Episode 209 - Contractor's Design Portion (CDP)

Hi and welcome to the Part 3 with me podcast. The show designed to help Part 3 students kickstart their careers as qualified architects while offering valuable refresher episodes for practicing professionals. If you like to support the podcast and help us keep creating great content, check out the link in the episode notes to subscribe. We also provide one-to-one mentoring to help you prepare for your submissions, exams and interview and you can visit our website to learn more, connect with us on LinkedIn by the Part 3 with me page or you can find us on Instagram @part3 with me or email @[email protected]. I am your host Maria Skudari and this week we will be talking about what we mean by the term contractor design portion. Today's episode meets PC5 of the Part 3 criteria and make sure to stay into the end for today's scenario. So today continuing on the theme of contractor's design responsibility we'll be covering a topic that crops up again and again in UK contracts as well as exam questions and live projects which is the contractor's design portion. Often shortened to CDP. So if you're working mostly under JCT building contracts, you'll know that the contractor's design portion sits in an awkward middle ground between a fully traditional arrangement where the design team carries almost all design responsibility and full design and build where the contractor takes on the majority of the design of those works. It's one of those areas where it's very easy for assumptions to creep in and for design responsibility to be muddled which is exactly what clients insures and the courts don't want. So in today's episode we'll cover three big themes. Firstly what contractor's design portion actually is and how it differs from design and build or straightforward traditional procurement. The JCT contracts where you'll come across the contractor's design portion and how it's structured in those forms including design and build and also we will be covering the practical and professional issues around scope, coordination, liability and how you as an architect or contract administrator should manage it on live projects. So to start off what is the contractor's design portion? What do we mean by that definition? Under the JCT the contractor's design portion is the part of the works that the employer asks the contractor to design in addition to building them. It is not the whole project, it is specific elements or packages where design responsibility shifts to the contractor. Often because specialist knowledge proprietary systems or performance based solutions are required for that element. Examples you'll often see in practice include specialist cladding or curtain wall systems, sprinkler or fire suppression systems, lifts escalators and certain MEP systems, especially structures like long spam, steel trusses or feature staircases and so on. The design responsibility for elements like that is carved out in the tender documentation and then crystallized in the contract as the contractor's design portion. The contractor may then subcontract that design to specialist subcontractors but as far as the employer is concerned, the main contractor remains responsible for that portion of the design. Historically, JCT used a separate contractor's design portion supplement for the standard building contract. But those provisions are now incorporated into the main standard form. The intermediate building contract however still uses a discrete with contractor's design version and also related subcontract forms. That evolution is worth remembering for part three because it reflects how embedded the contractor's design portion has become in traditional procurement. Now let's move on to how the contractor's design portion is embedded into the different procurement routes. Starting with traditional procurement, so under this route, the employer appoints a design team who develop the design to a high level of detail, enough to tender a lump sum contract based on drawings, specifications and often bills of quantities. The contractor's role here is fundamentally to construct in accordance with that design with only limited design in temporary works or methods. However, traditional projects increasingly require specialist input and also proprietary systems that architects and engineers are not best placed to detail fully. So to address this, traditional JCT forms allow certain elements to be identified as a contractor's design portion, giving the contractor design responsibility for those parts while the overall project still follows a traditional pattern. Now by contrast under JCT design and build, responsibility for completing majority of the design rests with the contractor based on the employer's requirements and the contractor's proposals. So in that model, the whole project is effectively a contractor's design portion. I'll be it with careful distinctions around what is in the employer's requirements and what is in the contractor's proposals. So you will see contractor design portion concepts appearing in the JCT intermediate building contract with contractors design used for traditional style projects for intermediate complexity where the contractor designs specific parts. And you may also even see it in the JCT minor works building contract with contractors design where the contract is essentially a minor works form plus additional provisions for limited contractor design responsibility. So the headline for exam purposes is that the contractor's design portion is primarily a feature of traditional and intermediate contracts. But the underlying idea clearly defining which parts of the design sit with the contractor runs right through to full design and build. Now let's move on to the specifics on where contractors design portion appears in JCT forms. So starting with the intermediate building contract which we just went through, JCT's own description states that it is for use where the appointed contractor is to design specific parts of the works while the employer's design team retains responsibility for the overall design. So the employer must provide drawings and bills of quantities, a specification or work schedules to define the quantity and quality of work and to set out the requirements for the contractors design portion. Now under the minor works contract with contractors design it's similar in concept but pitched at smaller simpler projects giving the employer a like touch way to delegate limited design responsibility to the contractor. Again the employer's documents describe the required performance and scope and the contractor undertakes design for those identified parts. Now on a standard building contract the contractors design portion provisions effectively import design and build style responsibilities for those defined elements into the otherwise traditional framework. So commentary on those contracts and notes that the contractors design portion mechanism reproduces for the designated parts the key design responsibilities that a contractor would carry under a JCT design and build contract. And then we have the JCT design and build itself. So under the JCT design and build contract the contractors core obligations include completing the design for the works and carrying out and completing the construction in a proper and workman-like manner in accordance with the contract documents. So the employer's requirements set out what the client wants and the contractors proposals explain how the contractor will meet those requirements. and the Contractors Design documents then implement that. So while the Contractors Design portion is explicitly called out in the traditional and intermediate forms, it's helpful both in practice and in exams to recognize that GCT Design and Build represents the same idea taken to its logical full project conclusion that the Contractors responsible for design, subject to important limits about the contents of the Employers Requirements. Now speaking of Employers Requirements, let's zoom in on the documentation that makes the Contractors Design portion work because this is where a lot of risk actually sits. For any Contractors Design portion, the Employers Team needs to define clear requirements at 10 to stage. On Contracts like the Intermediate Contract with Contractors Design, GCT notes that the Employer must provide drawings, specifications, and other documents that both specify the quantity and quality of work and detail the requirements for the Contractors Design portion. In a Design and Build context, these appear as the Employers Requirements, setting out the client's needs, objectives, performance criteria, and sometimes outline design and the Contractors response with the Contractors' proposals that show how those requirements will be met. Those two documents are then annexed to the Contract and form the basis for the Contractors' Design Responsibility. For limited Contractors' design portions under traditional forms, the pattern is similar, just narrower in scope. The Employers Requirements or equivalent description within the 10 to documents define what the Contractors' Design portion element must achieve, such as five performance, acoustic standards, durability, structural spans, or interfaces with the rest of the building, and the Contractor often using Specialist Designers or Manufacturers, produces Specialist Proposals and later designed documents that show how those performance and interface requirements will be met. The Architects role is twofold. First, they assist the client articulate robust coordinated requirements. And second, they review the Contractors' Design submissions for compliance, usually on a reasonable skilling care basis, not by taking over-design responsibility. That division is key because it links into professional indemnity insurance, duty of care, and the limits of what approval or comment on Contractor Design actually mean. Now, who is actually liable when something goes wrong with a Contractors' Design portion element? Under the traditional JCT forms with a Contractors' Design portion, the Contractor assumes Design Responsibility for those identified parts of the works, broadly comparable to its Design Responsibility under a Design and Build contract for the whole works. They are expected to exercise reasonable skilling care in that design, and unless expressly amended, JCT doesn't impose a fitness for purpose obligation. Now, in the Design and Build form, JCT guidance and legal commentary emphasize that the Contractor is responsible for completing the design for the works, but not for verifying the adequacy of design contained in the Employees Requirements unless that duty is expressly imposed. If an adequacy is found in the Employees Requirements, and the Contractor is not responsible for verifying their adequacy, then correcting that in adequacy is treated as a change, potentially entitling the Contractor to additional time and money. Recent case law analysis has highlighted that amendments can significantly alter this balance, including shifting full Design Responsibility back onto the Contractor, even for aspects originating in the Employees Requirements. So the key lesson here is to always check what the Contractor actually says about Design duty, including any bespoke amendments, and do not rely solely on the unamended JCT position. So for the Architect, Design Responsibility remains with them for the non-contractors design portion of the works. They are not automatically responsible for the Contractor's Design portion simply by commenting on or approving their drawings. Standard wording and professional guidance make clear that their role is usually to review for compliance with the Employees Requirements and with their own design, not to warrant the Contractor's Design. However, there is a practical grey area. If the Architect goes beyond that role, for example by redesigning Contractor's Design portion elements or by issuing instructions that effectively change the Contractor's solution, then they may start to assume additional responsibility. That's why the way they comment on Contractor's Design portion submissions and the clarity of their appointment are very crucial here. So let's contrast how the Contractor's Design portion feels in practice on a traditional project with a Contractor's Design portion versus a full Design and Build project. So starting with the Traditional project with Contractor's Design portion, firstly the Employer and their Design team lead and coordinate the overall design, then they define clear performance and interface requirements for the Contractor's Design portion elements in the Tendered documents. The Contractor then designs only those identified elements, often through specialist subcontractors and they are responsible for both the Design and Construction of that portion. The Architect or Contract Administrator administers the Contract, certifies payments and reviews the Contractor's Design portion submission against the requirements and against the rest of the Design. Now in contrast, on the JCT Design and Build project, the Contractor is responsible for completing the entire Design based on the Employers requirements and Contractor's proposals. The Employers' pre-contract design team often becomes novated to the Contractor after Contractor award so their duty of care shifts. The Contractor's Design duty is then expressed as a reasonable skill and care obligation unless a Memments impose a higher fitness for purpose standard. And then the Employers' representative focuses on monitoring compliance and managing the Contract rather than detailed design development. So conceptually the Contractor's Design portion is a targeted application of Design and Build principles within a traditional framework. For specific elements, the Contractor takes on Design risk in return for being able to control the design of those elements and often to integrate, especially suppliers more efficiently. So that hybrid approach can unlock value but it also creates interface risks which is where good coordination, clear documentation and thoughtful procurement strategy come in. So as Architects or Contractor Administrators, what should we actually be doing when a project includes a Contractor's Design portion? So firstly, Architects should assist the client to decide whether including a Contractor's Design portion is appropriate for the project in general. Legal and technical commentaries point out that Contractor's Design portion is most useful where the Contractor or Specialist has genuine expertise and control, for example in Complex Building Services or proprietary facade systems. If the Employers' team is clearly better placed to design something, pushing it into the Contractor's Design portion purely to transfer risk can be a false comfort, especially if the Employers' requirements are vague. Second, they should ensure the Employers' requirements or equivalent Contractor's Design portion description are very robust. This should tend to include the defined performance criteria. For example, this could be fire, acoustic, thermal, structural or durability. It should also set out required standards and statutory compliance, including booting regulations and relevant guidance. They should also clearly describe interfaces with the rest of the design. For example, movement joints, fixings, tolerances and coordination with services. And also identify any specific approvals needed, such as third-party certifications or warranties. And thirdly, architects during delivery should have a structured process for reviewing the contract is design. That might involve a submission schedule for the contract is design portion elements. Clear status codes for comments or coordination workshops with the contractor and specialist to resolve interface issues early. So professional literature emphasizes that whoever manages the digital model or central design coordination must carefully integrate specialist designers' input. If the design team keeps control of the model, they must manage specialist information without inadvertently taking on the main contractor's design responsibilities. And lastly, architects should keep an eye on changes to the contractor's design portion scope. If the client or design team decides to reclaim some design responsibility or if the contractor's proposals go beyond the original scope, they may need to adjust appointments, insurances and the building contract itself to match that shift. Now let's look more closely at risk because contractors' design portion is fundamentally a risk allocation tool in essence. On the employer's side, the contractor's design portion can transfer certain design risks to the contractor, especially where the contractor is in the best position to control design and installation. That might reduce disputes about specialist design failures and can make pricing more realistic because the contractor can package design and installation together with their chosen supply chain. Now on the contractor's side, the contractor's design portion increases risk because they are now responsible for getting the design right within the specified performance parameters. And they must manage their specialist designers and ensure that their design integrates properly with the rest of the project. Insurers and legal advisers will usually be keen to ensure that the contractor's design duty is limited to reasonable skill and care and that no unintended fitness for purpose obligations creep in. Now for architects, the contractor's design portion can be a double-edged sword. It can reduce their design workload and also their liability in some areas, but it also introduces interface risks and the potential for misunderstandings about who is responsible for what. That is why the appointment, scope of services and PI insurance need to be aligned with the reality of the contractor's design portion of the project. And to conclude today's episode, let's look at a few pitfalls and good practice points that you can bring into both your exam answers and your day-to-day work. So some common pitfalls can include vague in-place requirements for the contractor's design portion elements leading to ambiguous scope and disputes when the installed system doesn't meet the client's expectations. Another common pitfall is assuming that the contractor's design portion means that the architect is off the hook. When in reality, interface design and coordination remain critical responsibilities for the design team. Another common issue is treating contractor design review as a box-taking exercise rather than a serious check against performance and interface requirements. As well as ignoring the effect of bespoke amendments that may expand or reduce the contractor's design duty and thereby change risk allocation. Now in terms of good practice, this should look more like early identification of potential contractor's design portion packages as part of the ReBus Stage 2 and 3 development. So that the procurement strategy and imposed requirements can reflect them properly. It would also be beneficial to have clear measurable performance criteria and interface descriptions in the tender documents for each contractor's design portion element. As well as a structured system for reviewing the contractor's design submissions with clear communication about what your comments mean and what they don't mean. And they should also include regular design coordination sessions involving the client, specialists and the design team, especially at the boundaries between contractor's design portion and non-contractors' design portion. So that captures what I wanted to run through today. Now before we move on to today's scenario, let's quickly sum up what we just ran through. So the contractor's design portion assigns the contractor responsibility for designing specific elements like cladding or MEP systems distinct from full design and build. It is featured in a number of JCT contracts, such as intermediate minor works and standard building contracts, as well as design and build which extends the concept project-wide via the employee's requirements. So generally robust requirements are essential when defining the contractor's design and tender documents must specify performance criteria. Interfaces and standards to avoid disputes. Architects reviews should be noted as being for compliance only and not assuming design responsibility. In terms of liability, this stays with the contractor for the contractor's design portion design under reasonable skill and care. And the architect retains non-contractors design portion duties, but should be aware for interface risks. Best practice is to identify the contractor's design portion elements early, use structured reviews and coordination, and avoid vague specifications or assuming full of loading of the architect's role. So that captures generally the subject around the contractor's design portion, what it means, how it is allocated between the different building contracts. So to put what I just went through into context, let's dive into today's scenario. So in today's scenario, you receive an email from your manager and they have been commissioned for a community hub project. So they had a design coordination workshop with the M&E subcontractor, where they presented their drawings for discussion. And your manager noticed the title block having an unusual logo and listing another company as a designer. So your manager queried this with the main M&E subcontractor. And they said that the name listed on the drawings was another designer that they appointed that were producing the design on their behalf. So after the meeting, your manager did an internet check to discover that the second designer, the secondary designer that was appointed, was a sole trader working for a residential property. They have been trading for three years with an average annual turnover around 15,000. So they have a website selling reconditioned boilers with no mention of any design services. And your manager noticed that they didn't have any evidence of any recent projects. So manager mentioned this to the main contractor who told them not to worry and that they should be concentrating on answering their outstanding requests from the company. information. So your manager recalls that the prelims and the M&E consultants performance specification, which forms the employees requirements for the plumbing and heating work, made requirements around professional indemnity insurance, and also collateral warranty being granted in favor of the client from the subcontractor undertaking that work, which was the original M&E subcontractor. So it's obviously not ideal that the M&E consultant wasn't retained through stage 5, as this would be an obvious thing to discuss with them. So your manager here asks you to give them your thoughts if there is anything wrong with this arrangement, and if the practice can do anything. So here you can respond back saying that obviously there's a serious problem with the current arrangement, and we should act quickly to regularize it and protect the client, as well as the funder and our own position as the contract administrator. Now in terms of what is wrong with the arrangement, so from what your manager described, the employees requirements and preliminaries clearly envisaged that the party actually doing the M&E design within the contractors design portion element would hold a minimum 2 million professional indemnity cover for that design and give a collateral warranty direct to the client and the funder. So the M&E subcontractor were the tendering subcontractor whose PI track record and ability to give warranties were presumably assessed as part of that tender, whereas the designer that they have employed to do the design were not tested or assessed on their track record and ability. So given that the title block indicates that the other company is the designer, combined with their very low turnover and lack of any advertised design services, strongly suggests that they're not the entity whose PI and worry-til obligations were contemplated in the tender documentation, and they probably don't meet the requirements anyway. So although the main contract might allow subcontracting of the contractors design portion work with the client's consent, that consent needs to be given from the client which to our knowledge wasn't. So if the other designer are in practice acting as designers but don't have the required PI and can't or will not give the warranty for the client and the funder, then the contractor is not complying with the conditions attached to the employer's consent. Additionally, as principal designer under CDM and principal designer under the building regulations, our practice must plan manager monitor the design process, so foreseeable risks are identified and controlled, allowing a lightly insured or uninsured designer of critical life safety systems to sit invisibly behind the M&E subcontractor is inconsistent with good practice and could compromise our ability as the principal designer to demonstrate that the duty holders were competent and adequately resourced. Now in terms of what the practice could do, so we should notify the client in writing that we have discovered that the actual designer named on the drawings is another designer and not the M&E subcontractor and that we have serious concerns over whether the contractual PI and collateral warranty requirements have been met. Then we could ask the contractor formally, ask contract administrator to confirm in writing that the design of the contractor's design portion elements is being carried out by an entity which holds the required level of PI insurance and will give the collateral warranties stated within the tender documentation. So the information they should give should include the name of the entity taking design responsibility, evidence of their current PI cover and that they have the 2 million pound limit and also confirmation that they will execute the required warranties for the benefits of the client and the funder. Now if the M&E subcontractor insists on using the other designer, as a practice we should advise the client that either the designer that they are using must themselves meet the PI and warranty requirements with evidence provided or the M&E subcontractor must take full design responsibility with PI and warranties and treat the other designer as a mere supplier assisting them not as a party with a design liability. Now from a principal designer's perspective, as a practice we should also record any design risk and coordination meeting minutes that we have queried the competence and insurance position of the M&E designer and that we have requested clarification and evidence and make clear that the design of safety critical systems must be carried out and checked by designers with appropriate skills, experience and organizational capability consistent with CDM and building regulation duty holder expectations. And then lastly you could recommend to your manager that if satisfactory evidence isn't provided we should recommend to the client that the contractor be required to rectify the situation before further design is accepted or incorporated into the works and potentially appoint a suitably insured M&E designer. So that should give you a good overview of what to expect if you are ever involved in a situation like this where either someone is incompetent or someone subcontracts their duties or try to subcontract their duties and gives you generally a better understanding of the contractor's design portion elements during construction. So that's all for now thanks for tuning in and we'll catch you in the next episode. If you would like to get in contact with me please feel free to email me on the address provided in the show notes. Thank you for listening this is an educational show aimed at supporting the future generation of architects. The information opinions and recommendations presented in this podcast are for general information only and any reliance on the information provided in this podcast is done at your own risk. Please join me next week for some more part three with me time. [MUSIC]