ROLE AND LIABILITY OF THE CONSULTANT DURING CONSTRUCTION
On most construction projects, both contractors and consultants are engaged to design and construct the project. In addition to preparing a design, engineers and architects are often also involved with overseeing the work to ensure that the project is being constructed in accordance with the plans, specifications and applicable building codes or bylaws. These services are often referred to as contract administration, field review or inspection.
On the other hand, contractors and sub-contractors are responsible for constructing the project in accordance with these plans and specifications. This involves selecting appropriate construction methods and ensuring there work complies with the specifications. Contractors are also often required to prepare, obtain and/or submit shop drawings for certain aspects of the project.
Few aspects of a construction project involve more potential overlapping responsibility, misunderstanding and potential liability than inspection and shop drawing submittal, as both the contractor and consultant have a role in these key functions.
From the design professional’s perspective, field review poses unique and difficult challenges. On one hand, these professionals are under an obligation to ensure general compliance with the plans and specifications. On the other hand, as they are not responsible for carrying out the work themselves and (typically) not responsible for directing how the work is to be carried out (the contractor is typically responsible), they cannot be expected to ensure prefect compliance, as they cannot and are not expected to review all work carried out by the contractor.
From the contractor’s perspective, while they are contractually responsible, they sometimes rely on the consultant’s inspection, advice and direction to ensure compliance.
The shop drawing submittal process also raises difficult issues for both consultants and contactors. How much responsibility for the drawings rests with the reviewing consultant as opposed to the contractor who prepared or obtained them?
The purpose of this paper is to provide an overview of the potential liability for field review services and shop drawings. While the focus of this paper is on the role of the consultant, attention will also be given to the contractor’s role and responsibility.
2. Liability of Design Professionals Generally
The duties of a design professional arise primarily from the contract with his or her client. Typically, the contract will spell out the duties and obligations of the architect or engineer to the client. The consultant also owes a “duty of care” to its client and to third parties – which typically includes the contractor and subcontractors.
Unless the contract expressly states otherwise, the architect or engineer owes a duty to exercise skill, care and diligence, which may be reasonably expected of a person of ordinary competence, measured by the professional standard of the time. This test imposes several limitations on the duty owed, including:
- Unless the contact explicitly states so, architects and engineers are not obligated to perform to the standard of the most qualified and competent – meaning that only reasonable skill is expected;
- The design professional is to be judged to the prevailing professional standard at that time the work was done and not by what may be later known or accepted;
- It is sufficient for the architect or engineer to follow an accepted body of opinion even where there are competing schools of thought so long as the school of thought was chosen with reasonable competence;
- Design professionals do not guarantee that the work will be successful. As long as they have exercised reasonable skill and diligence in doing their work, the fact that the work proves unsatisfactory will not necessarily render them liable.
Importantly, the content and nature of the duty owed to the client can be modified by the contract. As is discussed further below, reviewing the contract can be critical to determining the scope and content of a design professional’s inspection and shop drawing review obligations and whether such obligations have been breached.
3. What is Field Review?
Field review can take many forms. A design professional’s field services may include:
- Reviewing a contractor’s work for deficiencies and deviations from the plans, building codes, by-laws or general good construction practice;
- Reviewing and certifying the contractor’s applications for payment;
- Preparing and issuing project change orders and advising the client of the changes;
- Certifying substantial performance of the work;
- Performing annual warranty inspections;
- Issuing supplemental design details and instructions;
- Reviewing shop drawings, data and samples;
- Attending meetings with the client and the contractor;
- Coordinating multiple contractors or consultants;
- Inspecting and testing work; and
- Interpreting the contract.
There is no “magic number” of times that the design professional must review the work site to avoid liability, but the construction site must be supervised and inspected sufficiently often to ensure that the project is constructed in conformity with the plans and specifications as well as the contractor’s contractual obligations, unless the contract specifies otherwise. Likewise, there is no specific form that a field review is required to take; it can be confined to a visual inspection, but it can also extend to making more invasive or scientific inquiries as are necessary to ascertain that the work has been satisfactorily performed. Again, the form will depend on the circumstances and the contract.
What is clear is that the design professional is not required to be everywhere and see everything on the job site. He or she does not need to supervise everything done during construction, but at a minimum, needs to be in attendance for critical phases of the work and should inspect important aspects of the work before they are hidden from view.
Typically, the contractor is responsible to construct the project in accordance with the plans and specifications. The fact that a consultant carries out review does not relieve or limit such responsibility. As such, the consultant and contractor both have concurrent obligations to the owner to take steps to ensure that the project is constructed in accordance with the plans and specifications.
4. What is the Standard of Care for a Field Review?
As set out above, unless expressly stated in the contract for professional services, in all the work done for the client, design professionals owe a duty to exercise the skill, care and diligence which may reasonably be expected of a person of ordinary competence, measured by the professional standard of the time.
Design professionals have a duty to act impartially and objectively in administering the contract between the owner and the contractor; but also have a duty to protect the client as per their contractual obligations to do so. Design professionals must exercise reasonable diligence and skill in supervising the work to ensure that it conforms to the contractual requirements. They are not required to guarantee that every departure from the design will be noted and corrected, but only those that reasonable supervision will disclose.
The design professional is not normally required to tell the contractor how to carry out its work – that is the contractor’s responsibility. Further, it is the contractor’s responsibility to construct the project in accordance with the plans and specifications.
While the applicable standard of supervision is largely dependant on the facts of each case (including the contractual provisions), some general comments can be made:
- the design professional is expected to carry out sufficient review to be in a position to certify that the project conforms to the plans and specifications based on a reasonable system of review (i.e. periodic reasonable inspections were done properly and did not uncover any obvious issues);
- generally speaking, design professionals have a higher duty to inspect aspects of the project that are at greater risk of error or where the consequences of any error are more extreme;
- The design professional is not expected to supervise everything done on the project but is expected to attend during critical phases of the work, particularly if the work will later be covered up;
- the type of contract can impact the duty owed, with “costs plus” contracts generally requiring more supervision;
- the duty to inspect may include both visual and other types of inspections (i.e. measurements, readings, testings, etc.);
- if the contract between the design professional and the client does not clearly set out the scope of field review services to be provided, a court may find an implied duty of inspection or supervision on the design professional;
- although design professionals may delegate aspects of supervision in appropriate cases, to cut costs or for other reasons, they may not delegate all of the duties for which they were retained. Final responsibility for the adequacy of supervision remains with the design professional.
The contractor has a responsibility to facilitate the consultant’s field review. This can include keeping the consultant advised on the progress of construction generally so that filed reviews can be coordinated. This is particularly important where the work will be covered up or not accessible. If the contractor fails to give reasonable notice to consultant and the work is covered up, the contractor may be liable to owner for the costs associated with exposing the work for the purposes of inspection.
In sum, the consultant’s duty to inspect is narrower and more limited than the contractor’s contractual obligation to ensure that the project is built in accordance with the specifications. Whereas a contractor is generally contractually liable to the owner for any material deviation from the specifications, a consultant’s responsibility is limited, broadly speaking, to carrying out a reasonable system of review to confirm general compliance. Practically speaking, this generally means that the contractor faces greater potential liability exposure in circumstances where the as-built condition deviates from the design.
There are, however, exceptions to this general rule, including the following
- where the consultant is more actively involved in the selection or direction of construction methods (i.e. where there is a blurring between the responsibilities of the contractor and consultant);
- where the contractor specifies the importance of field review at certain stages of the project but fails to carry our or adequately carry out such review; and
- where the contractor is relying on the consultant to verify its work (e.g. where a civil contractor relies on a geotechnical consultant to carry out density testing to conform adequate compaction and moisture content).
In the above examples, and depending on the specific facts and circumstances, the consultant may face greater liability exposure.
The following cases help illustrate the application of the above legal test to different factual situations.
In Willis, Cunliffe, Tate & Co. v. Harmony Estates (1977) Ltd. (1984), 11 C.L.R. 154 (B.C.S.C.), a subdivider hired an engineer to design and provide engineer services for the installation of site services in a development. Their contract required the engineer to complete a design prepared by another engineer, to obtain the necessary approvals and to provide engineering services during construction to ensure compliance with applicable municipal by-laws. After a lengthy hiatus for winter, leaks were revealed and repairs were made which were represented by the contractor to have rendered the services watertight. No further testing was done. In the summer, the contractor abandoned the project and a new contractor was hired to complete the work. Testing by the new contractor revealed a number of leaks caused by the negligence of the previous contractor, and the new contractor completed repairs at great expense to the developer.
The engineer sued for professional fees withheld by the developer who counterclaimed for damages. The developer based its action on (1) failure to supervise and inspect; (2) failure to pressure test; and (3) improper certification of progress estimates.
The engineer’s action was allowed and the developer’s counterclaim was dismissed. The Court held that the contract did not require the engineer to carry out the types of inspections that the client alleged should have been done. While the contract did provide for intermittent inspection, the Court held that these inspections related more to costing issues and did not impose a duty on the engineer to “fully” supervise the work.
In reaching this conclusion, the Court held that the engineer had no authority to direct the contractor as to the manner in which testing was to be done in the absence of a specific contractual requirement. Further, there was no generally accepted practice of testing each section of pipe as it was installed and, in any event, the engineer was not in a position to exert pressure on the contractor to ensure that testing was done. Control over the contractor could only be exercised by the developer, and the engineer’s only recourse was to withhold the certificate of completion until testing was done.
This case demonstrates the critical importance of the contract in determining the nature of the duty owed by the design professional to the client for field review services. Specifically, it illustrates how the contract may limit a design professional’s field review obligations. It also confirms the contractor’s primary responsibility for constructing the project in accordance with the specifications.
In Zimpro Inc. v. Fischbach & Moore of Canada Ltd, (1984), 11 C.L.R. 204 (Ont. H.C.), Zimpro., a specialist in the production of sludge heat treatment equipment, had been hired to supply, deliver, supervise the installation of and guarantee the proper functioning of its process. Zimpro was to work with the architect-engineer of the project to ensure that the system would function properly. The architect-engineer was also responsible for overseeing the activities of the general contractor, whose responsibilities included building the plant, installing equipment, co-ordinating work schedules, and insuring that the work site was secure. One sub trade, F & M Ltd., was responsible for installing plumbing fixtures and equipment. This included the installation of Zimpro’s equipment under Zimpro’s supervision.
On the date of the accident, Zimpro was conducting tests on its equipment. At Zimpro’s request, F & M turned the water supply on in the high-pressure pump room. At the end of the workday, an F & M employee turned off the air compressor but did not turn off the water. Flooding occurred which was not discovered until several hours later. During the course of the proceedings, F & M admitted liability but claimed over against the various parties for contribution and indemnity.
The Court relieved the architect-engineer from liability. While it possessed special knowledge about Zimpro’s process, it was not responsible for teaching every trade about the potential hazards of working with the system when such knowledge should have been possessed by the trade. As the evidence did not disclose anything unique about Zimpro’s process, the architect-engineer was entitled to assume that F & M would be aware of how the system operated.
This case demonstrates that the design professional will not be held responsible for everything that goes wrong under its supervision, so long as it acted reasonably with regard to the reasonable standards of the profession and the contract. It also illustrates that a design professional is not expected to direct the contractor as to how the work should be carried out.
In Dabous v. Zuliani (1974), 6 O.R. (2d) 344 (H.C.), the plaintiff’s house was damaged by fire. The defendant Zuliani was the builder and the defendant Townend, Stefura, Baleshta & Pfister was the architectural firm that designed the house. The plaintiff claimed that the fire was caused by the negligent performance by the builder and the architects of their respective contractual obligations. The fire was caused because the prefabricated metal chimney connected to the fire-box in the fireplace on the ground floor of the house was installed in direct contact with wooden joists at the level of the second floor, without any clearance space and without any fire-stop being installed in the area to ensure the proper degree of clearance. Against the architects the plaintiff alleged negligence in failing to supervise the installation of the fireplace and chimney.
The court held that when the installation of a potentially hazardous fixture such as a fireplace chimney is taking place, a duty is imposed on the architect to make sure that the installation is properly done. Mere instruction to a builder’s employee to build properly will not satisfy the duty of care. The Court stated that while not every undetected or uncorrected departure from the plans and specifications will result in liability, liability is more likely to be imposed where the non-compliant work relates to a component that is of critical importance to the future safety of the building and its inhabitants (especially when, as in this case, the mistake could have been caught quite easily and with little expense).
The defendant architect commenced third party proceedings against the builder. While this claim failed on technical grounds, the Court noted that it would have been “entirely appropriate for the architects to have had their claim for contribution against the builder recognized in this action for a substantial portion of their liability to the plaintiff”.
This case is authority for the proposition that where work has been covered over before the design professional has had a chance to inspect it, the reasonable design professional will have it uncovered and checked. It further illustrates the point that liability is more likely to be imposed where the design professional did not adequately review a critical component of the construction that, if done improperly, could result in extreme consequences. Lastly, it is consistent with the general rule that the contractor will generally bear greater liability for such claims.
In Coast Hotels v. Bruskiewich, the plaintiff brought an action against the consultant, SMB, and the contractor, Latham, for the defective design and installation of a replacement hot water heating system at one of its hotels. Soon after the work, serious leaks appeared, necessitating repairs. Latham contended that at least 75% of the liability should be assessed against SMB with Latham accepting, at most, 25% of the liability.
During construction, SMB conducted periodic field reviews (10 – 11 site visits over two phases), which the consultant testified were less than usual. Further, the majority of these reviews occurred during the first phase of the project. Latham was responsible for preparing the as-built drawings.
The Court concluded that SMB’s design met the requisite standard of care. The main problems with the piping related to poor workmanship, substandard materials and inadequate supervision of the work.
SMB was found liable for failing to carry out adequate field review. The Court held that on the facts of this case, SMB’s efforts fell short of what was reasonably required. The Court was specifically critical of SMB’s final review, which occurred after drywall was placed and the piping was concealed.
Latham was also found liable for breach of contract and in negligence. The Court held that the appropriate apportionment was 80% against Latham and 20% against SMB.
This case is often cited and relied on for the proposition that a consultant’s liability for field review is generally limited to 20%. While this has been used as an informal guideline in many disputes, a consultant’s potential exposure for field review is highly fact specific. SMB carried out a number of field reviews and the problems were mainly workmanship related but was still held 20% liable. It is entirely possible and, in fact, likely that a consultant who falls well short of the standard expected could face significantly greater exposure for field review.
5. Shop Drawings
Shop drawings are defined as “drawings, diagrams, illustrations, schedules, performances, charts, brochures, product data and other data which the Contractor provides to illustrate details of portion of the work”.
General Condition 3.10 of CCDC 2 (2008) sets out the following pertaining to shop drawings:
3.10.1 The Contractor shall provide Shop Drawings as required in the Contract Documents.
3.10.2 The Contractor shall provide Shop Drawings to the Consultant to review in orderly sequence and sufficiently in advance so as to cause no delay in the Work or in the work of other contractors.
3.10.3 Upon request of the Contractor or the Consultant, they shall jointly prepare a schedule of the dates for provision, review and return of Shop Drawings.
3.10.4 The Contractor shall provide Shop Drawings in the form specified, or if not specified, as directed by the Consultant
3.10.5. Shop Drawings provided by the Contractor to the Consultant shall indicate by stamp, date and signature of the person responsible for the review that the Contractor has reviewed each one of them.
3.10.6 The Consultant’s review is for conformity to the design concept and for general arrangement only.
3.10.7 Shop Drawings which require approval of any legally constituted authority having jurisdiction shall be provided to such authority by the Contractor for approval.
3.10.8 The Contractor shall review all Shop Drawings before providing them to the Consultant. The Contractor represents by this review that:
.1 the Contractor has determined and verified all applicable field measurements, field construction conditions, Product requirements, catalogue numbers and similar data, or will do so, and
.2 the Contractor has checked and co-ordinated each Shop Drawing with the requirements of the Work and of the Contract Documents.
3.10.9 At the time of providing Shop Drawings, the Contractor shall expressly advise the Consultant in writing of any deviations in a Shop Drawing from the requirements of the Contract Documents. The Consultant shall indicate the acceptance or rejection of such deviation expressly in writing.
3.10.10 The Consultant’s review shall not relieve the Contractor of responsibility for errors or omissions in the Shop Drawings or for meeting all requirements of the Contract Documents.
3.10.11 The Contractor shall provide revised Shop Drawings to correct those which the Consultant rejects as inconsistent with the Contract Documents, unless otherwise directed by the Consultant. The Contractor shall notify the Consultant in writing of any revisions to the Shop Drawings other than those requested by the Consultant.
3.10.12 The Consultant will review and return Shop Drawings in accordance with the schedule agreed upon, or, in the absence of such schedule, with reasonable promptness so as to cause no delay in the performance of the Work.
Shop drawings typically have two main purposes:
- for larger projects, it is not possible or practical for the designer to prepare every detail, particularly those aspects that require co-ordination between various trades; and
- the plans and specifications may only establish performance requirements, with shop drawings necessary to depict the actual design.
Ideally, the shop drawing submittal and review process affords an opportunity for discussion between the consultant and contractor respecting construction details. The contractor’s review of shop drawings is typically to coordinate trades and material suppliers and to verify construction methods and field dimensions. The consultant’s review focuses on ensuring that shop drawings follow and accord with the design concept.
In practice, it is often far more difficult to clearly demarcate the consultant’s and contractor’s respective responsibility for shop drawings. Indeed, communication over shop drawings is a point of interaction where responsibilities may easily be confused.
A dramatic example of the potential communication breakdown between consultant and contractor is the 1981 Kansas City Hyatt collapse in which 114 people lost their lives. Suspended walkways in the building’s atrium collapsed during normal use. A subsequent investigation determined that the failure was caused by insufficient load capacity on the connectors that held the walkways in place. During the shop drawing process, the contractor proposed a modification to the design that significantly increased the load on the connectors. The contractor wrongly assumed that the consultant would accommodate this change in its design. The consultant wrongly assumed that the contractor would redesign the connectors to handle the increased load.
Investigators concluded that the basic problem was a lack of proper communication between the consultant and the contractor. The consultants lost their engineering license and the ensuing litigation resulted in a settlement in excess of $150,000,000.
While an extreme example, this case highlights the risks associated with shop drawings and the difficulties in determining what the consultant and contractor are responsible for.
CCDC 2 (2008) makes clear that the contractor is primarily responsible for shop drawings and, importantly, cannot avoid liability to the owner by having the consultant review and approve the drawing. Put otherwise, the contractor has a responsibility to ensure that the items depicted in shop drawings accord with the plans and specifications. However, the consultant was responsible to the owner to review shop drawings for general conformance with the design concept and as such, has potential liability exposure as well.
Determining the relative apportionment of liability for problematic field review is difficult and highly fact specific. Surprisingly there are very few decided Canadian cases that touch on this issue. The US Case law illustrate the tensions between contractors and consultants over who is responsible for what in the shop drawing review process, with contractors in some cases successfully arguing that the consultant’s approval of shop drawings excuses it from liability and with consultant’s successfully arguing that they have no responsibility for errors relating to construction means and methods.
Given this uncertainty, there are number of practical risk management practices than can help minimize the risk of liability, including:
- including clear contractual language describing the purpose, extent and limitation of the consultant’s shop drawing review;
- ensuring clear, consistent and frequent communication between the consultant and contractor respecting shop drawings;
- developing a realistic schedule for the submissions and review of shop drawings so as to ensure proper review and timely turnaround;
- taking the responsibility seriously (e.g. ensuring the person reviewing shop drawings has the necessary expertise and experience; doing calculations and other forms of technical review where required).