal precedent or industry standards or guidelines. In the opinion of the author, the design professions should take the lead in identifying and distinguishing between design responsibility and design risk allocation through the development of contractual and practice guidelines and standards, including relevant informational materials for all project participants.

[1] For more detailed discussion, see D.J. Hatem & D.H. Corkum eds., “Ch. 15, Risk Allocation,” Megaprojects: Challenges and Recommended Practices, §5.1.3, ACEC (2010); D.J. Hatem, PC, “Design Responsibility in Integrated Project Delivery: Looking Back and Moving Forward.” (Jan. 2008); and D.J. Hatem, Design Delegation: How to Manage Your Risk in the Effective Delegation of Permanent Project Work Design (Aug. 2016).

[2] If design responsibility and risk are not addressed in contract documents, the relevant standards default to the professional standard of care, as articulated in Klein v. Catalano, in which Massachusetts Supreme Judicial Court stated:

As a general rule, ‘[a]n architect’s efficiency in preparing plans and specifications is tested by the rule of ordinary and reasonable skill usually exercised by one of that profession… [I]n the absence of a special argument he does not imply or guaranty a perfect plan or satisfactory result… ‘Architects, doctors, engineers, attorneys and others deal in somewhat inexact sciences and are continually called upon to exercise their skilled judgment in order to anticipate and provide for random factors which are incapable of precise measurement. The indeterminable nature of these factors makes it impossible for professional service people to gauge them with complete accuracy in every instance. …Because of the inescapable possibility of error which inheres in these services, the law has traditionally required, not perfect results, but rather the exercise of that skill and judgment which can be reasonably expected from similarly situated professionals. Klein v. Catalano, 386 Mass. 701, 718 (1982).

[3] Design risk allocation may also occur as between the owner and a DP and, in that context, the DP’s risk of inadequate design typically is defined and evaluated according to the professional standard of care, as articulated in Klein, see note 1 supra.

Although contractual risk allocation provisions relating to design inadequacies should universally apply to personal injury, property damages and economic damage categories, they are more apt to be enforced in the latter category. See C. Circo, “When Specialty Designs Cause Building Disasters: Responsibility for Shared Architectural and Engineering Services,” 84 Neb. L. Rev. 162 (2005).

[4] A related issue is the extent to which a DP who prepares and stamps final design for a project component may rely upon design or other stamped or sealed work product of another registered DP. In some such circumstances, the first DP may maintain that it reasonably relied upon the design or other work product of the second DP. For example, the first DP may be a structural engineer relying upon a report or recommendations prepared by a geotechnical engineer.

In that context, however, the first DP is responsible for its stamped design but may defend a claim – predicated on deficiency in that design due to inadequacies of work product of the second DP – by proving reasonable and prudent reliance upon the latter work product. However, such a defense is not based on the premise that the first DP is not responsible for its stamped design.

[5] As in CMR, in most forms of integrated project delivery (“IPD”) in which multiple project, non-DP participants have collaborative and related roles in providing input in the design development process, those participants are not required or expected to assume responsibility for the final design. That said, the collaborative role of non-DPs in the design development process in IPD may affect risk allocation for design inadequacies. As this author has stated:

Among the project participants, however, the role and opportunity of the constructor and its trade subcontractors to contemporaneously participate in the design development process needs to be contractually reckoned with and accounted for by a reduction in their opportunities for claims based on defective design. Under the Spearin implied warranty doctrine, the owner who typically issues final and detailed (prescriptive) design to a constructor impliedly warrants that the final design will be adequate to achieve the end product of that design. The rationale for imposing the implied warranty obligation upon the project owner, as issuer of the design, is that the owner is in control of the design development process and that, typically in the design-build-bid method, the constructor has no ability or opportunity to contemporaneously, meaningfully, or otherwise influence the process of design development and is required to construct in strict conformance with the furnished project design.

In a collaborative design context, the rationale for the application of the Spearin implied warranty obligation legitimately is called into question given the contemporaneous and potentially influential and meaningful role of the constructor (and/or its trade subcontractors) in the design development process. Accordingly, IPD contract terms should justifiably include risk allocation provisions for defective design that alter in significant ways the traditional application of the Spearin implied warranty doctrine.

At first blush, it may appear that such a contractual risk allocation modification of the otherwise applicable Spearin implied warranty doctrine would affect only risk and claims exposure between the owner and constructor. However, given the risk sharing among owner, constructor and design professional for, among other things, defective design risk in IPD, this type of modification should also serve to benefit the design professional. Moreover, to the extent that a constructor’s implied warranty claim against the owner is based upon alleged deficient design, or other work product or services of the design professional, it is likely that the owner may assert negligence or indemnification claims against the design professional arising out of the constructor’s underlying claim against the owner. Thus, even though design professionals typically are not directly a party to implied warranty claims, there is a distinct likelihood that such claims involving the design professional’s services may give rise to claims by the owner against the design professional. IPD contractual limitations on the implied warranty obligation of the owner should serve, both directly and indirectly, to limit and manage professional liability exposure of the design professional. D.J. Hatem, PC, “Design Responsibility in Integrated Project Delivery: Looking Back and Moving Froward.” (January 2008).

Thus; in IPD, as in CMR the distinction between design responsibility and design risk allocation – as in DBB Design delegation and DB – has importance.

[6] 472 Mass. 549 (2015).

[7] The owner’s implied warranty obligation is independent from, and does not detract from or diminish the DP’s responsibility to prepare a design that conforms to applicable professional and/or contractual standards.

[8] Hatem, D.J., PC and Gary, Patricia, Esq., eds. “Ch. 11 Risk Allocation and Professional Liability Issues for Consulting Engineers on P3 and DB Projects,” Public Private Partnerships and Design Build: Opportunities and Risks for Consulting Engineers, Washington, D.C.: American Council of Engineering Companies, 2^nd edition (2017).

[9] That said, in CMR, as in all delivery methods, owners should allocate risk prudently. This author does not support overly-aggressive risk transfer from owners to constructors or to design-builders, and maintains that there should be reasonable and sensible boundaries and principles guiding and governing the contractual risk allocation process. Imprudent risk allocation between owners and constructors and/or design-builders leads to increased risk of professional liability claims against design professionals. See D.J. Hatem and D.H. Corkum, “Ch. 15, Risk Allocation,” Megaprojects: Challenges and Recommended Practices, §4.0, ACEC (2010).

[10] While only a registered DP may be professionally responsible for final design stamped by that DP, non-DPs may be assigned contractual responsibility for that design (so long as the design is prepared and stamped by a registered DP). In DBB design delegation and DB, it is fairly standard practice for a constructor or the design-builder to accept contractual responsibility for the adequacy of the final design prepared and stamped by its DP. In effect, this contractual responsibility is another way of signifying that the constructor or design-builder is vicariously accepting the allocation to it of risk for defects or inadequacies in the final design prepared and stamped by its DP. The latter DP, alone, is professionally responsible for that design.

[11] For the DP, professional liability is evaluated in the context of the professional standard of care. See note 1 supra.

[12] See M. Callahan, Shared Design, Walters Kluwer (Aspen 2011); C. Circo, Contract Theory and Contract Practice: Allocating Design Responsibility in the Construction Industry, 58 Fla. L. Rev. 561 (2006).

[13] For detailed discussion of the Spearin implied warranty principle, see Hatem, D.J., PC and Gary, Patricia, Esq., eds. “Ch. 11 Risk Allocation and Professional Liability Issues for Consulting Engineers on P3 and DB Projects,” Public Private Partnerships and Design Build: Opportunities and Risks for Consulting Engineers, Washington, D.C.: American Council of Engineering Companies, 2^nd edition (2017). In general, under the Spearin implied warranty principle, a party who controls the development of a final design has responsibility for the adequacy, suitability and constructability of that design.

[14] The AIA approach to design delegation has produced confusion as to the distinction between design responsibility and design risk allocation. See Circo, supra, note 3, pp. 212-217.

[15] Hatem, D.J., PC and Gary, Patricia, Esq., eds. “Ch. 11 Risk Allocation and Professional Liability Issues for Consulting Engineers on P3 and DB Projects,” Public Private Partnerships and Design Build: Opportunities and Risks for Consulting Engineers, Washington, D.C.: American Council of Engineering Companies, 2^nd edition (2017).

[16] These practices and the implications upon contractual provisions relating to design responsibility and risk allocation are discussed in more detail in D.J. Hatem, “PPP and DB: Who is Responsible for Risk: A Call for Guidelines,” North American Tunneling Journal (Oct. 2014); Loulakis, Michael C.; Smith, Nancy C.; Brady, Donna L.; Rayl, Rick E.; and Gransberg, Douglas D., Liability of Design-Builders for Design, Construction and Acquisition Claims, Legal Research Digest 68, National Cooperative Highway Research Program, Transportation Research Board, pp. 76-78 (Dec. 2015); Hatem, D.J., PC and Gary, Patricia, Esq., eds. “Ch. 11 Risk Allocation and Professional Liability Issues for Consulting Engineers on P3 and DB Projects,” Public Private Partnerships and Design Build: Opportunities and Risks for Consulting Engineers, Washington, D.C.: American Council of Engineering Companies, 2^nd edition (2017).

[17] For more detailed discussion, see Hatem, D.J., PC, “Design Responsibility in Integrated Project Delivery: Looking Back and Moving Forward,” Donovan Hatem Design Professional White Paper. (Jan. 2008).

[18] Circo, supra, note 3, pp. 239-241.

[19] Hatem, D.J., PC and Gary, Patricia, Esq., eds. “Ch. 11 Risk Allocation and Professional Liability Issues for Consulting Engineers on P3 and DB Projects,” Public Private Partnerships and Design Build: Opportunities and Risks for Consulting Engineers, Washington, D.C.: American Council of Engineering Companies, 2^nd edition (2017).

[20] Loulakis, Michael C.; Smith, Nancy C.; Brady, Donna L.; Rayl, Rick E.; and Gransberg, Douglas D., Liability of Design-Builders for Design, Construction and Acquisition Claims, Legal Research Digest 68, National Cooperative Highway Research Program, Transportation Research Board, pp. 76-78 (Dec. 2015).