Some of us are old enough to remember that the JCT With Contractor’s Design contract 1981 introduced design and build so as to place “single point responsibility” on the contractor. So, it was the contractor’s job to ratify the Employer’s Requirements in order to complete the design. He was responsible for any inadequacies in the Employer’s Requirements.
There was a simplicity and neatness about single point responsibility. The contractor knew where he stood.
But the lesson for all contract draftsmen is that risk must be fairly managed. Just as we learn from experience not to force our feet into shoes which are too small because it is bad for our feet and bad for the shoes, so those drafting standard forms of contract learn not to impractically force too much risk onto either party.
The JCT Design and Build contract 2016 now says, with one qualification, that the Contractor shall not be responsible for the contents of the Employer’s Requirements or for verifying the adequacy of any design contained within them. This important relaxation of the Contractor’s responsibility is often amended or deleted. But unamended, it provides a reasonable balance of risk.
The JCT family of contracts has for some time included traditional contracts, where primarily the Employer is responsible for the design of the specified works but with a Contractor’s Designed Portion or CDP. An example is the Intermediate Building Contract with contractor’s design 2016.
These “with contractor’s design” contracts allow the Employer to designate certain (usually specialist) works as the Contractor’s Designed Portion. The Employer produces his Employer’s Requirements for such Portions and the Contractor responds with his Contractor’s Proposals and his price analysis (“the CDP Analysis”).
So, to a great extent, the Contractor’s Design Portion operates as a sort of mini design and build operation within a traditional contract.
The main provisions of the Intermediate Building Contract with contractor’s design 2016, which govern the Contractor’s Design Portion are as follows:
The Recitals deal at some length with the Contractor’s Design Portion. Recital 2 provides that the Works include the design and construction of..… with a blank space for a brief description of the CDP. This in itself can be problematic. There can be a temptation for the Employer or his professional team to give a very brief description on an important element of the works such as “the roof trusses and roofing”. Recital 7 says that the Employer has examined the Contractor’s Proposals and subject to the Conditions is satisfied that they appear to meet the Employer’s Requirements. This is standard JCT wording for dealing with design and build works. It is ambivalent. It neither frees the Employer from responsibility, nor clarifies what is the significance of his satisfaction.
Section 2.1.1 of the contract Conditions requires the Contractor to complete the Contractor’s Designed Portion, including the selection of any specifications for the kind and standards of materials, goods and workmanship insofar as not described in the Employer’s Requirements or the Contractor’s Proposals. This is bound to give some comfort to those who produced the design within the Employer’s Requirements. They might naturally assume that anything absent from that design is to be completed by the Contractor.
Section 2.1.2 requires the Contractor to comply with the Architect’s directions for the integration of the design of the Contractor’s Designed Portion with the design of the Works as a whole (subject to a defined right of objection). The Contractor may take comfort from that because it indicates that the Architect has some role in integrating the Designed Portion into the design of the rest of the Works.
Section 2.34.1 limits the Contractor’s liability in respect of any inadequacy in his design of the Contractor’s designed portion to the same liability as an Architect or other professional designer would have. So, it limits it to a reasonable skill and care responsibility.
Section 2.34.4 states that, with one exception in respect of divergence from Statutory Requirements, the Contractor is not responsible for the contents of the Employer’s Requirements or verifying the adequacy of any design in them.
Section 2.34.5 says that where an inadequacy is found in the design in the Employer’s Requirements and the Contractor is not responsible, then if the inadequacy is not dealt within the Contractor’s Proposals, the Employer’s Requirements will be altered and that will be treated as a Variation.
The Contractor will be comforted by 2.34.4 and 2.34.5 into believing that he has not simply ratified the Employer’s Requirements. Any proven inadequacy in design will entitle him to claim a Variation and quite possibly more time and more money.
Taking all these component parts of the Contract together, it will not be surprising if the Employer and his team believes that where the design in the Employer’s Requirements is silent on a matter this is to be completed by the Contractor. If he fails to “fill in the gaps”, then the Contractor is responsible for that. The Contractor, on the other hand, will be confident that if and insofar as the Employer’s design of the CDP is inadequate, he is not responsible. Even where he is responsible, he will be reassured that his responsibility is limited to reasonable skill and care and not a fitness for purpose obligation in respect of the design.
But there are gaps between the notes. Plainly, in the ordinary course of things, there can be an inadequacy in a design, not only because the design is positively wrong but also because the design has inadequacies of or by omissions. If there is such an error of omission which amounts to an inadequacy in the design, then the Contractor is not responsible for it.
There will be cases where it is clear that the Employer’s own designer has not properly applied his mind to the design and has left something out of the Employer’s Requirements. Equally, there will be other cases where the Employer’s team can fairly argue that the completion of the design was the Contractor’s responsibility. He was given a partial design and the contract required him to complete it.
It is likely that the more complex and complicated the technical issues are surrounding what is omitted from the Employer’s Requirements, the greater the scope for argument over whether there is an inadequacy or not.
There is of course a requirement upon the Contractor under 2.13.3 to notify the Architect/Contract Administrator of the errors, omissions or inconsistencies, including inconsistencies within the Employer’s Requirements not dealt within the Contractor’s Proposals of which he is aware. That does not alter the position that the Contractor is not responsible for inadequacies in the Employer’s Requirements of which he is not aware.
It can be said, superficially, that if the Works are properly scoped, specified, drawn and described in the Employer’s Requirements and the Contractor’s Proposals, problems over design responsibility should not occur. Yet they do occur – surprisingly often.
The temptation for the Employer’s team is to keep the description of the Works in the Contractor’s Designed Portion simple, so as to pass the onus of design to the Contractor. Faced with a simplistic description of the Contractor’s Designed Portion, the Contractor will narrowly interpret what he is required to design and argue that everything else, including the interface between what he has to design and the rest of the works, is for the Architect or the Employer’s team.
So, determining precisely what design the Contractor has to complete under 2.1.1 and where responsibility lies for inadequacies, can be far from easy.