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

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CONTENTS I. Introduction, 3 II. Principles of Construction and Design Liability, 4 A. Contractor’s Standard of Care, 5 B. The Spearin Doctrine, 6 C. Designer’s Standard of Care, 6 D. Designer’s Higher Standard of Care, 10 E. Rights of Third Parties to Sue Designers, 11 III. Design-Build Contract Clauses Affecting Liability, 12 A. Disclaimers of Responsibility for Owner-Furnished Information, 13 B. Design Development, 17 C. Standard of Care and Warranty, 18 D. Indemnification, 19 E. Limitations of Liability, 20 IV. Procurement and Contract Administration Issues Affecting Design and Design Liability, 22 A. Design Content in Procurement Documents, 22 B. Design Reviews, 24 C. Contractual Approaches to DSCs, 26 D. Alternative Technical Concepts (ATCs), 27 V. Right-of-Way and Design-Build Processes, 28 A. Overview of Process for Acquiring Right-of-Way, 28 B. Relationships Among Right-of-Way Acquisition, the Environmental Review Process, and Design-Build Projects, 32 C. FHWA Rules Relevant to Design-Build Contracts, 33 D. Assessment of Right-of-Way Risks, 34 E. Allocation of Risk and Responsibility, 37 F. Common Challenges Relating to Right-of-Way Risk, 40 G. Proposed Federal Rulemaking May Mitigate Some Risks of Uncertainty, 45 VI. Design-Build Case Law Addressing Design and Construction Liability, 46 A. Errors in Owner’s Preliminary Design, 47 B. Conflicts Between Owner’s Design and Performance Specifications, 49 C. Geotechnical Design Scope and DSCs, 51 D. Disputes Arising Out of the Design Process, 56 E. Failure of Design-Builder to Meet Expected Performance, 65 F. Designers’ Liability for Design Defects, 71 G. Liability for VE and ATCs, 78 H. Limitations of Liability and Consequential Damages, 79 VII. State Laws Affecting Design and Construction Liability, 81 A. Indemnification, 81 B. Statutes of Limitations and Repose, 83 C. Certificates of Merit, 86 D. Derivative Immunity, 86 VIII. Case Studies, 87 A. Cooper River Bridge Replacement Project, 87 B. Case Studies from PLI Carriers, 93 C. Technical Case Studies on Design Administration, 96 IX. Conclusion, 100 Appendix A: Right-of-Way Requirements and Contract Terms for Certain Design-Build and Public-Private Partnership Projects, A-1 Appendix B: Anti-Indemnity Statutes Applicable to Public Agency Contract, B-1 Appendix C: Statutes of Repose, C-1 Appendix D: Certificate of Merit Statutes, D-1 Appendix E: Sovereign Immunity Statutes in Various States, E-1