Engaging in construction projects that use new delivery methods increases a contractor’s design responsibilities. While this new role is designed to encourage collaboration, improve efficiency, and bring more profitability, it also increases contractors’ exposure to risks.
This two-part article is intended to make contractors more aware of their increased exposure to risk as well as to provide ways in which this risk can be better managed and reduced. The first step is to rely on a Nashville construction dispute lawyer for legal counsel as well as an expert insurance professional. In part one, we discussed contract terms and insurance coverage. Read on to learn more.
Understand the Designer’s Contractual Responsibility
Historically, contractors manage materials and labor for a project while the design professionals manage the design aspects.. As a contractor, it is critical that you not only understand your contractual responsibilities, it is also crucial that you understand the designer’s as well. If you participate in design and constructability reviews, you could be subject to claims involving design errors and omissions along with the architect or engineer. You could also be subject to the errors and omissions by subcontractors if they engage in the design portion of a project. If there is confusion regarding responsibilities, it can be difficult to identify the source of an error or omission.
Rely on the Help of a Risk Manager
Does your company have a dedicated risk manager? According to a 2016 survey conducted by Associated General Contractors of America and Fails Management Institute, contract language, insurance terms, and subcontractor default were the top three concerns of construction contractors. A risk manager can review contract documents and analyze other aspects of a project from a purely risk-related perspective. Overall, construction firms with a dedicated risk manager have a more effective risk assessment process.
Mitigating Risk on Any Project
The entire construction process can be complicated. Complications can lead to risks for contractors, so risk mitigation is critical. Without a risk management policy in place, contractors can face all kinds of legal issues beyond the design phase which may require the expertise of a Nashville construction dispute lawyer. Contractors must have a strategy in place to prevent problems or, at the very least, lessen their impact. Developing good habits such as understanding the dynamics of each project you take on, identifying risks ahead of time, and establishing a good relationship with the project design team early is important.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.