Vol. 11 No. 2		February 1992

There are errors and omissions in every set of plans and specifications. You know this, your client should understand it (and will if you explain it carefully), and the law acknowledges it. The law requires only that you exercise reasonable professional care, and you can take some comfort in that. Failure to do so can be difficult to prove.

Why, then, does the close-out of so many projects seem to include a list of errors, omissions, and other failures on your part, complete with details regarding the associated costs, all set forth in a presumptive letter from the owner informing you where you can send your check for the total? Is it because you were negligent? Possibly. But on a $10 million project, where the total being demanded of you amounts to $100,000, it would hardly seem so.

Surely a standard of usual and customary care accommodates recognition that some additional costs will be incurred by the owner as a result of usual and customary flaws in your performance. Not necessarily, and therein lies the problem.

If one takes a global perspective (from your point of view), it goes almost without saying that: 1) there will be errors and omissions in the documents; 2) perfection is not required of you by law, nor is it economically feasible for the owner to retain you to pursue it; and 3) some problems can only be resolved in the field, and contractors reasonably ought to be expected to anticipate and budget for them. Beyond this, the only source of funds for addressing the unavoidable and unforeseeable risks of construction is the owner, and the owner ought to pay.

This is not a bad argument. But there is a counter-argument (the owner's point of view), and it can be telling. It goes like this:

"Never mind your theoretical view of the universe. Let's examine each of the items on our list. Does it fall within a usual and customary standard of care to fail to specify temperature control wiring? To show carpet on the plans and call for hardwood floors in the specifications? To take six weeks to review a finish sample? It does not. Your failure to exercise reasonable care in each and every one of these instances constitutes negligence. We have been damaged by that negligence, and we expect you to compensate us for those damages.

"Moreover, you have known since the outset that the construction contract was to be awarded on the basis of the lowest bid. We cannot look to the contractor for responsibility for the simple reason that the contractor cannot be expected to meet requirements not clearly communicated in the construction documents. You are responsible for that failure in communications."

At this point, the question of which of these arguments is likely to prevail in court is largely irrelevant. It is not worth the cost of finding out, and the fact of the matter is, you could well lose. You are likely to pay something to resolve this dispute; the only question is how much? If the amount in dispute is relatively small, you may get away with a modest contribution. If it is significant, and especially if the owner and the contractor are locked in combat over other issues and large sums, you may find yourself an unwilling participant in a very costly battle.

Hold on a minute! If the specific negligent act argument is the more compelling, is it not logical to conclude that a flawless set of plans and specifications is coming to be seen by some as a minimum requirement? Regrettably, it is. Beyond higher fees, more tightly controlled plans and specifications, a stronger presence on the construction site, and the usual budget contingencies, can you protect against an owner's demand for compensation for anything less than perfection? Perhaps so. Subject to the advice of counsel, you might consider proposing the following contractual understanding:

12.1.1 It is understood and agreed that the nature of the design process is such that the plans, specifications and other documentation prepared by the Architect/Engineer under this Agreement will inevitably contain errors, omissions, conflicts, and ambiguities requiring clarification and/or correction during construction. Not only is the production of perfect documents an impossibility, but some design decisions are more efficiently deferred, for the benefit of the Owner, to a point during construction at which they can be made in light of a clear understanding of actual field conditions.

12.1.2 It is further understood and agreed that the extent to which errors, omissions, conflicts, ambiguities, and design uncertainties might reasonably be expected to impact the construction schedule and cost depends upon unknown and unforeseeable conditions and cannot be ascertained in advance.

12.1.3 Accordingly, the Owner and the Architect/Engineer agree to fix a sum within which the Owner shall not look to the Architect/Engineer for either responsibility or compensation for costs which might be attributable to errors, omissions, conflicts, or ambiguities in the design. For purposes of this project, that limit shall be fixed at 3% of the Construction Cost. Costs incurred by the Owner in excess of this amount shall be compensable by the Architect/Engineer, but only to the extent caused by a negligent act, error, or omission in the performance of services under this Agreement.

If your proposal does nothing else, it should precipitate candid discussion. Your goal is reasonable expectations. Here are the issues you might raise in pursuit of that goal:

1. It is not possible for us to produce perfect construction documents, and it makes no economic sense for us even to attempt to do so. Our intuitive decision to stop short of excess perfection is a response to this reality. It is made with your best interests in mind, for it is far less costly to resolve some problems in the job shack than it could possibly be if we were to seek to divine everything that might somehow go awry. We must defer these costs, and they are costs you must be prepared to pay.

2. As respects putting the project out for bid, you have the option of a negotiated procurement. It is not relevant that this option may have already been foreclosed by corporate or public policy. If you choose to pursue the lowest bid, it is because you perceive a benefit will be realized as a result. There are risks inherent in the pursuit of this benefit. The risks and their associated costs are yours.

3. Since neither of us can predict these costs, and because we can reasonably expect them to fall somewhere between zero plus and x squared, we can avoid a costly dispute later by agreeing on a threshold amount now. For this project, we propose 3%.

Whether you agree on 3% or on something more appropriate to the specific circumstances at hand, the important thing is agreement on the principles involved--that perfection is neither feasible, nor expected. This alone would be a highly desirable outcome.