On a traditional design-bid-build project, the design professionals prepare the plans, the owner gives them to the contractor, and the contractor builds the project. So what happens when the plans are wrong?
[Disclaimer – this video contains profanity. Just giving you a heads up.]
The answer to that questions depends on where the project is located.
If the project is almost anywhere but Texas, then when the owner gives the plans to the contractor, there is an implied warranty by the owner that the plans are accurate and sufficient for construction of the project.
In Texas though, there is no implied warranty on behalf of the owner that the plans are accurate and sufficient when the plans are given to the contractor. Unless there is specific language in the contract saying that the owner warrants the accuracy of the plans, then the contractor must proceed at its own risk.
If the plans given to the contractor turn out to be incorrect, the contractor can submit Requests for Information seeking clarification. This may lead to delays, changes to the plans, and requests for change orders that the contractor did not anticipate at the time it submitted its bid or entered into the contract.
In this situation, a contractor may find itself facing schedule delays, and whether the contractor is entitled to an extension of time will be determined by the other provisions of the contract. In addition, the contractor may end up incurring significant additional costs that may or may not be recoverable based on the language of the contract.
So how can a contractor avoid a situation where incorrect plans have caused delays and damages that may or may not be recovered? I’m glad you asked.
The situation is avoided by addressing it in the contract and negotiating a resolution with the owner. This requires carefully reading the contract. There are a issues that are frequently seen in construction contracts that can impact the contractor’s rights with respect to incorrect plans.
Pay attention to contract provisions that address:
- Whether the owner warrants the drawings and specifications;
- The contractor’s responsibility for reviewing the plans and specifications for errors;
- Whether the contractor is allowed to rely on the accuracy of information provided by the owner;
- Whether the contractor is responsible for reviewing the site and satisfying itself as to whether the work can be constructed per the drawings and specifications; and
- Whether the contractor is entitled to additional time or costs incurred due to incorrect plans.
Most likely, the contractor will discover that most (if not all) of the risk for errors in the plans have been shifted to the contractor.
If this is the case, then during the contract negotiation process the contractor can propose revisions to minimize this risk, including proposing language specifically stating that the owner warrants the accuracy of the plans and specifications. The owner may not accept the contractor’s proposed revisions, but it should at least provide an opportunity for both parties to discuss the risks associated with incorrect plans and find some resolution that both parties can live with.