Liability of Design-Builders for Design, Construction, and Acquisition Claims (2015)

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87 dangerous conditions of public property.406 The Act carves out “design liability”—which means that the public agency retains its sovereign immunity—if the “plan or design” has been approved in advance of the construction or improvement by the legisla- tive body of the public entity or some other body or employee exercising discretionary authority to give such approval, or such plan or design is prepared in conformity with standards previously so approved, if there is any evidence that a reasonable public employee could have adopted the plan or design or standards therefor, or a reasonable legislative body or other body or public employee could have approved the plan or design or standards there- for.407 This is an uncommon concept and means that, in California, public agencies are likely to want to review and approve “released for construc- tion” design documents. VIII. CASE STUDIES This section consists of three sets of case studies illustrating different facets of the design–build design and acquisition process. The first case study reviews the arbitration award arising out of a dis- pute between the design–builder and designer on SCDOT’s Cooper River Bridge project. Next, a set of case studies derived from experiences shared by professional liability insurance (PLI) carriers is examined. The final set of case studies discusses transportation agencies’ creative procurement and contracting approaches that had a positive impact on the design and acquisition process. A. Cooper River Bridge Replacement Project As discussed in Section VI, the trend to use alternative dispute resolution (e.g., arbitration, dis- pute review boards, and mediation) has resulted in many design–build disputes being resolved without published decisions. Although this trend provides the benefit of faster and more cost-effective resolu- tion, the downside is that the industry has a smaller universe of reported court decisions from which to derive insight into behavior and legal theories that beyond the scope of this digest and has been addressed in other publications.403 The concept of sovereign immunity may be relevant, however, in determining whether public agencies and design– builders have liability to third parties for defects in the project design. Two specific concepts relat- ing to sovereign immunity are discussed in this section: 1) the doctrine of “derivative immunity” and 2) legal requirements that affect the design review process. 1. Derivative Immunity In some states, the doctrine of “derivative immu- nity” might allow a design–builder to assert that, as the government’s agent, it is entitled to the same immunity that applies to the government in suits from third persons. The U.S. Supreme Court recently discussed the doctrine’s history and application, although not in the design or construction context.404 The law on the applicability to private contractors is mixed, and would need to be examined in the par- ticular state. As an example, a Texas statute grants immunity to certain private contractors under lim- ited circumstances, as follows: (c) An independent contractor of a transportation entity [created under specified statutes] performing a function of the entity or an authority is liable for damages only to the extent that the entity or authority would be liable if the entity or authority itself were performing the function.405 Even where the doctrine of derivative immu- nity applies to a design–builder, it would retain the risk of any claims that could be made against the government. As a general matter, most states allow suits against themselves for tort claims under certain conditions. See Appendix E for a chart referencing the sovereign immunity statutes in various states. 2. Relationship Between Sovereign Immunity and Design Review Process The law in California provides an interesting example of the need to consider sovereign immu- nity in the context of the design review process for public agency design–build contracts. California’s Government Claims Act provides a general waiver of sovereign immunity for tort claims based on 403 For a detailed discussion regarding issues relating to transportation agency liability for defects in transpor- tation facilities, see TorT liAbiliTy of highwAy Agencies, selecTeD sTuDies in TrAnsporTATion lAw (Vol. 4, Nat’l Cooperative Highway Research Program, Transportation Research Board, 2003). 404 Filarsky v. Delia, 132 S. Ct. 1657, 182 L. Ed. 2d 662 (2012). 405 Tex. TrAnsp. coDe § 452.0561(c). 406 cAl. gov’T coDe § 830. The statute goes on to say that the immunity provided by this section shall con- tinue for a reasonable period of time sufficient to per- mit the public entity to obtain funds for and carry out remedial work necessary to allow such public property to be in conformity with a plan or design approved by the legislative body of the public entity or other body or employee, or with a plan or design in conformity with a standard previously approved by such legislative body or other body or employee. 407 cAl. gov’T coDe § 830.6.

88 components,” including certain ramps and sepa- rated pedestrian and bicycle facilities on the struc- tures. The proposals were to include renderings of the bridge, representative conceptual drawings of the superstructures and substructures of the bridge and approaches, types of materials, and specific bid sheets and other forms. SCDOT allowed proposers, at their option, to sub- mit an alternative proposal, including a single eight- lane structure in addition to the dual four-lane par- allel structures, with the same requirements as previously stated. Proposers were required to sub- mit a separate proposal to design and construct an additional amount of bridge width to accommodate light rail or other mass transit. Proposals were to identify scope based on the assumption that: 1) suf- ficient funding would be available in time for the full project to be constructed on schedule under an unlimited notice to proceed; and 2) sufficient fund- ing would not be available, and only a specified por- tion of the full project would initially be constructed under a limited notice to proceed. Palmetto Bridge Constructors (PBC), a joint ven- ture of Tidewater Skanska, Inc., of Norfolk, Virginia, and Flatiron Constructors, Inc., of Longmont, Colorado, was the winning proposer, with the low price of $531 million. Parsons Brinckerhoff Quade and Douglas, Inc. (PB), was its engineering subcon- tractor and chief designer. SCDOT awarded the design–build contract to PBC on July 2, 2001, and the project was completed in July 2005. Readers should note that PBC and PB signed, on August 31, 2000, a Memorandum of Understanding (MOU) regarding the preparation and submission of the first-phase proposal. While working together on the second-phase proposal, they negotiated a Sub- contract for Design Services (Design Subcontract), which was not signed until September 10, 2001. This was more than 4 months after the second-phase pro- posal was submitted and more than 2 months after the execution of the design–build contract. The effec- tive date of the Design Subcontract, however, was made May 11, 2001, which appeared to coincide with the date that PBC submitted its second-phase pro- posal on May 15, 2001. As constructed, the project stretches more than 3 mi. The main crossing of the Cooper River between Mt. Pleasant and Drum Island is one of the longest cable-stayed bridges in North America, with a cen- ter span of 1,546 ft and a total cable-supported length of 3,296 ft. The bridge’s as-constructed width of approximately 140 ft carries eight lanes of traffic and a 12 ft pedestrian and bicycle path. It provides 186 ft of vertical clearance above a 1,000-ft-wide shipping channel in the Cooper River. Most of the influence dispute outcomes. This section will review one of these arbitral awards, Parsons Brinckerhoff Quade & Douglas, Inc. v. Palmetto Bridge Construc- tors, et al. (Award),408 which involved major claims between the design–builder and its lead engineer on the Cooper River Bridge Replacement Project for SCDOT.409 The design–builder alleged that its lead designer failed to perform its pre-proposal design work adequately.410 1. The Project, Procurement, and Parties The project was comprised of the design and con- struction of a replacement of two truss bridges over the Cooper River—the Grace Memorial and Silas Pearman Bridges—as part of U.S. Route 17 between Charleston and Mount Pleasant, South Carolina. Associated approach structures, ramps, and inter- changes at each end of the bridge were also included. SCDOT initially commenced the bridge replace- ment project using the traditional design–bid–build protocol. It converted, however, to a two-phase design–build approach to address the limitations of state funding. Under the first phase, SCDOT sought a conceptual proposal that would allow it to select two or more proposers who would be eligible to sub- mit full technical and price proposals under the sec- ond phase of the procurement. The first-phase RFP was issued on July 14, 2000, and allowed a total of 9 weeks for submission of proposals. This RFP also required that the bridge structure be constructed within a specified budget amount.411 The second-phase RFP was issued on February 23, 2001, and ultimately required proposers to sub- mit their technical and price proposals in 11½ weeks. Proposers were required to submit a proposal for design and construction of dual four-lane paral- lel structures, including the cable-stayed main spans, approach spans, and interchanges at each end, and a separate proposal for “additional 408 AAA-09, 16-110 Y 00125-05. 409 It is only recently that arbitration awards have been published and consequently, the ultimate precedential value of arbitration awards will be determined over time, as arbitrators, mediators, and even judges consider them in rendering their advice and decisions. 410 All of the narrative set forth below is taken directly from the 110-page Award. Each of the three arbitrators is an experienced construction lawyer from the mid-Atlantic region, and the Award reflects the thoughtful approach they used in addressing the design–builder’s allegations that its lead designer failed to perform its pre-proposal design work adequately. Readers should read this case study in conjunction with Section VI.F.1, which addresses case law on the same subject raised in the arbitration. 411 In describing the procurement process, the Award identified a budget number of $362 million. Later in the Award, in discussing the dispute, a budget of $536 million was used.

89 result, PBC argued that PB knew that certain proj- ect requirements—such as seismic, wind, geotechni- cal, and ship impact issues—were significant and carried a higher order of importance than on an ordinary project. PBC alleged that PB did not exam- ine areas of the design that would have been critical to these areas, including the vertical component of seismic reactions, design of the expansion joints for seismic movement, and site-specific wind loadings. Some of PBC’s largest claims were for aerody- namic and seismic design. PBC argued that PB should have provided a level of design that would allow PBC to bid the project with a wind force resist- ing system that was complete, constructible, and stable, and which fully satisfied the design criteria. PB’s alleged failure to fully investigate aerodynamic stability required significant post-award redesign and cost. PBC additionally claimed that PB did not consider many aspects of seismic design and thus did not fulfill its obligation to provide a preliminary design for a complete seismic resistance system. This resulted in PBC incurring additional costs to rectify details omitted in the pre-proposal engineering. PB asserted a number of positions to defend its pre-proposal work and the claims against it. It asserted that the validity of pre-proposal engineer- ing judgments must be evaluated based on what was known at the time of the proposal, not on what is known at final design through a “hindsight” anal- ysis. Among other things, it urged the arbitrators to consider, in determining whether PB had met its professional standard of care, that: • Two years of full engineering design process took place after award, during which extensive investigations, testing, and analysis had to be con- ducted and reports of those efforts written and reviewed by SCDOT. • SCDOT formed a Seismic Resource Panel after contract award to review all seismic engineering and design, and that numerous iterations of analy- sis and design were completed, incorporating the information gathered and comments received. • During final design, changes were requested by SCDOT, PBC, and fabricators for a variety of reasons, including preferences, ease of fabrication, and convenience of construction, with which PB was obligated to comply but which are at the root of many of PBC’s claims in this arbitration. PB con- tended that such changes after a lump sum proposal was submitted and accepted were common on large construction projects and on design–build projects. PB argued that the purpose of the engineering services was to support the development of a concep- tual proposal, not to develop final construction structures use a composite steel superstructure, including the 3,296-ft cable-stayed main span. The main span and side spans use a composite concrete deck with I-shaped steel girders and floor beams. The two 572½-ft-high diamond-shaped main towers are comprised of hollow rectangular reinforced con- crete sections with 2- to 2½-ft-thick walls. 2. Nature of the Dispute PBC filed an arbitration demand against PB for 44 specific errors and omissions that it contended arose out of PB’s work during the pre-proposal period, and that allegedly resulted in increased con- struction costs and delays for PBC. PBC also identi- fied four claims of error in the final design of the bridge. It sought an award against PB of approxi- mately $65 million, plus other relief, and based its claims on negligence, breach of contract, breach of warranties, negligent misrepresentation, and breach of fiduciary duty. PB denied any liability to PBC and asserted a counterclaim for approximately $3 mil- lion, largely for interest on unpaid contract amounts, extra work, and extended general conditions. With respect to the pre-proposal period claims, PBC essentially contended that PB’s proposal design: 1) omitted certain elements required for a suitable project design; 2) contained errors or omissions, and incorrect data, that impacted PBC’s cost estimating; and 3) did not comply with applicable project design criteria, though PB certified it as meeting such crite- ria knowing that the design conflicted with such cri- teria. PBC argued that it relied on the efficacy of PB’s design because, among other things: • It was significantly detailed, containing fram- ing plans, structural member evaluations, and drawings containing dimensioned and sized mem- bers and related material quantity tables, includ- ing parametric formulae, and could not be consid- ered as conceptual. • The design did not indicate any level of uncer- tainty or draw attention to items that had not been properly detailed, in accordance with the project requirements. • PB did not communicate to PBC certain unknowns or uncertainties that would later impact final design. • PB did not include design allowances in its pre-bid design information, despite understanding its obligation to meet the bid quantities in its final design and cost estimates. PBC particularly focused on the fact that PB had been involved with the project since 1987 and had developed project design criteria in working for SCDOT, as well as authored the EIS for FHWA. As a

90 critical information with PB and overtly excluded its designer from providing input on final estimating, risk evaluation, or contingency setting. It found that “such exclusion lies at the core of this dispute.” The panel noted that PBC’s rationale for its actions was that PB was a subconsultant and not a joint ven- turer sharing the financial risk of the fixed-price design–build contract. PBC was further concerned over confidential pricing information being disclosed to competitor bidders. This concern “apparently overrode the MOU’s express requirement to share ‘competitive position’ information, as well as the mutual exclusivity and confidentiality provisions of the MOU.” As to the second point, the panel was heavily influenced by PBC’s pre-proposal design directions: The PBC direction provided by PBC to the design team was to provide the most economical design, because price in the competition for the design–build contract was a, if not the, most important consideration. …Sensitive to price issues, on separate occasions in the pre-proposal design process, PBC management variously instructed PBC to provide a ”bare bones” design and to design solely to SCDOT’s design criteria, even when it was known to PBC that the criteria was insufficient.413 The panel noted that PB only had 12 days to develop its first-phase design, and that substantial changes took place during the development of the second-phase pricing package. The panel also believed that PBC was sophisti- cated enough to know that major elements of the design had to be subject to verification: PBC, therefore, was, or by the exercise of reasonable dili- gence should have been, aware that full and complete load analyses were to be performed only after contract award. Further, because a change in load analysis had a cascading effect on other structural analyses, PBC knew or should have reasonably known that uncertainties in design existed and significant post-award analyses and design was anticipated.414 The Award notes that this was evident from a com- parison of the level of engineering effort in the com- pressed pre-proposal period with the effort after con- tract award. PB expended approximately 10,000 hours in the pre-proposal phase versus approxi- mately 300,000 hours in the post-award phase. It was paid approximately $1 million in the pre-proposal phase as compared to approximately $21 million for post-award design services. The Award stated: PBC, therefore, understood the categories of risk inherent in a project of this scope and complexity, as evidenced by the list of risks PBC management created in their final pricing and contingency setting exercise. PBC understood that load testing, geotechnical investigations, scour analysis, ship impact, wind studies, aerodynamic testing, and seismic documents. Noting the many uncertainties inherent in the engineering design process at such an early stage, PB cited to the fact that the pre-proposal design stage is time-constrained in relation to the project, and that many of the issues PBC complained about (such as seismic, wind, and geotechnical issues), required, by contract, additional studies to be performed after contract award. It also argued that PBC excluded PB from the assessment of design risks and applicable contingencies and from the cost estimating process in general.412 The hearing took 39 days, beginning on January 16, 2008, and ending with final arguments on July 15, 2008. The Award provides a methodical analysis of each claim and counterclaim, and the arbitrators ultimately concluded that PB was liable to PBC in the net amount of $1,239,568.25. The Award is instructive on many levels, but particularly in terms of how this panel considered the global arguments of each party and applied them to the facts of each claim. The main arguments are discussed in the sec- tions that follow. 3. General Factors Cited by the Panel Influencing Its Award Before examining PB defenses, the panel set forth findings of fact on three points that clearly influ- enced its Award as it examined each of the 44 spe- cific claims: • Collaboration by the parties during the pre- proposal phases. • PBC required an economical, conceptual design knowing design uncertainties existed. • PBC’S unilateral contingency in the face of known design uncertainties. As to the first issue, the Award cites the impor- tance, on a design-build project, of collaboration between the contractor and designer during the pre- proposal period. The MOU specifically acknowl- edged that the parties needed to collaborate, and obligated PBC and PB to share information on sta- tus, cost, technical considerations, competitive posi- tion, and such other information as reasonably may be necessary to develop the best proposal. In fact, this was one of PBC’s arguments—PB failed to pro- vide “information reasonably necessary for the prep- aration of the Joint Venture’s cost proposal.” The Award noted that the panel weighed the suit- ability of each of the parties’ respective collaborative efforts. It concluded that PBC did not share certain 412 In addition to these general points, PB also argued that it had, in fact, satisfied its standard of care for pre- proposal design services for each of the 44 areas that were raised by PBC. 413 Id. at 39. 414 Id. at 40.

91 Design Subcontract, as well as the testimony of the parties, which made it clear that the parties intended and understood that the information provided prior to the award was for the purpose of bidding to SCDOT and not for construction: “Moreover, there was no doubt that the information provided prior to the award of the Design Build Contract might be subject to refinement and change during the development of the final design.”418 Therefore, the panel found no basis for PBC’s claim of breach of implied warranty with respect to pre-bid design information. 5. Express Warranty of Sufficiency of Pre-Proposal Design As noted in Section VI, designers can, by their con- tract, expressly warrant that their design documents are free of defects. PBC argued that, contending that elements of the Design Subcontract applied to all pre-bid services. The specific clause at issue stated: Designer warrants to Contractor and also to Owner that: (a) all design services performed pursuant to the Contract Doc- uments shall conform to all professional engineering prin- ciples generally accepted as standards of the industry in the state where the Project is located; (b) the Project shall be free of design defects, errors and omissions; and (c) the Proj- ect’s design shall be fit for intended use for its function.419 PB responded by arguing that this clause did not apply to pre-bid services, as the Design Subcontract was applicable only to post-award services. The panel disagreed with PB relative to Para- graph (a) and found that PB expressly warranted all pre-bid design services pursuant to the Design Sub- contract. It reached this determination by examin- ing the subcontract’s definition of “Contract Docu- ments,” which expressly included “all documents having to do with the design and construction of the Project and the bidding process released by Owner.”420 The panel rejected, however, that the warranty set forth under (b) and (c) applied to pre- proposal services, concluding that they only applied to the final RFC drawings. Based on this ruling, the panel then evaluated each of the claims to determine whether PBC breached the Paragraph (a) warranty. The panel specifically found that an engineer can contract to exercise a standard of care higher than the ordinary negligence standard, and that the Paragraph (a) warranty could be a higher standard of care. It also stated, “the mere fact, however, that the final RFC drawings differed from the design information pro- vided to PBC during the pre-award phase of the con- tract does not establish that PB violated the analysis and modeling would all be performed after award. The evidence, in fact, was that PB communicated specific uncertainties regarding wind fairings, hurricane tie-downs, integral connections, and ship impact criteria. PB also advised PBC of uncertainty in shaft capacities in the main span and high level approaches due to the lean design directed by PBC. Moreover, seismic issues were described by PB to PBC as the ”biggest unknown.”415 Finally, as to contingency setting, the panel’s Award was clearly influenced by PBC’s failure to involve PB in the cost-estimating process. PBC con- ceded that, but for some limited exceptions, it did not rely on quantities estimated by PB. “PBC did not involve the design team, in any meaningful way, in the estimating process or the establishment of con- tingency—reserving those functions to itself.”416 The Award discusses in detail how PBC arrived at its contingency and noted that it was based in part on decisions by upper management to present a competitive, “bare bones” bid. PB was not privy to the contingency before, or at any time during, the project. PB’s suggestions on appropriate contingency amounts, which were higher than those PBC ulti- mately used, were not considered. PB was instructed, however, not to provide contingencies on its quanti- ties, because that would place a “contingency on a cost already increased by PB’s contingency.”417 The Award noted that PBC acknowledged growth in quantities during the course of the project, and suggested that these appeared to be anticipated growth. PBC apparently confirmed that it would not hold PB financially responsible for what PBC identi- fied as design-related quantity and costs increases. This position apparently changed approximately 2 years before the project was completed. 4. Implied Warranty for Sufficiency of Pre-Proposal Design As discussed in Section VI, case law supports the position that a designer impliedly warrants the suf- ficiency of its pre-bid design documents. PBC argued that South Carolina law imposed a higher standard of care than the traditional negligence standard and that it is “virtually a strict liability standard,” i.e., a standard that requires that the “Pre-Bid Design have no errors or omissions.” PB argued that the South Carolina cases all addressed final plans and specifi- cations and not preliminary or pre-bid design infor- mation. It therefore argued that there was no implied warranty claim for which it could be liable for the pre- proposal errors and omissions cited by PBC. The panel agreed with PB, although it did not cite to any cases. The Award cited to the MOU and the 415 Id. 416 Id. at 41. 417 Id. 418 Id. at 44. 419 Id. at 45. 420 Id.

92 into the Design Subcontract, the panel was unwill- ing to consider this as a proper defense. The Award noted, “It is also clear that when the regrettable deterioration of the relationship between PBC and PB occurred, both parties ignored this part of their commitment in the claims, counterclaims and back- charges which they have presented in this arbitra- tion.”424 Moreover, because there was no evidence of any discussion or agreement as to a dollar threshold for claims considered to be in the “nickel–dime” cat- egory, the panel was unwilling to “guess as to what might be considered to be a ‘nickel–dime’ claim.”425 7. Post-Award Errors and Omissions The panel separately evaluated the legal stan- dards for the four post-award errors and omissions allegedly caused by PB’s negligence and breach of contract. The panel found that PB did impliedly war- rant the sufficiency of the completed design under South Carolina law, as noted in Section IV above. It also found that the express warranties discussed in Section V—specifically that the project “shall be free of design defects, errors and omissions” and that the “design shall be fit for intended use for its func- tion”—were applicable to these breaches. This, in theory, posed a higher standard of care on PB than would result from an ordinary negligence standard. This principle was applied with respect to one of PBC’s claims for the failure of eight lateral bearings on the bridge. PBC argued that the bearings were not replaceable as required by the specifications. As a result, when the bearings failed, they had to be cut into smaller pieces to be removed. This involved con- siderable effort, and PBC sought over $1 million for this problem. PB argued that the failed bearings were replaceable, and that the replacement process could be done without undue difficulty. The panel found no evidence that the replace- ment of the bearings was considered during the preparation of the RFC drawings. It also found the testimony of PBC witnesses as to why the bearings as installed were not replaceable without destruc- tive removal more persuasive than that of the PB witnesses. Given this, it concluded that PBC proved that PB had breached its warranty that its work be free of design defects, errors, and omissions. 8. Lessons Learned The ultimate outcome of any formal dispute process is dependent not only upon applicable law, but also upon the specific facts of a case; witness credibility; the “temperament” of the decision-maker (i.e., arbitrator, judge, or jury); and other project-specific factors. That standard of care imposed upon it, under the negli- gence standard or by contract.”421 Instead, the panel evaluated whether PB had breached this duty by considering expert testimony and factual evidence on each of the individual items. As is evident from the Award, PBC was unable to meet its burden of proving that PB breached this standard on most of its pre-proposal claims. 6. Measure of Damages for Pre-Proposal Design Errors and Omissions PBC’s pre-proposal damages theory was based on the concept that it was entitled to recover, for each claim item, the difference between the price it actu- ally bid for that item of work and the amount it “would have bid” if: 1) the final design elements of the project had been known at the time it was pre- paring its estimate; or 2) it had been given proper warning that the quantities and costs on the project might increase as significantly as they did. PB argued that this approach was inherently speculative and, as a result, all of PBC’s claims for pre-bid errors should be dismissed because of insuf- ficient proof. Among other things, PB contended that if PB had included in its $531 million proposal to SCDOT all of the costs claimed for PB’s errors and omissions, its proposal would have been at least $581 million, well in excess of SCDOT’s budget of $536 million. This, according to PB, would have rendered PBC’s bid nonresponsive and would have precluded the award of the contract to the joint venture. Although the panel expressed concerns over the reliability of the costs calculated pursuant to the “would have bid” approach, it nevertheless rejected PB’s motion to dismiss—viewing this method as a “conceptually valid approach” for a damages calcu- lation. The panel specifically observed that this cal- culation method required the panel to exercise “con- siderable care in assessing the accuracy and reliability of PBC’s assertions as to what direct and indirect costs would have been included in its bid.”422 The Award noted that this scrutiny was “especially necessary in view of the fact that these asserted damages were based on claims of additional revenue which would have been received rather than the additional costs of materials and labor actually incurred in completing the Project.”423 Another defense PB raised for certain claims and backcharges should be denied because, as a matter of contract, the parties agreed not to assert “nickel– dime” claims against each other. Although observing that this issue was discussed as the parties entered 421 Id. at 49. 422 Id. at 42. 423 Id. 424 Id. at 52. 425 Id.

93 Finally, it should be noted that although the panel did not address this directly, triers of fact are influenced by the financial position of the plaintiff. Although the Award did not make this clear, PB suggested that PBC apparently made money on the project. B. Case Studies from PLI Carriers As noted previously, most design–build disputes are resolved without formal proceedings. This is particularly true if the dispute involves an alleged design defect, as this triggers the involvement of professional liability (i.e., Errors and Omissions (E&O)) insurance carriers. Insurance carriers eval- uate a claim’s merits during investigations and dis- covery and thus often resolve their disputes before trial. As a consequence, PLI carriers have a wealth of case studies that provide examples of the type of claims that are raised against their insureds and how they were ultimately resolved.426 1. Sources of E&O Claims As might be expected, all of the major PLI carri- ers conduct extensive studies to assess why their insureds have claims and how to help them avoid future claims. XL Insurance Group posits that although every claim has a technical cause—such as a code violation—there are also several nontechni- cal factors related to business practices that can lead to or exacerbate a claim.427 Its top four nontech- nical factors for design–build claims are: 1) commu- nications, 2) project team capabilities, 3) client selec- tion, and 4) negotiation and contract. Communications was the biggest problem, cited as a primary factor in 39 percent of all claims and 29 percent of claims dollars. The top five subcategories for this, in relative order of importance, were: • Lack of procedure to identify conflicts, errors, and omissions. • Project issues and potential disputes not han- dled correctly. • Scope of services not explained to client. said, the Award provides insight into how experienced construction lawyers considered several issues com- monly raised when there are allegations that the designer failed to fulfill its duties to provide the design–builder a “biddable” design. For example: • Purpose of the proposal design. The panel clearly understood that PB’s proposal design was quite preliminary and subject to modifications as post-award studies were conducted. As they con- sidered each claim, the arbitrators looked at evi- dence of what PB actually did during the proposal period, and whether this was sufficient given the information currently available. For the most part, they determined that PB established it met the standard of care for these early design services, and that the post-award design changes were a natural outgrowth of the expected, more compre- hensive, design effort. • Involvement of the designer in establishing the price and contingency. The fact that PBC did not involve PB in any meaningful way in establish- ing quantities and the contingency heavily influ- enced the panel. In essence, the panel found that PBC had reached its own commercial decisions on these elements of the proposal, and that PBC should have known that the proposal design would require modifications. • Application of implied and express warranty liability theories. The issue of implied warranty of a preliminary design is determined by state law, and although the cases discussed in Section VI.F.1 demonstrate this as a viable theory in some states, the arbitrators (without any discussion of case law in the Award) found that South Carolina did not recognize this theory. • Use of colloquial terms. Although the MOU and Design Subcontract seemed well-conceived, the is- sue of how to deal with “nickel-and-dime” issues was a struggle for the panel. It was a concept that the parties agreed upon, but because it was neither defined nor applied by either party, the panel could do nothing with it in deciding the case. • Inability of parties to rely upon “global” argu- ments. An important lesson from this case is that “global” positions do not work well in deciding design disputes. PBC had to go through each claim item and show precisely how PB breached its stan- dard of care or warranty on that item. Likewise, PB was not able to rely on its overall view that PBC failed to prove the merits or damages for each claim. In essence, each breach stands on its own, and the parties have to meet their respective bur- dens of proving/defending each such claim based on testimony and other evidence. 426 In writing this digest, the authors reached out to a number of the large PLI carriers to obtain examples that could be published. One of the carriers had claim histories on its Web site, and some of those studies are discussed below. Others provided examples but cited confidentiality concerns given that these examples involved nonpublic information. The narratives in this section attempt to bal- ance these interests and provide as much information as can be shared about the respective claims. 427 Guy LeVan, Design-Build Claims: Risk Drivers and Lessons Learned, International Risk Management Insti- tute, PowerPoint presentation, 33rd IRMI Construction Risk Conference (Nov. 2013).

94 retained a design–build subcontractor for the con- struction of carport structures with solar panels. The subcontractor used incorrect wind load data and provided this data to its two structural engi- neers. As a result, the carport structures were under- designed, and at least one structure failed in 35 mph winds, while six others showed significant stress and required redesign and repair. The subcontractor had no E&O insurance for design-related exposures, and one of the structural engineers appeared to have no E&O insurance whatsoever. As a result, the design–builder’s PLI carrier is responding to the loss, but appears to have little ability to obtain con- tributions from other insurance sources. In a reported case study,428 XL Insurance Group noted that a general contractor entered into a design–build contract for a retail center and subcon- tracted the design to a design professional. During construction, it was discovered that the designer made a layout mistake on the site plan, “resulting in the retail center sitting several inches above the existing roadways. Correction of the problem was estimated to cost more than $1 million.”429 The design–builder sought indemnity from the designer but appeared to have no practical recourse, as the designer declared bankruptcy. 3. Disagreements over Proposed Fix Once a design defect is discovered, it is not unusual for disputes to develop over the appropriate correction. In one case study, a PLI carrier noted that this type of dispute was at the heart of its claim. The owner (an airport authority) entered into a design–build contract for a taxiway rehabilitation and bridge at the airport. The design–builder had retained a structural engineer for the design work on the project. Approximately 1 year after substan- tial completion, cracks appeared in the deck of one of the bridge’s spans. The cracks were principally in the wheel path of the airplane traffic and ran paral- lel to the path of travel. It was initially believed that the cracks at issue could have been caused from heat. The issue was monitored through the fall and winter. Further investigations and monitoring suggested the issue was more complex. The structural engineer made an initial recommendation for repair of the cracks involving epoxy injections and a carbon fiber “mesh.” The owner rejected this proposed fix. Following additional observations, the structural engineer • Lack of documentation regarding changes in scope, budget, etc. • Project staff not aware of responsibilities. Project team capabilities were the next major contributor, cited as a primary factor in 25 percent of all claims and 34 percent of claims dollars. Among the top five subcategories for this, in relative order of importance, were: • Inexperienced design staff. • Inexperienced on-site staff. • Inexperienced project manager. • Firm inexperienced in project type. • Unqualified back-up staff. Client selection was the third biggest nontechni- cal problem, cited as a primary factor in 23 percent of all claims and 18 percent of claims dollars. The top five subcategories for this, in relative order of importance, were: • Client inexperienced in design issues. • Client has a history of claims and litigation. • Client in poor financial condition. • Client behind in fee payments. • Contractor selection. Finally, negotiation and contract issues were cited as a primary factor in 6 percent of all claims and 13 percent of claims dollars. Among the top subcatego- ries for this, in relative order of importance, were: • Unclear or inappropriate scope. • No formal project evaluation. • No contract before work started. • Lack of construction phase services. • Lack of mediation clause. • No contingency fund. It is important to note that the above compila- tions are likely based on all claims that XL Insur- ance Group has in its database, not just on design– build claims. As can be seen, however, from the reported litigation and Cooper River Bridge case study, lessons can be learned from these compila- tions that go directly to the design–build process. 2. Lack of Adequate E&O Insurance by Subcontractors Although owners may require that design–build- ers provide a certain level of E&O insurance cover- age—either directly or through their lead designer— some design–builders are not vigilant about following up on this with their respective subcon- tractors. Consider the following two examples. In one unpublished case study, a PLI carrier reported that its insured was a design–builder that 428 This case study is available at http://resources. xlgroup.com/docs/xlenvironmental/library/industry_ solutions/6117_GeneralContractors.pdf (last visited June 29, 2015) [hereinafter XL Insurance Case Study]. 429 Id.

95 potentially reactive and raising the possibility of ASR problems. The second major claim involved mass concrete thermal issues and the potential for delayed ettrin- gite formation (DEF) in certain concrete elements of the project. Ettringite is formed in cement as a result of the reaction of calcium aluminates with calcium sulfate. DEF is the result of improper heat curing of the concrete that suppresses normal ettr- ingite formation. Excessive heat during curing causes cement paste to expand, which causes empty cracks (i.e., gaps) to form around aggregates. The cracks may remain empty or later be only partly filled with ettringite. The project specifications required heat of hydration temperatures in mass concrete placements to not exceed 158 degrees Fahr- enheit. Project instrumentation recorded tempera- tures during placement well in excess of that maxi- mum temperature. A project-specific E&O policy covered both engi- neering design and construction management ser- vices. As of the date of this publication, the claims were still being evaluated. 5. VE-Type Claims Potential liability arising out of VE services and ATCs has been discussed in several sections of the digest. Although there are few reported cases, XL Insurance Group has published two case studies that are instructive on this issue.431 In one case, an airport hired a general contractor to develop a retail and transportation center adja- cent to an existing airport. Among other things, the contract called for the contractor to schedule, coordi- nate, and inspect the quality of the project. When the project schedule slipped, the contractor investi- gated shortening the curing time of a parking struc- ture’s cast-in-place slabs. Its study suggested this could be done. Curing braces were removed sooner than originally recommended, and the fourth floor slab collapsed onto the third floor slab, “pancaking” the entire structure. One worker was killed and many more were injured. Among the claims against the contractor was that it breached its professional obligations. The contractor was ultimately held responsible for millions of dollars in losses. Another case involved a contractor being hired by a school to provide constructability and VE services. The contractor determined that the HVAC system was undersized and recommended changes, which the owner rejected due to cost. The moisture from the undersized system caused the growth of mold. The school claimed that the contractor was respon- sible as a result of its failure to properly warn the prepared a second recommendation that proposed adding transverse reinforcement. Although this second proposal appeared gener- ally responsive to the conclusions reached by the owner’s independent expert, the owner again rejected the proposal as insufficient. The owner asserted that this repair did not meet AASHTO’s requirements that the bridge have a 75-year service life. The owner took the position that to obtain this service life, the span had to be removed and replaced at a cost of over $1.5 million. It commenced demoli- tion and construction of the new span. The struc- tural engineer disagreed over the scope of the repairs and refused to pay for the associated costs of the remediation. The design–builder’s PLI carrier responded financially to the owner on behalf of the design–builder, and as of the date of this publica- tion, is pursuing recovery from the engineer. In a reported case study, XL Insurance Group noted that a contractor designed and installed mechanical, electrical, plumbing, and fire sprinkler systems on a hotel project. The project owner alleged design errors “in excess of $9 million against the contractor because the fire suppression system was found not to be in compliance with code and the elec- trical distribution system did not work properly.” The contractor did not carry any E&O insurance and was forced to seek bankruptcy protection.430 4. Public–Private Partnership Highway Claim A PLI carrier reported that one of its insureds, the design–builder on a new public–private partner- ship highway project, faced several claims from the concessionaire. The concessionaire alleged errors and omissions in the performance of professional services, and that these actions resulted in project delays costing millions of dollars in damages. One claim involved alleged problems with the concrete mix design on certain project elements, including the potential for alkali-silica reactivity (ASR) issues with the concrete. ASR is a reaction that occurs over time in concrete between highly alkaline cement paste and reactive silica compo- nents found in common aggregates. This reaction can cause expansion of the altered aggregate by the formation of a swelling gel of calcium silicate hydrate. The gel increases in volume with water and exerts an expansive pressure inside the mate- rial, causing cracking and eventually failure. Fly ash is used to reduce that destructive expansion. Unfortunately, the design–builder, for cost-saving reasons, used a 15 percent fly ash admixture rather than the approved mix design requiring a 25 percent admixture—making the aggregate 430 XL Insurance Case Study. 431 XL Insurance Case Study.

96 procurement, contracting, and execution practices influencing project outcomes. The following three case studies focus on how agencies used creative techniques relative to the design process to accom- plish their budgetary and schedule-related goals. 1. MnDOT: I-35W St. Anthony Falls Bridge Replacement Project This project arose out of the August 1, 2007, eve- ning rush-hour collapse of the I-35W bridge near Minneapolis, which killed 13 people, injured more than 100 more, and caused state transportation agencies around the country to rethink the safety of their existing infrastructure assets. MnDOT needed not only to quickly replace the I-35W bridge, but also to expeditiously remove the disaster’s wreckage from the Mississippi River to restore barge traffic on that important interstate commerce route. MnDOT accomplished its goal. Flatiron-Manson, a Joint Venture, was awarded a $234 million design– build contract on October 8, 2007. The bridge was open for traffic on September 18, 2008, less than 14 months after it collapsed. This provides an excellent case study in both how to conduct an emergency delivery of a major urban interstate bridge and some of the design and acquisition issues that can arise during the procurement. The replacement bridge is 189-ft-wide with five lanes of traffic running each direction. The central clear span over the river is 504-ft-long, and the overall length of the bridge is 1,223 ft from abut- ment to abutment. The bridge was designed and constructed to be ready for the construction of a future light rail feature. The replacement bridge required 13 parcels of land, 3 of which were complete acquisitions and the remainder of which were partial takes. MnDOT used an innovative two-step process to obtain immediate access to the properties and avoid the typical delays associated with the right-of-way process.432 An initial “Right of Entry” easement was negotiated with each landowner, for which each was paid a nominal $1,000. Owners were then given a guaranteed time- line for closing the financial part of each deal. This procedure guaranteed access to critical pieces of property for both demolition and construction activi- ties. It was also noted that the affected property own- ers were “generally more cooperative given the nature of the work and the emotional impact on the community of the failure of the 35W Bridge.”433 owner of the consequences of an underdesigned sys- tem. The contractor was held partially liable based on this theory. 6. Deficiencies in Owner-Furnished Information This digest extensively discusses liability arising from defective owner information. One PLI carrier discussed a claim in the context of missing owner information. The claim involved a design–build– operate contract for a new water treatment plant. The owner provided the design criteria for typical levels of contaminants contained in the raw water source and the acceptable levels for the treated water based on federal standards. The owner did not convey that the lake used for the raw water source was subject to seasonal algae blooms that would cause a spike in the quantity of organic solids. After the project was completed and in operation, an algae bloom occurred and clogged up the submerged mem- brane strainers, resulting in a significant decrease in plant performance. The owner opined that the design–builder should have known about these algae blooms because it had designed and built another plant that used the same lake for the raw water source and should have designed the subject plant accordingly. 7. Liability for Underbidding As discussed in the Cooper River Bridge case study, there are common examples of professional claims arising out of alleged errors committed by the designer during the proposal stage. The surveyed PLI carriers provided several examples of these. One reported that due to a rush to prepare a bid submission within only a few weeks, its insured, the designer, made an error by underdesigning the steel on a state bridge design–build project. The design– builder underbid all other bidders by $4 million to $5 million and was awarded the project. The PLI carrier suspected that the transportation agency realized that something was wrong as soon as it saw the bid. However, it accepted the bid and then pointed out the error. Because both the designer and design–builder contractor did significant work for the transportation agency, they did not feel it appro- priate to back out of the bid and risk future busi- ness. As a result, they honored the bid and went for- ward with the work. Because of the designer’s error, its PLI carrier paid policy limits of $2 million, with the belief that the design–builder also incurred sig- nificant costs in performing the work. C. Technical Case Studies on Design Administration Numerous design–build case studies in pub- lished literature describe transportation agency 432 Tom wArne, The sT. AnThony fAlls briDge proJecT, successful for mAny reAsons: lessons leArneD 26 (Min- nesota Department of Transportation Report, 2008) [here- inafter MDOT Lessons Learned]. 433 Id.

97 completed in “record time.”439 The Request for Quo- tations required a much-abbreviated Statement of Qualifications (SOQ) pro- cess…designed to balance the state’s need to have key infor- mation about the proposing teams and the desire to reduce the effort required by the teams to enter the proposing pro- cess…to not do anything to discourage potential proposers from entering the competition for the project or to distract them from the more important efforts of putting their pro- posal together.440 The centerpiece of the procurement process was the MnDOT Preapproved Elements (PAE) process. The unique aspect of the procurement process that was particularly important to the design aspects of the project was the use of “private and confidential preproposal meetings,” with the purpose described as follows: Each Proposer is invited and encouraged to attend a private preproposal meeting at which the Department will address and respond to the Proposer’s concerns and questions regarding details of the project scope, administrative proce- dures, outstanding issues for the remainder of the bid pro- cess, and any other related matters. Each meeting would be private in that only one Proposer would meet with MnDOT representatives at a time. Proposers are not required to accept the meeting invitation.441 While it is now relatively common for design– build procurements to use these confidential meet- ings, that was not the case in 2007. Unlike its previous design–build projects, MnDOT chose to limit the number of ATCs that a given proposer could generate. The goal was to focus the process on high-value ATCs and avoid the adminis- trative requirement to review and approve or disap- prove numerous ATCs of trivial or no value. Once an ATC was submitted, a review panel made up of tech- nical experts met with the proposer. If the ATC was acceptable, it was approved and incorporated in the proposer’s scope of work as a PAE. This allowed the proposer to include the ATC/PAE in both its techni- cal package and its price proposal. Flatiron-Manson indicated that “MnDOT did an excellent job in man- aging the procurement process. Of particular value... the one-on-one meetings [got] answers quickly, [and the] responsiveness saved time and effort in putting their [FM’s] proposal together.”442 A six-member technical review committee (which did not include anyone who was involved in the PAE process) evaluated the four proposals that were ulti- mately submitted. Flatiron-Manson’s proposal received the highest technical score, 95.30 out of 100 The project required a total of 10 permits, as well as an emergency environmental impact analysis. To expedite the process, MnDOT requested a “Categori- cal Exclusion” for the project. As a result, MnDOT had to carefully manage the final scope of work to ensure that betterments did not jeopardize the exclu- sion. For example, proposals to rebuild the undam- aged interchanges at either end of the bridge were excluded because their inclusion would have made the project length exceed 1 mi—thereby preventing a Categorical Exclusion finding and delaying the proj- ect.434 The betterments would also have required additional funding as they would not have been eli- gible under Emergency Relief (ER) program provi- sions, further exacerbating the potential delay.435 The MnDOT project team approached obtaining permits using the philosophy to “Build the largest project possible with the smallest environmental process.”436 In furtherance of this, it held a permit- ting kick-off meeting with the heads of local, state, and federal permitting authorities to “ensure buy-in from the top down.”437 The meeting resulted in agreements or understandings on permitting approvals, mitigation expectations and submittal requirements, barriers to overcome, and a single point of contact with decision-making authority in each agency. Among other things, MnDOT: • Obtained an agreement from the resource agen- cies to make each document received “the priority of the reviewer and it was immediately reviewed and comments returned in a very timely manner.”438 • Delegated the authority to make project scope and specific design decisions to the individuals that managed the project and prepared the permit applications. • Took full advantage of existing programmatic agreements and categorical exclusions wherever appropriate. • Convened a meeting with the competing pro- posers and the affected utility companies during the procurement phase to furnish first-hand infor- mation on potential utility relocations. This also provided an opportunity for the industry to ask the utilities direct questions rather than rely on the request for information process. MnDOT used a best-value, weighted criteria pro- curement process, and the procurement was 434 MDOT Lessons Learned. 435 Minnesota Department of Transportation, I-35W Streamlining for Emergency Relief Program Provisions, Unpublished Working Paper, 2008, at 1–2. 436 Id. 437 Id. 438 Id. 439 MDOT Lessons Learned. 440 Id. 441 Minnesota Department of Transportation, Construc- tion Tools–Force Account, http://www.dot.state.mn.us/const/ tools/forceaccount.html (last visited June 29, 2015). 442 MDOT Lessons Learned.

98 any additional right-of-way. Flatiron-Manson’s proposal required work outside the ROW defined in the RFP for the purpose of lowering Second Street. MnDOT countered by arguing that it added this instruction after it received a request for clarification from another contractor that was planning to take additional right-of-way and add traffic capacity in an area of the project that would have required more environmental review and more municipal consent. MnDOT claimed that the instruction relied on by the tax- payer was not intended to be a “project-wide directive” to proposers on right-of-way limitations, and that nothing in the RFP forbade any proposer from obtaining right-of-way on Second Street. The court agreed with MnDOT. As to the concrete-box girder issue, the court stated that Flatiron-Manson’s proposal included eight webs, four in each direction of traffic, but only two webs per concrete-box girder. The court interpreted the RFP to require a minimum of three webs per direction of traffic, not three webs per concrete-box girder. Because Flatiron’s proposal exceeded this minimum requirement, the court rejected the taxpay- er’s argument that the proposal was nonresponsive. 2. Colorado Department of Transportation (CDOT): U.S. Route 160 Fourth Lane Addition This $29.5-million project was delivered with what CDOT calls a “modified design–build” approach.447 It illustrates how design liability can be shared for a project in which design has been sub- stantially advanced to a point where it will be diffi- cult to assign design performance liability to the design–builder.448 The project included the design of four bridges in a mountainous terrain, crossing U.S. Route 160 and the environmentally-sensitive Wilson Gulch. The project included the addition of a fourth lane on U.S. Route 160 and the construction of portions of ramps. It was originally programmed for design– bid–build delivery. In January 2007, however, CDOT was informed that the project had been funded early and had to be advertised by June 2007. By January 2007, a major portion of the civil and traffic design was underway and could be fin- ished by June, but other specialties such as bridges, walls, and drainage could not be finished in that time frame.449 CDOT decided that its best option was to assume design liability for the completed design and only allocate design responsibility to the contractor for possible points. The next highest score was 71.40. Although Flatiron had the highest price and tied with another company for submitting the longest delivery time, its high technical score enabled Flat- iron to win under MnDOT’s best-value formula. Although the industry widely praised MnDOT for its expeditious procurement approach, there was some controversy. Shortly after the award to Flatiron-Manson, a Minnesota taxpayer filed a law- suit seeking an injunction and declaratory relief that Flatiron-Manson’s proposal should have been rejected as being nonresponsive.443 The taxpayer was unsuccessful at the trial court and appealed to the Minnesota Court of Appeals. The decision of this appellate court, Sayer v. Minnesota Department of Transportation,444 affirmed the trial court’s decision and found MnDOT’s procurement to be proper.445 The taxpayer argued that two elements of the proposal deviated from the RFP’s requirements. One involved the proposal’s statement that it would be working outside of specified right-of-way limits. The other was that the pro- posal design used concrete-box girders with only two webs each, contradicting the RFP’s requirement that concrete- box designs use a minimum of three webs. The taxpayer argued that, under Minnesota law, MnDOT did not have discretion to determine whether a proposal responded to the specifications of the RFP, and had no choice but to reject Flatiron’s proposal as being nonresponsive. The appellate court noted that in a traditional design– bid–build process, the taxpayer might be right. However, under Minnesota’s design–build statute, which authorized a best-value selection process, MnDOT could consider fac- tors other than cost when awarding contracts. The court noted that the design in a design–build RFP is not complete and that proposers will be submitting technical approaches based on these incomplete designs. The court stated that “the plain terms of the design–build statute indicate that the legislature’s intent is to permit the [technical review committee], by applying its judgment based on the advertised selection criteria, to evaluate proposals where no finished design exists to which the proposals must conform.”446 As a result, the court found that the committee had discretion to decide whether a design–build proposal was responsive, which decision could only be reversed if there was an error of law, or if the findings were arbitrary, capri- cious, or unsupported by substantial evidence. As to the right-of-way issue, the taxpayer relied on an RFP instruction that the proposed work was not to include 443 See Jennifer s. shAne, DouglAs D. grAnsberg, keiTh r. molenAAr & Joseph r. glADke, Legal Challenge to a Best- Value Procurement System, in leADership AnD mAnAgemenT in engineering, Vol. 6, Issue 1, Jan. 2006, at 1-6. 444 769 N.W.2d 305 (Minn. 2009). 445 The following write-up for this case is taken (with permission from the American Society of Civil Engi- neers) from Michael C. Loulakis & Lauren P. McLaughlin, Appellate Court Validates I-35W Bridge Procurement, civil engineering: The mAgAzine of The AmericAn socieTy of civil engineers, Oct. 2009, at 88. 446 Sayer, 769 N.W.2d at 311. 447 peTe grAhAm, colorADo DepArTmenT of TrAnsporTA- Tion, evAluATion of Design-builD prAcTice in colorADo proJecT ir im(cx)025-3(113), at 25–26 (2001). 448 Douglas D. Gransberg & Elizabeth Windel, Com- municating Design Quality Requirements for Public Sec- tor Design/Build Projects, 24 JournAl of mAnAgemenT in engineering 105–110 (Apr. 2008). 449 David N. Sillars & Landon Harman, Case Studies in Innovative Quality Assurance Methods for Alternative Delivery Projects, TrAnsporTATion reseArch boArD 92nD AnnuAl meeTing compenDium of pApers (2013).

99 designs, as it preferred having more design reviews. However, with the number of design reviews already required by contract, it was challenging to manage the number of submittals and have CDOT respond within 2 weeks.454 One thing that helped this pro- cess was getting commitments up front from inter- nal CDOT bridge personnel for the project and the project requirements.455 Another design administration difficulty involved the understanding by CDOT bridge section person- nel as to the difference between a design require- ment and a design preference. If it was a preference and CDOT accepted the “change,” then the contrac- tor was entitled to additional monies to implement the preference.456 A specific example is the size of the monuments on the abutments. Originally they were very small but met the requirements. CDOT wanted larger monuments and eventually approved and paid for them. The original RFP required the contractor to pro- vide a full-time third-party independent design reviewer for the duration of the project to take some of the design review burden off of CDOT and shift it to the contractor. This was removed before the solici- tation was issued to reduce the cost of the project, and CDOT assumed responsibility, implementing an over-the-shoulder review process.457 CDOT also internally provided a full-time construction inspec- tor. It is believed that this cost CDOT more than hav- ing the contractor hire a third-party inspector, but at the time of contract award, CDOT did not have a suf- ficient budget to require this of the contractor. CDOT considered the project successful overall, but there were several specific quality issues that required negotiations during project close-out. One related to cracking in the CDOT-designed bridge abutments. The contractor discovered the cracks dur- ing the pre-final inspections and negotiated the appro- priate procedure for fixing the existing cracks and preventing future ones. CDOT assumed full design liability for these types of issues, and there are no known claims or litigation pending on the project.458 3. I-270 Slide Repair Project—Missouri Department of Transportation This project involved a design–bid–build expan- sion project undertaken by Missouri Department of Transportation (MoDOT) on the eastbound lanes of I-270 in St. Louis County, Missouri. MoDOT the bridges, walls, and drainage.450 It used a single- phase, low-bid selection process to select a general contractor.451 The general contractor did not have the freedom to select its own design partner but was required to select a designer from a list of CDOT prequalified firms, which included the same group that would have been used if the project had been completed as a design–bid–build project. CDOT instituted a series of design quality assur- ance reviews that were intended to ensure that the completed design package was properly coordi- nated with the uncompleted packages.452 The RFP described the reviews as follows:453 • Constructability Review. A review performed at the corresponding stage of design development that considers, among other things: 1) consistency with design concept objectives, 2) adequacy of information on the plans and specifications to con- struct the work, and 3) ability of the design to be constructed within the required schedule given site restrictions. • Design Coordination Review. A review that addresses the design approach, suitability, com- pleteness, interferences, and conformance with contract requirements. This review is not to be con- ducted by the design task lead. • Final Package Review. A review performed after design quality checks have been completed, for pur- poses of verifying that the package is complete and approved for construction. • Quality Assurance Audit. An audit performed by the Project Quality Assurance Officer at the end of each completed final package to assure that plans, specifications, calculations, and design reports have been checked, reviewed, and properly signed-off in conformance with the design QCl report. Innovation on the project was limited due to CDOT’s constraint on additional design. CDOT dic- tated the type and aesthetic of the bridges and even completed some of the designs before the contractor was brought on board. In addition, CDOT retained control of some aspects of the design, such as light- ing and landscaping. The CDOT bridge section had a difficult time relinquishing control over the bridge 450 keiTh r. molenAAr, DouglAs D. grAnsberg & DAviD n. sillArs, guiDebook on AlTernATive QuAliTy mAnAge- menT sysTems for highwAy consTrucTion (Nat’l Cooperative Highway Research Program Report No. 808, Transporta- tion Research Board, 2015). 451 colorADo DepArTmenT of TrAnsporTATion, Design– builD mAnuAl 46 (2006, as revised June 11, 2014). 452 Id. 453 Colorado Department of Transportation, Request for Proposal, Book 2, U.S. 160 Fourth Lane Expansion, 2007. 454 molenAAr, grAnsberg & sillArs, supra note 450. 455 Sillars & Harman, supra note 449. 456 Id. 457 molenAAr, grAnsberg & sillArs, supra note 450. 458 Id.