Shop Drawings: Managing Your Exposure During the Submittal Review and Approval Process BY, STACEY D. BAILEY* I. What’s at stake? No set of contract documents can ever be complete. No matter how detailed the plans and specifications are, there will always be a detail concerning materials to be supplied by the contractor, an aspect of the site that presents an unforeseen challenge, or any number of other unanticipated problems once construction begins. Therefore, a submittal process was developed to address ongoing communication and decision‐making needed to get the job done. The standard form contracts used in the construction industry have specific provisions allocating responsibility for the submittal process. The primary responsibility for submittals falls on the contractor, as a part of the contractor’s means and methods of constructing the project. The design professional is charged with reviewing each submittal to determine whether the proposed material or solution will result in a finished project that conforms to the plans and specifications. Submittals include shop drawings, schedules, diagrams, product literature and materials information, samples of products and models demonstrating particular construction techniques, or mock‐ups showing how portions of the project are to be constructed. II. Key issues Identification – The contract should specify which submittals are required, including submittals for information (also known as requests for information, or “RFIs”). If the contractor makes submittals that are not required by the contract, the designer may simply return the submittal without comment. The standard form contracts require the designer to keep a record of submittals and copies of all submittals. Even if the contract did not specifically require such record keeping, it is good practice, and such records are clearly essential in order to defend against claims related to submittals or the designer’s response to submittals. Contractor’s Duties – The contractor is responsible for timely submittals of proposed methods and materials for the project, as the contractor is generally responsible for delivering the project on time. (If the project designer is not diligent in requiring submittals of the contractor, however, the designer may be held accountable for the delay along with the contractor.) The contractor is also responsible for verifying the availability of the materials and products the contractor proposes to use. In some instances, where a proposed method of construction requires the input of an engineer or other design professional, such as the construction of a fixed crane at the site or complex scaffolding, the contractor is responsible for obtaining the necessary design to achieve the task. The contractor must sign the submittal, indicating that the submittal has been reviewed and approved by the contractor. If a submittal is submitted to the project design professional unsigned, the design professional may return it to the contractor without any other action or comment – and the contractor would be responsible for the delay. Timing of Work – The contractor may not start work on a particular aspect of the project without prior approval of submittals related to that aspect of the work. The contractor who begins work without approval assumes the risk of error along with any delays associated with the error. Turnaround Time and the Cost of Delays – The design professional is expected to “turnaround” submittals within a “reasonable” amount of time to enable the contractor to keep the project on track to meet the completion date. In addition, the design professional cannot be unreasonable in refusing to approve submittals. The Meaning of Approval – The design professional approves or takes other action on submittals “for the limited purpose of checking for conformance with information given and the design concept expressed in the contract Documents.” A201‐2007 § 4.2.7. In other words, the design professional is indicating that the use of the proposed materials or methods generally conforms to the contract documents, but does not relieve the contractor from ultimate responsibility for the accuracy and completeness of details, dimensions, quantities, instructions for installation, or the performance of equipment or systems. Likewise, approval of a submittal for a specific component does not indicate approval of the assembly containing the component. Approval of a submittal does not indicate approval ®
Risk Management PLUS+ Online Page 1 of 3 of any safety precautions, or (unless specifically stated by the project designer) for any means, methods, techniques, sequences or schedules. When a submittal contains the work of another design professional, then approval of the submittal indicates approval of the submittal based on reliance of the design work provided in the submittal. For example, if a contractor submits a sealed drawing from an appropriately licensed structural engineer, then the project engineer may approve the submittal without checking the calculations or design work of the structural engineer contained in the submittal. Similarly, as long as the contractor delivers a project that conforms to contract documents, the contractor’s contractual obligations have been met. If the design provided in the submittal proves faulty, then it would be the responsibility of that design professional, not the project architect or engineer. Design professionals use different stamps for responding to submittals, such as “Approved,” “Approved as Noted,” and “Approved with Corrections Noted”. The meaning of different stamps on submittals is one of the most litigated issues on construction projects. Therefore, the designer needs to be particularly attentive to the use of such stamps. In some cases, it may be prudent to add a note or clarification under the stamp to make sure the project designer’s intent is clear. Requirements of Contract Documents Trump Approved Submittals – Once a submittal is approved, the requirements of the contract must still be met. If work done according to an approved submittal does not conform to the contract documents, the contractor will not be entitled to a change order. Unless the contractor specifically points out deviations from the contract documents in the submittal itself, approval by the project designer will not constitute approval of the deviation, and the non‐
conforming work can be rejected later. Submittals are not part of the contract documents and do not modify the contract documents unless the contract specifically provides that submittals will be deemed modifications to the contract documents. Deviations from the contract documents can be made only by change order, or construction change directive. Performance Specifications – The owner or design professional may require the contractor to deliver a project that meets certain performance criteria of materials, systems or equipment. When this kind of requirement is included in the contract documents, then the criteria for evaluating the performance must also be included in the contract documents. It will then be the responsibility of the project design professional to verify that the performance criteria are suitable for the project. A simple example would be the wind rating of windows to be installed in a residence on the coast. Specifying Particular Methods, Equipment or Materials – Although the standard form agreements provide that the contractor is solely responsible for the means and methods of constructing the project, the contract may in some instances also specify a particular manufacturer’s product or equipment, or a particular method of construction for some part of the project. Where the contract specifies such a material or construction method, however, the designer assumes some of the risk of failure of that material or procedure. If, for example, an architect specifies a particular kind of brick to be used, and the contractor builds the project using that brick, then the contractor has complied with his obligations under the contract. (How particular does “particular” have to be to trigger this shift in risk? It depends on the unique circumstances of the project, but to use the brick example, this will be brick that is only made by one manufacturer or brick satisfying some performance criteria; see below.) If there is damage to the building because of a latent defect in the brick, liability will fall on the architect who specified the material, not on the contractor. (In such a situation, the designer will want to shift responsibility to the supplier and/or manufacturer of the faulty material, if possible.) If the designer specifies a particular method that causes a delay to the project, the designer may face a delay claim. Corrections – If the project designer rejects the submittal, then the designer will indicate the corrections to be made and return the submittal to the contractor. Upon resubmittal, the contractor must indicate any revisions made to the submittal other than the changes requested by the project designer. Otherwise, revisions made to the submittal that were not requested will likely be overlooked by the project designer. The project designer’s approval of revisions will apply only to the items for revision requested by the designer and those revisions of which the designer was specifically informed by the contractor. III. Negotiating points Pay Me Now, Pay Me Later – Review of shop drawings and submittal review can be a time consuming part of the contract administration phase of a project. The more “bare bones” the plans and specifications are, the longer the review process for submittal is likely to be. This should be considered not only when developing the scope of services for the design phase, but also when negotiating fees for contract administration services. An owner who pushes a minimalist approach to plans and specifications may not understand that skimping on details at the beginning could have the consequence of prolonging the project and increasing the overall price in the final analysis. ®
Risk Management PLUS+ Online Page 2 of 3 Fixed Fees vs. Hourly Fees for Contract Administration Services – The extra work created by an unexpected number of submittals will require extra time and may require extra personnel to administer the project. The design professional could find that the cost of staffing the project quickly exceeds the fee paid for contract administration services, or the designer may also face increased risk of liability for a claim for delay or increased material costs related to slow response time on submittals for key project materials like fabricated steel. The designer should consider the scope of services contemplated and negotiate fees for contract administration with these considerations in mind. IV. Risk transfer considerations The great majority of larger commercial and municipal construction projects use the standard form documents provided by the American Institute of Architects (AIA), and the comments provided here generally track the language and provisions found in AIA Document A201‐2007, “General Conditions of the Contract for Construction.” A201‐2007 was designed to be used in conjunction with the various AIA standard form agreements, and is sometimes incorporated into other agreements as well. In addition, there is a long history of use of the AIA general conditions, and case law interpreting the provisions in AIA form documents generally is well developed (though constantly evolving with each new version released). This makes predicting the outcome of pending litigation easier and more certain, which helps early resolution of claims. When A201‐2007 is used with non‐AIA documents, care should be used to make sure that there are no conflicting terms, ambiguities created by omissions, or unintended shifting of risk caused by failure to consider the impact of A201‐2007 provisions on the other contract documents. Similarly, any changes made to A201‐2007 should be made with caution and the advice of legal counsel and the insurer. The Engineers Joint Contract Documents Committee (EJCDC) has developed a set of standard form documents similar to the standard forms developed by the AIA. The EJCDC is a committee which includes members from the Professional Engineers in Private Practice Division of the National Society for Professional Engineers (NSPE), the American Council of Engineering Companies (ACEC), the American Society of Civil Engineers (ASCE) and the Associated General Contractors of America (AGC), with input from representatives of other professional engineering design, construction, owner, legal, and risk management organizations. EJCDC form documents are the only pre‐approved construction and engineering services contract documents for use on water and wastewater projects financed by the USDA/Rural Utilities Service, and appear to be widely used for other municipal water and wastewater treatment projects. With the exception of projects for the construction of water treatment and wastewater treatment facilities, however, EJCDC form documents are not as widely used as the AIA forms for construction projects, and case law interpreting their use is not as well‐developed as the case law interpreting the AIA form documents. Article 9 of the EJCDC C‐700 (formerly EJCDC No. 1910‐8) Standard General Conditions of the Construction Contract addresses the engineer’s role in reviewing shop drawings. The current version of EJCDC C‐700 was published in 2002. The 2002 revisions included renaming the document C‐
700 and simplifying Article 9. Conclusion As there is a good likelihood that submittals will be revised during the life of the construction project, design professionals should minimize their risk by making sure that contractual provisions adequately address which submittals are required. In addition, design professionals should establish clear expectations with the contractor regarding additional time and work needed to address project plan modifications as a result of revised submittals. *Stacey D. Bailey is an associate at Pharr & Boynton, PLLC in North Carolina. Stacey’s key practice areas include litigation, construction law, professional liability and product liability. travelers.com/1stchoice Travelers Casualty and Surety Company of America and its property casualty affiliates. One Tower Square, Hartford, CT 06183 The views expressed in this article are those of the author and do not necessarily reflect the views of The Travelers Companies, Inc. or any of its subsidiary insurance companies (“Travelers”). This paper is for general informational purposes only. None of it constitutes legal advice, nor is it intended to create any attorney‐client relationship between you and the author. You should not act or rely on this information concerning the meaning, interpretation, or effect of particular contractual language or the resolution of any particular demand, claim, or suit without seeking the advice of your own attorney. © 2013 The Travelers Indemnity Company. All rights reserved. Travelers and the Travelers Umbrella logo are registered trademarks of the Travelers Indemnity Company in the U.S. and other countries. Ed. 11‐13 ®
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