Contract for Design Services by anm13008


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									Construction Engineering 380

   Professional Design Services
            Chapter 12
           Appendix G
  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”)
  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
  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.)
  Professional Design Services
• Traditional role of design professional in
  – Project administration
  – Supporting service
  – Evaluation and planning
  – Design
  – Construction procurement (bidding)
  – Contract administration
  – Facility operations
  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)
  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.
  Professional Design Services
• Review samples of joint committee forms in
  Appendix “G”
• Cost predictions can be troublesome for design
  – Clients often use consultants to verify designer cost
  – Can get contractors involved early (pre-bid),
    sometimes evolves into design-build project
  – Many designers use rough estimate based on area or
     • Leads to bulk of cost-related litigation
  Professional Design Services
• Designers can create a cost-condition by failing
  to design a project within the cost estimate they
• “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
  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
  Professional Design Services
• Government approvals (zoning, planning,
  – 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
  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
  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
  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
  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
  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

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