In keeping with a growing trend, in 2004, Massachusetts departed from the exclusive use of the traditional “design-bid-build” project delivery method for public projects and permitted public agencies to employ the less traditional design-build and construction manager-at-risk delivery methods on certain public projects. The increased use of such project delivery methods raises the question: who is liable for the adequacy of the design?
By way of background, on a traditional design-bid-build project, the owner holds two separate contracts, one with the design entity and another with the contractor. The contractor does not commence construction until the design is 100 percent complete. Because the contractor is not responsible for the design, the United States Supreme Court defined what has become known as the Spearin doctrine, which holds that the owner impliedly warrants that the plans and specifications are suitable for construction. Massachusetts adopted the Spearin doctrine into its common law in a 1970 decision, Alpert v. Commonwealth, 357 Mass. 306, 320 (1970), when public agencies continued to generally employ only the design-bid-build method.
Unlike a design-bid-build project, under the construction manager-at-risk project delivery method, the owner retains a construction manager, who in addition to acting as the general contractor during construction, may consult regarding the design prior to construction starting and, therefore, possibly affect the plans and specifications. Given this expanded role of a construction manager, it became unclear whether or not the Spearin doctrine would apply to construction manager-at-risk projects.
The Massachusetts Supreme Court recently answered this question and held that the Spearin doctrine does apply to a construction manager-at-risk (CMAR) who performs preconstruction services and some design review, provided the CMAR relied upon the design both reasonably and in good faith. In Coghlin Electrical Contractors, Inc. v. Gilbane Building Company, the Court held that despite the differences between a traditional design-bid-build project and a CMAR project, it “was not persuaded that the relationships are so different that no implied warranty of the designer’s plans and specifications should apply in construction management at risk contracts…and that the CMAR should bear all of the additional costs caused by design defects” on public projects. However, the Court also recognized that a CMAR does have more influence and access to the design than a general contractor in a traditional design-bid-build project. Therefore, the Court limited the protection of the warranty by concluding that under a CMAR delivery method, in order to establish the owner’s liability under the implied warranty, the CMAR bears the burden of proving that its reliance on the defective design was both reasonable and in good faith.
The Coghlin decision provides guidance to both construction managers and owners employing the construction manager-at-risk delivery method regarding who bears the ultimate responsibility for the design. Owners must be aware that despite a construction manager’s collaboration in the design, the ultimate responsibility for the accuracy and sufficiency of the design continues to rest with the owner and architect.