The Owners' Manual Newsletter | Issue 22 | Fall 2021

LEGAL TIP As a reminder and refresher, there are two types of projects that add considerable risk for BL that are highlighted below A legal tip from Julia O’Brien,Vice President & General Counsel.

DESIGN BUILD PROJECT

CONDOS

Over the past year or two, we’ve seen a slow increase in the number of design build projects that we’ve been asked to participate in. Design/Build projects can take three forms: contractor led, design consultant led or a new entity (sometimes a joint venture) is created to contract with the Owner. The only type of design/build project that BL will participate in, at least for the foreseeable future, is the one where the contractor contracts with the owner and we contract with the contractor. If you have a potential design/build project that meets this criteria, please loop me in at the outset of the project so I can have input and we can discuss the scope, fee and clarifications of how we would be willing to perform our work. Often times, an owner is looking for a fixed price and is not allowing the contractor/design consultant team to advance the drawings very far and/or do the investigations, due diligence, testing needed to come up with an accurate price for construction costs. Therefore, contingencies must be built into our contract with the contractor in terms of costs and schedule, and we would want to understand the flow-down provisions from the owner. Please get me, as well as your Director/Executive Director, involved early in the process to assist. Please also remember that Carolyn needs to sign off on a design/ build project before the contract gets signed.

While all PM’s who’ve been at BL for a while know this, I want to reiterate to all PM’s, as we have many who are new, that we do not do condo work. Why? These are deemed to be the riskiest projects that a design consultant can take on. When we renew our professional liability insurance each year, we are asked if we do condo work and each year we check no. Insurance companies do not want to see this type of work as part of our list of projects. Condo projects are risky for the following reasons as set out by the professional liability insurance industry: ƒ Condo developers are often highly leveraged and cut costs. ƒ Often design consultants are not provided the opportunity to perform CA. ƒ Condo buyers are often first time homebuyers or elderly people with limited resources who believe advertisements and marketing materials that promise much more than is realistic. When what they are promised does not materialize, they turn to litigation. ƒ Condo dues are often not high enough to cover ongoing maintenance costs. While this is not BL’s problem, if a suit is filed, often all parties who touched such a project are brought in. ƒ Homeowners’ associations provide ready vehicles to sue as they are often targeted by aggressive lawyers who promise action on alleged design and construction errors. ƒ When a claim is filed,often contractors and developers are long gone leaving the design firms with deep insurance pockets the only target.