January 8, 2021

By: Miles D. Jolley Associate, Smith, Currie & Hancock LLP.

            Use of the design-assist collaborative approach has recently emerged as a result of the construction industry’s constant (and admirable) focus on innovation to deliver projects faster, more efficiently, and at less cost. For those not familiar with design-assist or needing a refresher, design-assist brings together project participants, including the Contractor, major trade Subcontractors, Design Professional, and the Owner, during the design phase to address concerns like constructability, scheduling, and cost to build the design. Design-assist is not to be confused with the design-build project delivery method in which the Owner contracts with one party to perform the design and construction of a project. One major challenge with design-assist is clearly delineating rights and responsibilities of the multiple parties involved. In response to that challenge, ConsensusDocs[1] recently developed and released the first standard industry document addressing design-assist: ConsensusDocs 541. The following is an overview of ConsensusDocs 541, how it defines the roles of the various project participants involved, and some considerations for design-assist participants to keep in mind when using ConsensusDocs 541 or entering into design-assist agreements in general.

Collaboration is a major theme of ConsensusDocs 541, but it is not like integrated project delivery or design-build when it comes to allocations of risk. ConsensusDocs 541 is a supplemental document to the separate Owner-Contractor and Owner-Design Professional agreements, so risk is allocated through those various separate documents. Further, ConsensusDocs 541 clearly establishes that liability for construction defects remains with the Contractor and liability for design errors remains with the Design Professional (even though the Contractor and Subcontractors will be involved in the design process). When utilizing ConsensusDocs 541, care should be taken to make sure that allocation of risk between the Owner-Contractor, Owner-Design Professional, and ConsensusDocs 541 work together and don’t create conflict or ambiguity.

Keeping with the theme of collaboration, ConsensusDocs 541 requires near-constant design review by the Contractor to identify constructability issues. Contractor’s role is to spot issues in the design and provide suggestions to the Design Professional before they become problems later in the field with delays, conflicts, rework, and changes. Pointing out problems in another person’s work can be a sensitive subject, so it is important for all participants to keep in mind that this is a collaborative process. Each party should approach it with the goal of producing the most complete, coordinated, error-free, and efficient design possible so that construction will be completed on time (or early) and on budget (or under). This benefits all parties in the long run as errors and disputes end up costing more time and money, which design-assist is meant to avoid.

ConsensusDocs 541 also requires Contractor to perform cost estimating at the typical preliminary design, schematic design, and design development stages. If at any point the cost estimate exceeds a prior estimate given by Contractor, Contractor has to work with the Design Professional to recommend design changes to reduce cost. This process keeps the Owner apprised of how much it will cost to build the design so the parties can control design creep and avoid surprises at bid time. The parties can ensure the design fits Owner’s budget instead of Owner finding out that the design is too expensive after it’s complete and bid out (and having to spend more money on design changes to bring the design within budget).

ConsensusDocs 541 also addresses the last leg of the construction project trifecta: schedule (the other legs being design and cost). Contractor has to prepare schedules during the design process to gauge whether the design fits within Owner’s time constraints. Scheduling review and preparation goes along much in the same way as cost estimating. Contractor prepares an initial schedule once Owner’s program is defined and updates the schedule as the design progresses. Any time an updated schedule shows an adverse change compared to the previous one, Contractor and Design Professional work together to recommend changes to bring the design back within Owner’s time constraint.

There are also numerous optional services that the parties can elect. When using ConsensusDocs 541, the parties can “check the box” to include these options in the services to be performed under the design-assist agreement. The options include life-cycle cost analysis, sustainable design recommendations, and risk analysis, which is important to note. The risk analysis option requires the parties to collaborate on a list of potential risks to the project, particularly ones that could impact the project’s schedule and cost. The risks are then assigned to the appropriate participant for monitoring and a risk management plan is developed to determine how to respond to a risk should it come to fruition. This could help all of the parties know the potential risks going in, so there are no surprises, and all of the parties will have already agreed on how to address the risk. Again, this option keeps with the theme of collaboration among the parties to address potential problems during the design phase before they become bigger issues during construction.

There are some gaps in ConsensusDocs 541 though, which are likely intentional so that the participants can fill in the document with their own arrangement. The payment terms are open ended and leave it up to agreement between Owner and Design Professional and Owner and Contractor in their respective agreements. Insurance requirements are not included either. Chances are that the insurance-related provisions are addressed in the separate contracts between Owner and Contractor and Owner and Design Professional. However, there may be a gap in the Contractor’s insurance if the Owner’s agreement with the Contractor doesn’t mention professional liability coverage. Since Contractor will be involved in design preparation, Owner and Contractor should consider obligating Contractor to maintain professional liability coverage.

ConsensusDocs 541 does a good job of delineating responsibilities and liabilities among parties in design-assist project delivery. It is not without intentionally designed gaps for the parties to customize their agreement, so care should be taken when preparing the document and it is advisable to involve counsel. Familiarity with this document and design-assist in general will be important for project owners, general contractors, and design professionals moving forward as this collaborative process will likely become more and more popular.

The  views expressed in this article are not necessarily those of ConsensusDocs. Readers should not take or refrain from taking any action based on any information without first seeking legal advice.