By Miles D. Jolley of 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 both 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 do not create conflict or ambiguity.

Keeping with the theme of collaboration, ConsensusDocs 541 requires near-constant design review by the Contractor to identify constructability issues. The 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 party’s work can be a sensitive subject, so it is important for all participants to keep in mind 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 the 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 the Contractor, the 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 the Owner’s budget instead of the Owner finding out that the design is too expensive after it is complete and bid out (and having to spend more money on design changes to bring the design within budget).

ConsensusDocs 541 also addresses the construction project schedule. The Contractor has to prepare schedules during the design process to gauge whether the design fits within the Owner’s time constraints. Scheduling review and preparation goes along much in the same way as cost estimating. The Contractor prepares an initial schedule once the 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, the Contractor and Design Professional work together to recommend changes to bring the design back within the Owner’s time constraint.

There are also numerous optional services that the parties can elect within the document. 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. This risk analysis option requires the parties to collaborate on a list of potential risks to the project, particularly ones that may 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 opportunity to evaluate risk early on 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, however, that 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 the Owner and Design Professional and the Owner and Contractor in their respective agreements. Insurance requirements are not included either. Chances are that the insurance-related provisions will be 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 does not mention professional liability coverage. Since the Contractor will be involved in design preparation, the Owner and Contractor should consider obligating the 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 popular.

[1] ConsensusDocs is a coalition of dozens of construction industry organizations representing architects, engineers, general contractors, trade contractors, and project owners across the United States. This organization drafts and publishes over one hundred standard contract forms for use by construction project participants at all levels.

Miles D. Jolley is an attorney in the Fort Lauderdale office of Smith Currie. Jolley concentrates his practice in the areas of construction law and litigation including representation of construction project owners, contractors, construction managers, major trade contractors, sureties, architects, and engineers. Jolley’s practice also includes a transactional practice involving preparation and negotiation of design agreements and construction contracts utilizing traditional and non-traditional delivery systems (such as design-build, stipulated sum and cost of the work with a guaranteed maximum price). He can be reached at mdjolley@smithcurrie.com or 954.769.5334.