Learning from the Mistakes of Others

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Learning from the Mistakes of Others
American Bar Association Forum on the
Construction Industry
2007 Mid Winter Meeting

• When Design-Build Has Gone Awry

Thomas L. Rosenberg Roetzel Andress
Kerry L. Kester Woods Aitken LLP
Deborah J. Mackay Faegre Benson LLP
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(No Transcript)
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Learning from the Mistakes of Others
American Bar Association Forum on the
Construction Industry
2007 Mid Winter Meeting

• When Design-Build Has Gone Awry

Thomas L. Rosenberg Roetzel Andress
Kerry L. Kester Woods Aitken LLP
Deborah J. Mackay Faegre Benson LLP
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Design-Build Gone Awry

• Overview
• Distill Lessons Learned
• Identify Recurring Themes
• Apply Lessons to Participant Roles

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I skimped a little on the foundation, But no one
will ever know it
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Design-Build Gone Awry

• Recurring Failure Themes
• Proposal Phase Responsibilities
• Obligate Designers to Meet Performance Specs
• Coordinating Diffused Design
• Schedule Impact of Design
• Integrating Design and Construction

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CASE STUDYOld Dominion Electric v. Ragnar
Benson, Inc.

• Key Facts
• EPC Power Plant
• No EPC Power Plant Experience
• Site plan, permits approvals
• Rock/Site Investigation
• Limited Owner Design Approval

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Old DominionAssembling the Design Build Team

• The Issue
• Procurement Phase Landmines
• Experience / Qualifications

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Old DominionAssembling the Design Build Team

• More Key Facts
• Design Builder Lacks EPC Experience
• Late Engagement of Designer
• Responsibility for Owner-Procured Equipment

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Old DominionAssembling the Design Build Team

• What Went Wrong?
• Compressed Design Phase
• Design Based on Erroneous / Inadequate Info
• Design Schedule Delayed Permitting
• Deficient Design Delayed Project
• Mismanaged Turbine P.A.

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Old DominionCoordinating Diffused Design

• The Issue
• Diffused Design
• Coordination
• Responsibility

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Old DominionCoordinating Diffused Design

• More Key Facts
• Schedule for Pre-Construction Activities
• Rock / Subsurface Information
• Coordination Meetings
• Quality / Quantity of Design Information

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Old DominionCoordinating Diffused Design

• What Went Wrong?
• Late Plan Approval and Permits
• No Meetings with Designer
• Disastrous Field Conditions
• Failed to Recognize Importance of Subsurface Info
• Waste / Redesign

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Old DominionIntegrating Design and Construction

• The Issue
• The Master Builder Concept
• Different Roles and Relationships
• Different Process

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Old DominionIntegrating Design and Construction

• More Key Facts
• 100 Subcontracted by Design Builder
• No Constructability Review / Input
• Failed to Integrate Design and Construction
  Schedules
• Reduced Supervision / Communication /
  Collaboration

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Old DominionIntegrating Design and Construction

• What Went Wrong?
• Complete Lack of Collaboration / Problem Solving

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Lessons from Old Dominion
Issue - Assembling Team

• Problem
• Lack of Design-builder Experience
• Late Design Involvement
• Failure to Manage Key Equipment PA

• Next Time
• Consider Joint Venture with Experienced Partner
• Obtain Design Services Immediately Upon Award (if
  not already in place)
• Identify/Manage Key PAs

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Lessons from Old Dominion
Issue - Coordinating Design

• Problem
• Late Approvals / Permits
• No Design Meetings
• Subsurface Issues

• Next Time
• Identify Critical Design Input
• Plan and Schedule Design to Support Project
• Identify / Collaborate re Project Critical Info

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Lessons from Old Dominion
Issue - Coordinating Design

• Problem
• Waste Rework / Redesign

• Next Time
• Honest Design Review
• Quality Design Info
• Pertinent Design Info

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Lessons from Old Dominion
Issue - Integrating Design Construction

• Problem
• Disconnect between design construction

• Next Time
• Construction Input
• Constructability Reviews / Collaboration

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CASE STUDYC.L. Maddox, Inc. v. Benham Group, Inc.

• Key Facts
• Design Build Remodel of Power Plant Coal
  Processing System
• Design Deficiencies
• Bid Errors / Huge Cost Overruns

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Maddox v. BenhamDefining Designers Proposal
Phase Responsibilities

• Issue
• Role Reversals in Design Build
• Historic View of New Partners
• Conceptual Bidding in Fixed Price World

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Maddox v. BenhamDefining Designers Proposal
Phase Responsibilities

• More Key Facts
• Fixed Price Proposal
• Design Builder Subcontracted Engineering and
  Material Estimates
• No Written Agreement for Proposal Phase Services

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Maddox v. BenhamDefining Designers Proposal
Phase Responsibilities

• What went wrong
• No Agreement Defining Purpose of Engineering
  Deliverables
• No Risk Allocation for Deficiencies in Estimates
  / Pre-Bid Services
• Pre-Bid Engineering Errors Resulted in Overrun
  Claims Over 5M

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Maddox v. Benham Coordinating Diffused Design

• Issue
• Fast Track Design Deliverables
• Dispersed Sources of Key Design Information
• Scheduling of Design
• Design to Support Pricing

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Maddox v. Benham Coordinating Diffused Design

• More Key Facts
• Delays in Design Review and Approval
• Late Vendor Drawings
• Lack of Design Experience
• Designer Duty to Support Lump Sum Pricing

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Maddox v. Benham Coordinating Diffused Design

• What Went Wrong
• Late Vendor Information
• Late / Deficient Design
• Inaccurate Quantities / Costs

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Lessons Learned from MaddoxIssue - Designer Role
/ Responsibilities

• Problem
• Responsibility for Pre-Bid Engineering Errors not
  Defined

• Next Time
• Formal Agreement with Designer at Proposal Stage
• Include Risk Allocation Mechanism

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Lessons from Maddox
Issue - Coordinating Design

• Problem
• Lack of Design Experience

• Next Time
• Team Qualification and Selection

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Lessons from Maddox
Issue - Coordinating Design

• Problem
• Late Vendor Input

• Next Time
• Recognize Key Design Sources
• Communicate Early
• Plan Design Process

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Lessons from Maddox
Issue - Coordinating Design

• Problem
• Late / Deficient Design

• Next Time
• Define Content of Design Deliverables (Fast
  Track)
• Schedule Design Deliverables
• Manage Review / Approval Process

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CASE STUDYPlayskool v. Elsa Benson, Inc.

• Key Facts
• Ragnar Benson (RBI) is Design Builder for Two
  Story Warehouse
• RBI Hires CST to Design, Supply, and Install
  Precast Beams and Structural Components
• CST Hires Midwest Concrete and Blakeslee to
  Design and Manufacture Portions of Work

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Playskool v. Elsa Benson, Inc.

• More Key Facts
• RBI Approves Shop Drawings and Monitors All
  Subcontractors
• After Occupancy, Separation Between Outside Walls
  and Floor
• Spalling, Concrete Separates From Beam and Falls
  to Floor

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Playskool v. Elsa Benson, Inc.

• Issue
• RBI Attempts to Shift Liability to Its
  Subcontractors
• Passive Negligence Theory
• RBI Seeks Indemnity from Subcontractors

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Playskool v. Elsa Benson, Inc.

• What Went Wrong?
• RBI was Architect of Record
• Ultimate Responsibility for Design Accuracy
• RBI Had Power and Duty of Approval
• RBI Had Duty to Stop Work and Reject Materials

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Lessons from Playskool
Issue Coordinating Design

• Problem
• Review and Approval Process

• Next Time
• Communicate and Assign Liability

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Lessons from Playskool
Issue Monitoring and Supervision of Construction

• Problem
• Right to Stop Work and/or Reject Materials

• Next Time
• Communicate and Assign Liability

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CASE STUDYIn re Donahue Electric

• Key Facts
• Design Build V.A. Contract
• Scope Fix Existing Building Code Deficiencies
• VA to Provide Bridging to Design Team
• VAs Designer to be on Team
• Change to Competitive Procurement No Team

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Donahue ElectricCoordinating Design - Bridging

• The Issue
• The Bridging Complication
• Impact on Single Point Responsibility
• Impact on Design Coordination

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Donahue ElectricCoordinating Design - Bridging

• More Key Facts
• VA Bars Communication with Key Bridging
  Consultant
• Bridged Design Based On Larger Project Than
  Awarded
• Specified Boiler Capacity
• Omitted Bridging Consultant Design Assumptions
• VA Said Drawings are For Info Only

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Donahue ElectricCoordinating Design - Bridging

• What Went Wrong?
• No Access to Bridging Consultants Key Info
• Defective Design
• Owner Design Liability

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Lessons from Donahue
Issue Coordinating Bridged Design

• Problem
• No Access to Key Design Information

• Next Time
• Evaluate Bridging Info
• Provide the Supporting Info

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Lessons from Donahue
Issue Coordinating Bridged Design

• Problem
• Defective Bridged Specs
• No Communication on Pricing

• Next Time
• Design Review
• Owner Must Provide Basic Project Parameters and
  Assumptions

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Lessons from Donahue
Issue Coordinating Bridged Design

• Problem
• Owner Design Liability

• Next Time
• Single Point Responsibility?

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American Bar Association Forum on the
Construction Industry
2007 Mid Winter Meeting
Break