HERES A TIP There are several ways contracts can help you avoid - PDF document

CONSTRUCTION LAW » A good contract can help avoid some of the common problems in the design review process. HERE’S A TIP There are several ways contracts can help you avoid delays in design approval. BY RYAN D. DEMOTTE AND RICHARD F. PACIARONI T he design/build delivery model have confl icting engineering judgments on sign on time, procurement and construction off ers owners and contractors the complex technical issues. will be delayed. potential for greater effi ciencies in A good contract can help the parties Design delays can cause potentially seri- the construction process, but if the avoid some of the common problems in the ous problems for procurement. Manufactur- parties do not carefully manage the design design review process. This article discuss- ers, particularly manufacturers of complex review process, the project can experience es some of the potential problems that mechanical and electrical equipment, of en unnecessary delays to procurement and owners and design/build contractors may have tight production schedules. construction that can cascade through- encounter in the design review process and For example, if the owner and contractor out the project. It is a complex process to suggests some contract draf ing strategies are unable to agree on the design of the track all of the hundreds or thousands of to prevent or mitigate these problems and equipment to be used within an industrial diff erent engineering drawings submitted keep the project on track. plant, the contractor may not be able to on a large project to ensure that they are place the purchase order in time to take being reviewed and approved according Design Review Problems advantage of openings in the vendor’s pro- to the contract schedule. The process is On any project, the fi nal design is typically duction schedule. The contractor may then further complicated because the owner’s what tells the contractor what to buy (pro- be forced to wait for the next opening and engineers and the contractor’s engineers curement) and what to build (construction). pay premiums to expedite manufacturing (and sometimes third-party reviewers) may Thus, if the parties cannot fi nalize the de- and shipping. 10 CONSTRUCTION-TODAY.COM NOVEMBER/DECEMBER 2014

CONSTRUCTION LAW Design delays can also delay the start of equipment. Without fi nal designs, the contractor may have to stop critical construction activities. If the owner work before fi nishing a building or ineffi ciently work around the and contractor have not agreed on the basic areas with unfi nished designs. layout of a plant or the design of key build- These are just a few examples of how upfront design delays can ings or processes, the contractor may not be lead to project delays and cost overruns. Below, we provide some able to start even basic civil works. Even if contract guidelines to owners and contractors to help prevent or basic designs are agreed, delays in fi nalizing mitigate some of these common design delay traps. detailed designs can still cause delays. In more complex industrial plants, the building Guidelines for Addressing Design Review designs of en depend on the type and layout The contract is the foundation of the design review process. The of the equipment inside of the buildings. contract terms establishing the design review process should be Thus, the contractor needs to know the clear, comprehensive and easy to follow for the project teams. By confi guration of the equipment inside the laying out a clear and thorough design review process with objective building order to fi nalize building details standards in the contract, owners and contractors can avoid the such as where to put openings for pipes and ambiguities that lead to design disputes later in the project. The wiring in the walls and to ensure that the contract should clearly defi ne both the review process and also the structure can support the loads from the standards the design must meet. 11 NOVEMBER/DECEMBER 2014 CONSTRUCTION-TODAY.COM

‘The contract is the foundation of CONSTRUCTION LAW the design review process.’ Some of the most important contract terms for the design phase are those es- tablishing the review and comment time periods for drawings. The contract should establish clear time periods for review and comment from the initial submission through fi nal approval. The contract should set an initial set number of days from the Richard F. Paciaroni is a contractor’s submittal for the owner to either partner and Ryan D. De- approve or provide comments, and then a Motte is an associate in further set number of days for the contrac- the Pittsburgh offi ce of tor to respond to those comments. These K&L Gates LLP. For more defi ned time periods for review and response information, contact should continue to apply to all subsequent Paciaroni at Richard.pa- rounds of comments until the parties fi nalize ciaroni@klgates.com or the construction drawings. This keeps all 412-355-6767. DeMotte parties “on the clock” and helps to avoid can be reached at Ryan. demotte@klgates.com having unfi nished designs fall into gaps in and 412-355-6440. the contract and sit unaddressed for weeks or standards. If possible, owners and contractors should base the con- months at a time. tract on well-known industry standards and include those standards The contract should also provide fl exibility as contract documents. The parties should be particularly cautious of to expedite the approval of important de- any design standards based on the approval of third-parties, such as signs. The parties should consider contract government agencies (e.g. transportation authorities). If the parties terms that allow the contractor to identify cannot avoid third-party approval due to the nature of the project, some of the most important drawings and the contract should clearly lay out which party is responsible for submittals (e.g. plot plans, process fl ow working with the third-party reviewer and for any delays caused by diagrams, P&IDs, critical long-lead equip- the third-party review. ment, etc.) for expedited review. This will Despit e the best eff orts of the parties, some disputes over design allow the contractor to prioritize the designs are likely. So a good contract should include mechanisms to facil- that are critical to keep key procurement and itate quick resolution of any disputes. One idea the parties may construction activities on schedule. consider is requiring a design review meeting or workshop for cer- To ensure a smooth review process, the tain drawings or sets of drawings if they are not approv ed af er the owner may also consider setting limits on initial review and comment period. Mandatory meetings will force the number of drawings that the contractor the face-to-face discussions that can of en help the parties resolve can submit at any one time. This will ensure design issues. that the owner’s reviewing engineers have enough time to comply with the contract re- Staying on Schedule view times and prevent the contractor from The review and approval of designs comprise the critical fi rst phase overwhelming the owner’s review staff by of a design/build project. By addressing the design review process submitting hundreds of designs at one time. in the contract based on the guidelines provided above, the parties To minimize design disputes, the contract have a better chance of avoiding design delays and keeping the should include clear and objective design project on schedule. 12 CONSTRUCTION-TODAY.COM NOVEMBER/DECEMBER 2014