June 18, 2014

Heard It Through the Grapevine


Anyone who has ever played the children's game "Telephone" knows information transferred through a number of parties will eventually become distorted.

It is a well-recognized fact many design professionals, especially those involved in a primary design role (civil engineers, architects) will assume responsibility for coordinating and formalizing information during the course of a project. Depending on the contract with the owner, however, this role can have serious exposure.

As a design professional, if you subcontract with consultants, and forward their analysis and data as part of your contract, you will assume liability for any errors or misrepresentations contained in that analysis. The owner, or any third parties entitled to rely on data, which you either submit, and/or certify, will look to you as an information gatekeeper.

As an example, suppose you receive a comprehensive "report" generated by your subconsultant regarding of the structural integrity of a retaining wall. You incorporate the report within your analysis, and certify that the grading plan meets and/or exceeds the applicable standards. If the structural analysis were correct, the wall would suffice as a restraint, and the grading and soils plan would be accurate. However, should the calculations prove incorrect, although you had every reasonable right to rely on a certified, stamped report, third parties will inevitably bring suit against you.

As a simple matter of contract law, because you subcontracted with the consultant, the only avenue the owner and/or third party has for a claim is to assert a breach of contract and negligence against you.

The warranties, representations, and analysis of any data generated by your subconsultant now belong to you. Similarly, if part of your contract for services calls for inspections or observation, you may be liable for transmitting erroneous data of subconsultants or inspectors to third parties such as permitting agencies, and/or the owner. If you subcontract inspection services, any failure on the part of the inspector to detect errors by the contractor, or to improperly certify progress payments will become your responsibility.

What then is the solution? First, clearly identify at the outset of the project what the information flow will be. The owner should have a contract manager, project manager, or construction manager, whose sole responsibility it is to coordinate the information and activities of the contractor and subs on the project.

Second, coordinate the contract with the consultants so it is directly between the owner and the subconsultant. Be sure you, as the design professional, are designated as a third party beneficiary, in the event the sub delivers incomplete or inaccurate data to the owner. This will affect your ability to perform under your contract.

Finally, if you're going to be the information gatekeeper, make sure this responsibility is clearly defined in your contract, and that it is a cost item in your contract. There is no need to get stung for information you heard "through the grapevine."

This article is intended to inform the reader of general legal principles applicable to the subject area. It is not intended to provide legal advice regarding specific problems or circumstances. Readers should consult with competent counsel with regard to specific situations. For more information on this topic, please contact marketing@jordanramis.com or call (888) 598-7070.


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