Does your risk increase if you aren’t retained during construction?

Judy IHSYour client wants to save money and opts not to pay for your involvement during the construction phase of the project. Does this increase your risk? Absolutely! It increases your risk as well as your client’s. Construction documents are never 100% complete and accurate. If you’re not involved during the construction phase, you lose the opportunity to resolve ambiguities or correct possible errors and omissions. You also lose the opportunity to make sure that your drawings and specifications are being used as intended, as well as the opportunity to evaluate the work of the contractor which helps prevent construction defects. You need to educate your client about the value you bring to the project during the construction phase. These are not unnecessary services. However, if your powers of persuasion are ineffective, and the client still refuses to allow you to provide these services, then you need to protect yourself contractually. The contract should acknowledge acceptance by the project owner of the additional services they must provide, and the additional risks they will assume.

If you know at the start of the project that your services will be limited or excluded, your professional services agreement should contain a provision that clarifies the limited extent of your services and requires the owner to assume all responsibility for interpreting the contract documents, reviewing contractor’s claims, processing change orders, revising the documents during construction, and all other necessary construction phase services. The owner should also agree to waive claims that may be connected in any way to the excluded services. The EJCDC E-500 contains a sample provision.

Too often, however, clients decide to reduce or eliminate your services following approval of the project by code authorities or once construction has started. In some states, or on some types of projects, project owners are precluded by law from terminating the services of the design professional-of-record during the construction phase. If this protection doesn’t apply to you, then you may be able to rely on terms of your professional services agreement. If your agreement allows you to retain ownership of the documents and copyright of the plans and specifications until all services are complete and all payment is received, you have some leverage. Without this, or an exculpatory provision in the original contract, and especially if the client has the right to terminate for convenience, you may have unanticipated exposure. In this scenario you should attempt to negotiate an addendum to the contract indicating the reduced scope of services, the client’s assumption of these additional responsibilities, and a waiver of related claims.

Without these protections you may find it difficult to defend a claim on a project on which you provided limited or no construction phase services.

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