March 28, 2019

Design Delegation – Practical Considerations and the Need for Clarity

By: Gregory H. Chertoff and Levi W. Barrett of Peckar & Abramson, P.C.

“Design Delegation” has existed in various, ad hoc, forms for generations. Building plans from 150 years ago typically left the details to the craftspeople executing the work. Over time, designers provided more and more specific detail, defining the contractors’ scope of work with much greater particularity. Recently, the pendulum appears to be swinging back to designers providing less detail and more performance criteria; delegating responsibility for achieving performance requirements to specialty contractors.

The construction industry has its own language and a unique affection for acronyms. Terminology is often used loosely, leading to confusion, unclear divisions of roles and responsibilities, and disputes. “Delegated design,” Design-assist,” and “Design-completion” all lack a standard definition or uniform applications.

For purposes of this discussion, “Design Delegation” is the assignment of responsibility, by the provision of performance criteria, for the design of a discrete portion of a construction project by the licensed, professional “Design Team of Record” (the “Delegator”), typically through a construction manager or general contractor which is not a licensed design professional, to a specialty contractor (the “Delegatee”). The Delegatee will typically employ licensed specialty designers, who will generate and be responsible for the design of the delegated portion of the project, the intent of which is to comply with and achieve the performance criteria specified by the Delegator.

Design is often delegated in the context of structural steel connection details, curtain wall systems, metal panel systems, cold-formed metal framing systems, fire suppression systems, among many others. An informal survey of contractors, designers and specification writers, indicates over 100 work scopes have design delegation potential.

The trend makes sense. Specialty manufacturers have exceptional knowledge of the design challenges facing their assemblies, and they all skin their cats differently. If an owner’s design team meticulously designed every nut, bolt, extrusion and gasket of a curtain wall system, none of the major curtain wall contractors could efficiently achieve the specified result, as they each have their own unique ways of achieving the desired goal. Requiring a specialty contractor to effectively re-tool their operations to build a bespoke system designed by others would represent a tremendous efficiency loss.

A Clarion Call for Clarity

The design and construction industry needs to embrace, understand and dissect design delegation and develop effective, practical, operational protocols. The AIA and ConsensusDOCS form agreements include language relating to the general apportionment of responsibility and the overall process for design delegation between project participants. See, AIA A201-2017, Section 3.1.12.10.1; ConsensusDOCS 200, Section 3.15.

The ConsensusDOCS 200 – Agreement and General Conditions between Owner and Constructor, Section 3.15 (2017) provides:

DESIGN DELEGATION. If the Contract Documents specify that Constructor is responsible for the design of a particular system or component to be incorporated into the Project, then the Owner shall specify all required performance and design criteria. Constructor shall not be responsible for the adequacy of such performance and design criteria.

As required by the Law, Constructor shall procure design services and certifications necessary to satisfactorily complete the Work from a licensed design professional. The signature and seal of Constructor’s design professional shall appear on all drawings, calculations, specifications, certifications, shop drawings, and other submittals related to the Work designed or certified by Constructor’s design professional.

The AIA A201-2017 General Conditions, Section 3.12.10.1 provides:

If professional design services or certifications by a design professional related to systems, materials or equipment are specifically required of the Contractor by the Contract Documents, the Owner and the Architect will specify all performance and design criteria that such services must satisfy. The Contractor shall be entitled to rely upon the adequacy and accuracy of the performance and design criteria provided in the Contract Documents. The Contractor shall cause such services or certifications to be provided by a properly licensed design professional, whose signature and seal shall appear on all drawings, calculations, specifications, certifications, Shop Drawings and other submittals prepared by such professional.

These clauses require that the applicable performance and design criteria be provided to the Delegatee. This is a mere general framework for how the process is to work. The devil, as they say, is in the details. The essential challenge the industry must overcome to avoid failed endeavors and costly and complicated disputes lies in addressing the specific problems that arise within each unique scope of work. The industry should strive for clarity and incorporate that clarity in specifications, contract documents and collaborative processes, specifically tailored to the varied scopes of work that are delegated, that clearly apportion responsibilities among project participants.

Additional Critical Considerations

Concerns that should be addressed in a project’s contract documents, and more generally, by the industry to create a fair set of standards, include:

• Is it legal? To the extent they exist, laws vary widely regarding the permissibility and the processes by which design may be delegated. In some cases, it may be illegal to delegate design responsibilities or may subject the parties to additional licensing or certification requirements. The first question that must be explored for any design delegation situation is whether it can be done legally and, if so, how it can be done in a compliant way.

• Who owns the gaps? When various delegated design and traditionally designed systems interface, which project participant is responsible, legally and practically, for ensuring that they all interface effectively? If, for example, alongside traditionally designed brick piers, are intersecting scopes of design, each delegated to different parties (e.g., window wall, metal panel systems, etc.), who is responsible for the integration of these systems? Who is responsible if air an or water leak occurs at the intersection of the brick pier and the window wall?

To be effective, these conditions must be anticipated and addressed in the contract documents, the plans and specifications and the performance criteria established by the Delegators to avoid problematic results.

• How is liability for failure to achieve the goal treated? Designers and contractors are held to different legal standards. Designers are usually held to a professional standard of care, generally defined as the ordinary and reasonable care usually exercised by one in that profession, on the same type of project, at the same time and in the same place, under similar circumstances and conditions. In practice, that means that designers can, without liability, engage in “non-negligent error.” Their work can fail to achieve the desired result, but if they were not negligent, they are not liable for the failure.

Contractors, by contrast, absent unusual circumstances, are required to substantially perform their contractual obligations. If a contractor fails to build pursuant to the plans and specifications, it is liable pursuant to the terms of the contract. A contractor cannot fail to perform and escape liability because it met some accepted standard of care.

Design delegation blends those roles. Typically, a prime contractor agrees to procure a design that meets the performance criteria and flows its responsibility down to a specialty contractor and its designers. Unless specifically provided otherwise, the prime contractor may not get the benefit of having only to perform to a professional standard of care with respect to the design services component.

Parties entering into contracts with design delegated components should consider this significant issue and address it deliberately in negotiations and contract documents. Either accept the risks knowingly and price them accordingly or employ contract language that bifurcates the standards to which the contractor is going to be held; a professional standard of care for the professional services it is agreeing to procure and provide and a contract standard for the traditional construction work.

Deliberate consideration must be given to how these risks are transferred and the various insurances on the project are going to be procured and operate. Risk managers should be consulted to ensure that each participant has appropriate coverage for their respective disciplines and responsibilities. Again, clear contract language reflecting a deliberate plan is paramount.

• What do the stamps mean? Typically in a delegated design situation, the Delegatee will submit plans, specifications, shop drawings or other similar documents and information regarding its design up the chain to the design Delegator for some degree of “review” or “approval.” Often Delegator review is to confirm the design’s general conformance to the Delegator’s specified performance criteria. Here too, there is no industry uniformity or standardization as to these roles and responsibilities. The “approved,” “approved-as-noted,” “rejected” or similar stamps routinely employed as part of the submittal and review process by design firms are themselves not uniform and, often, do not differentiate between a Designer of Record’s traditional roles and the different, and perhaps more limited, role they play in a delegated design paradigm.

These are just a few of the knotty issues that the industry should confront head-on and achieve clarity with respect to, in order to promote effective operations, ensure clear divisions of responsibility both practically and legally, to avoid problems borne of each participant believing another has “it” covered, and to minimize disputes in the increasingly important delegated design realm.

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.