Balancing act: Navigating professional duty and contractual obligations during construction services

Design firms entering the construction phase of a project carry two distinct sets of obligations that do not always point in the same direction. One obligation is established by state licensing laws and professional codes of ethics: the professional duty to protect public health, safety, and welfare. The other obligation is established by the professional services agreement: the contractual duty to the client. Both are real, both are enforceable, and neither is subordinate to the other. The tension between them, and the financial exposure that tension creates, is the defining risk management challenge of construction contract administration.

Client demands don’t override professional duties

The professional duty exists independently of the contract. It applies whether or not the firm is compensated for a particular service, and it extends not only to the client but to the users of the facility being designed and built. A firm that accepts direction from a client that would require the firm to compromise that duty—approving a material substitution that does not meet applicable requirements or declining to document non-conforming work to avoid conflict with the contractor, as examples—has not been relieved of its professional obligation. The firm has simply created a situation in which the obligation was violated as the contract cannot authorize what the professional’s license does not permit.

Contractual duties must be clearly specified

The contractual obligation, by contrast, is entirely the product of negotiation, and it is here that most construction phase risk originates. The scope of services provisions in many professional services agreements are drafted in terms so general that they resolve nothing. Language directing the firm to “observe the work” and “respond to requests for information” without any definition of frequency, volume, deliverables, or additional compensation triggers is not a scope of services; it is an open invitation to disputes. What the contract leaves undefined, the parties will define through conflict, which is costly for the design firm.

Construction phase services carry unique risks

A review of construction phase claims consistently reveals a familiar pattern:

• a scope of services that was too general to define the firm’s obligations;
• a fee that was too limited to compensate the firm properly for their services; and
• a contract that provided no mechanism for the firm to address either problem once construction was underway.

The individual services that make up construction contract administration—reviewing submittals, evaluating substitution requests, responding to requests for information, and documenting site conditions—each carry their own risk profile, and each is manageable with appropriate contractual structures and professional discipline.

Submittal review is a conformance evaluation, not a certification of the contractor’s work. Substitution requests require genuine technical analysis because the firm that approves a substitution has effectively taken ownership of the substituted product’s performance. RFI responses create a written record that becomes part of the project’s documented history—a history that will be examined closely if a dispute arises. Site visit reports serve as the primary record of the firm’s construction phase activities, and the scope of what was not observed during any given visit is as important to document as what was observed.

None of these risks are novel and none are beyond the reach of thoughtful contract drafting. The challenge for most firms is not awareness but execution. Construction phase scope provisions are often treated as secondary to design phase terms and frequently accepted in forms that were written to serve the client’s interests rather than the firm’s. The investment required to draft a well-structured construction contract administration scope is modest relative to the exposure that a poorly drafted one creates. A professional services agreement that defines deliverables, establishes response protocols, and includes appropriate additional services mechanisms describes what the firm will actually do, at what cost, and under what conditions. That clarity protects the client as much as the firm.

Conclusion

The solution is available at contract execution and rarely requires a difficult negotiation. It requires only the discipline to treat construction contract administration scope language with the same care that design professionals routinely bring to the design of the projects they govern.

From Victor Insurance Managers, an AIA Trust partner

Victor Insurance Managers provides professional liability, cyber, and business insurance solutions tailored to architects and design firms, helping them manage risk and protect their practice.