1. IF YOU WATCH THEM BUILD IT, THEY MAY SUE
The Risks & Rewards of Construction
Administration Services
Anthony S. Potter, Esquire
Offit Kurman, P.A.

2. Learning Objectives At the end of this program, participants will:
Understand duties and sources of duties during construction administration
Analyze the risks and benefits associated with performance of construction phase services
Learn techniques for minimizing construction administration risks
Develop effective in-house programs and training for A/E firm construction administration team.

3. Goal of the Presentation
Develop a framework to balance the risk and rewards associated with Construction Administration phase activities.
Define risks and identify liabilities associated with the construction phase services
Discuss opportunities including improving designs
Provide recommendations, not rules, to minimize risks and maximize rewards

4. Construction Administration Liabilities
Liability for not discovering, or discovering, defective work
Liability for job site accidents
Liability for impacting contractor’s performance
Liability to owner or surety on applications for payment

5. Construction Administration Benefits
Improve Design Documents
Prevention Through Design
Provide higher quality buildings through collaborative approach
Manage risks to the health, safety and welfare of the general public with effective shop drawing review

6. The Fundamentals

7. What Creates Your Duty During Construction Administration?
Written Scope of Services
Professional’s Conduct In The Field
Statutes – Regulations
Professional Codes of Ethics
Expert Opinion As To Standard Practices

8. Basic Rules for Providing Construction Administration
Discuss client expectations for Construction Administration during contract negotiations
Educate engineering staff and field personnel concerning contractual duties and the risks resulting from deviations from the contractual duties
Monitor and audit actual services being provided by project engineers and field personnel

9. Primary Areas of Concern
Construction Observation
quality of work
job site safety
Review of Contractor Submittals & Shop Drawings
Review of Payment Applications
Administration of Project Communications
Contract and Document Interpretation

10. Construction Observation

11. Observation v. Inspection
Observation: Suggests a general visual review of construction work for the purpose of determining whether the work is progressing in such a way that when complete it will be in general conformity with the design intent.
Inspection: Suggests a detailed, all encompassing review of the work for purposes of determining its strict compliance with plans and specifications.

12. Observation v. Inspection
Periodic Site Visits
vs.
Full-Time Project Representative
Does the frequency of site visits alter the
Standard of Care?

13. Non-Compliance
Authority to accept minor variations in the Work from the requirements of the Contract Documents.
Authority to reject Work that does not conform to the Contract Documents
Disruptive impact increases potential for claims for added cost and delay
It is critical to review contract documents carefully to confirm position.

14. Remedy for Non-Compliance
Replacement v. Repair v. Credit
Remove and Replace – potentially most disruptive remedy
Is there an adequate alternative to achieving the design intent?
What impact would replacement have on schedule and/or budget, it there is a potential for a claim?
Is the replacement a design change?
Repair - Who is responsible for developing the repair and for its adequacy?
Credit – Is a credit fair and adequate?
What is the Owner or client’s position?

15. Job Site Safety

16. Job Site Safety
Safety clearly should not be a part of design professional’s contractual duties under the General Conditions.
Sole responsibility for safety of all individuals and property rests with general contractor
Regardless of contractual safeguards, there is potential liability to design professionals

17. Current State of the Law in Pennsylvania

18. Contract or Conduct Rule
“…absent an undertaking by an engineer, by contract or CONDUCT, of the responsibilities of the supervision of construction and the maintenance of safe conditions on a construction project, an engineer is not under a duty to notify workers or employees of the contractor or subcontractors of hazardous conditions on the construction site.”

19. States That Seem To Follow Contract or Conduct Rule
Delaware
Georgia
Indiana
Maryland
Nebraska
New York
Utah
Arizona
Oklahoma
Washington
Pennsylvania
Missouri

20. States That Seem To Follow The Contract Only Rule
Texas
Colorado
Wisconsin
Illinois

21. Actual Knowledge Rule Accepted: Kansas Ohio Wyoming Michigan
New Jersey
Louisiana - “moral duty” rule
Rejected (?):
Pennsylvania (Herczeg v. Hampton Township Municipal Authority and Bankson Engineers, Inc., 766 A.2d 866 (Pa. Super. 2001))

22. Actual Knowledge Rule Carvalho v. Toll Bros. & Developers
Whether a legal duty is owed to an injured employee of a contractor is a question for the court
Liability of design professional may arise from:
Actual knowledge
Immediate risk of serious injury
Likelihood that others are not aware
Ability to stop the work (may be a factor)

23. Construction Site Safety
Legal Theory: The design professional is not responsible for, nor does the design professional have control over the contractor’s means, methods, sequences, techniques, or procedures, nor over safety programs and procedures.
Real World: The design professional may be found liable where serious injuries occurred as the result of an unsafe condition of which the design professional had actual knowledge and failed to act.

24. I Saw It, Now What Do I Do ?
Give immediate verbal notification of the specific hazard to the contractor with overall safety responsibility
Address only specific safety hazard posing an imminent risk of serious harm (i.e. fall protection or trench)
Do not give a recommended solution to the contractor
Thereafter, give written notification to the owner (your client) with a copy to contractor
Explain in writing that you do not have safety responsibility; however, this serious circumstance came to your attention and you are writing on a one time basis

25. Loss Prevention Recommendations For Site Visits
Adequately describe your scope of observation in the contract and thereafter understand and comply with that scope
Avoid unnecessary commentary on site safety
Be careful of pre-printed owner forms
Visit site only when required by contract

26. Prevention Through Design
Including worker safety considerations in the constructability design review process.
Making design decisions based in part on the Project’s inherent risk to construction and maintenance workers.
Considering and valuing the safety of construction and maintenance workers during design, when the inherent safety risks can best be addressed.

27. Contractor Submittals

28. Contractor Submittals Sources of Problems
Failure to adequately describe your scope of review in the contract; reliance on shop drawing stamp alone is not sufficient
Failure of staff to understand and COMPLY WITH the scope of your review and approval
Failure to demand compliance of contractor with procedural requirements
Failure to provide review services in a timely fashion
Failure to document your review with regard to timing and actions

29. Contractor Submittals Sources of Problems
Who is ultimately responsible for checking the safety of final designs as depicted in shop drawings?
What about delegated designs?
CASE STUDY: The Kansas City Hyatt Regency Walkways Collapse.

30. Applications for Payments
Work Completed is Defective
Review / Revise Certification language in Applications for Payment.
AIA G702 Certification as to progress and “the quality of the Work…”
Tip: Consider revision to language of G702.
EJCDC C-620 – provides a signature line recommending payment.

31. Applications for Payments (continued)
Contractor overpaid / underpaid
Less work completed than is represented.
Potential liability to Owner or Surety.
More Work Completed than certified for payment.
Failure to comply with “Prompt Payment” Statutes
Potential liability to Contractor or Surety

32. Review of Payment Applications
Adequately define the scope of your review in the contract (Try to Use AIA or EJCDC Agreements)
Educate staff on risks associated with review, certification and obligations of contract AND legislation
When in doubt, request additional documentation from Contractor
Review payment applications in a timely fashion
Provide written documentation of decision

33. Administration of Project Communications

34. Administration of Project Communications
You should be central to all communication as a loss prevention and claim avoidance tool
You prepare written minutes of meetings
they should be distributed to all parties
they should be prepared promptly
require parties who disagree to respond in writing
Confirm direction to the contractor either from owner or design professional in writing with copies to the client
Standardize communications for the firm to include:
site observation reports, minutes, incident reports
Segregate communications that relate to potential claims.

35. Interpretation of Construction Documents
Should be consistent with the design concepts and information contained in the documents
Should be clearly presented in writing
Should be given in a timely fashion
Keep track of RFI processing and identify related RFI’s (refer to prior RFI answer(s))
Advise client early of an excessive number of RFI’s

36. Implementation Plan
A systematic approach to Construction Administration services, should include establishing:
standard contract clauses for construction administration phase services
a senior manager as the point of contact for Construction Administration issues
a training program for construction administration personnel
a check list of procedures for conduct of site visits
procedures and policy for review of contractor submittals and applications for payment
standardized documents for communication of job issues

37. Anthony S. Potter, Esquire Franklin C. Miller, Jr., Esquire
Questions? Contact Us
Offit Kurman, P.A.
240 North Third St
Suite 1101
Harrisburg, PA 17101
Offit Kurman, P.A.
1801 Market St
Suite 2300
Philadelphia, PA 19103
Anthony S. Potter, Esquire
Offitkurman.com
Franklin C. Miller, Jr., Esquire
Offitkurman.com