Are you “observing,” “inspecting,” or “supervising” the work of the contractor?

During a recent contract review, I came across a worrisome provision in the contract. A school district revised a standard AIA B101-2007 document so that the architect would be required to “carefully inspect the Work of the Contractor whenever and wherever appropriate to determine the quality, quantity, and progress of the Work…to protect the Owner from defects or deficiencies in the Work.” These obligations greatly increase the architect’s responsibility to the owner and could result in claims against the architect for damages caused by the contractor.

The role of the design professional during the construction phase is often misunderstood by clients, contractors, and occasionally even by design professionals. Until 1961, the standard AIA and EJCDC documents stated that the design professional “supervised” construction. That was interpreted by the courts as requiring design professionals to exert control over the contractor—a responsibility for which the design professional had no authority. Over the years, the architect’s traditional role has been clarified. Under the standard form agreements today, design professionals conduct site visits for observation purposes only and to perform specific and limited inspections.

When a client wants the design professional to play a more aggressive role during construction, the design professional must be capable of doing so and must be compensated for the increased risk that the greater level of service involves. The use of “inspection” clearly expands the duties to include a critical evaluation of the work. The term “inspection” should not be used unless the duties and resultant fees involved in providing such inspections are clearly identified and understood by all parties. This increased level of service may assist in minimizing mistakes on the site that generate claims.

Some clients, however, mistakenly believe that the design professional has been paid to ensure that the client receives that which it is entitled to receive under the contract for construction. The client may expect the design professional to oversee the contractor’s work to assure that proper construction is achieved and to assume responsibility if the contractor does not perform the work properly. No design professional should assume such authority or can be adequately compensated for the services and risks that such an uninsurable guarantee requires.

Design professionals need to understand the difference between assuming the risk of inspections versus the risk of guaranteeing the contractor’s work for the owner. Inspections are an insurable risk, one that requires that the design professional be compensated appropriately. Guaranteeing the work of the contractor is uninsurable, so even if the design professional is compensated for assuming this risk, insurance coverage would not be available for claims alleging breach of warranty or guarantee. Any settlements would come out of the firm’s pockets.

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