Construction Manager At Risk - More Risk Than Previously Thought

Construction Manager At Risk - More Risk Than Previously Thought

In an incredibly important new ruling a Massachusetts court found that Gilbane Building Company (a Construction Manager at Risk) could not sue the owner of one of their projects for design defects eventhough** the owner provided the plans and specifications for the project.  Coghlin Electrical Contractors, Inc sued the Gilbane Building Company claiming mismanagement of the project (specifically wall and ceiling design changes). Gilbane then filed a third party action against the owner, claiming that the owner is responsible for design changes. The owner then responded that Gilbane was responsible for any damages due to design changes or errors because of the Construction Manager at Risk contract which included a broad indemnity clause. The court agreed with the owner drawing upon the evidence below…

“The court agreed with the owner, finding that the Construction Manager at Risk contract made Gilbane responsible for Coghlin Electrical’s claim.  The court quoted a few section from the 59 page contract:

  • The CM shall review, on a continuous basis, development drawings, specifications and other design documents.  The design reviews shall be performed with a group of architects and engineers, who are either employees or independent consultants under contract with the CM. . . .  The CM shall review the design documents for clarity, consistency, constructability, maintainability/operability and coordination among the trades . . .
  • The CM shall indemnify the owner against all claims, damages, losses and expenses . . . arising or resulting from: labor performed or furnished . . . regardless of whether or not such claims, damages, losses and/or expenses, are caused in whole or in part by the actions or inactions of a party indemnified hereunder.

The Construction Manager at Risk, in essence, takes on additional duties and responsibilities for the project, which may subject a Construction Manager at Risk to additional financial exposure.  This material change in the role of a Construction Manager makes the Construction Manager at Risk responsible for design deficiencies.”

Therefore, if you are a Construction Manager at Risk, you need to be mindful that the contract makes you liable for more than just cost overruns. It’s worth paying attention to design plans and details, as the contract might make you responsible for any and all flaws! Plan reviews during the design planning phase are critical to project success and to making sure that as a GC at risk, you get it right the first time. Using a system like BuildingBlok will help you track all project details. All project users can submit an unlimited number of files and collaborate through the File Manager so that you can discover any design flaws before the project begins. Reduce your risk and increase efficiency and profitability!