Liability Exposure and Indemnity for Architecture and Engineering Professionals Acting as Independent Consultants or Design Subcontractors

Abstract

Given the multiple approaches currently used by owners for the procurement of construction projects, design professionals end up undertaking their design and other related services either as independent consultants appointed by owners or as subcontractors acting under design-builders. The objective of this paper is to investigate the types and extents of the professional liabilities inherent in assuming either of these two contrasting capacities for rendering the contracted deliverables. The research methodology included (a) investigating the various types of professional liabilities and their associated indemnity coverages that can be procured by designers or contractors, (b) reviewing industry-reported cases involving designers being sued under tort law, and (c) developing the construct under which the involved liabilities may be encountered. It is concluded that the risks of the designer being sued under tort law, which have for long been realized to otherwise exist whenever contractors can prove the foreseeable harm resulting from the negligence of owner-appointed designers, seem to continue to prevail when these designers act as design subcontractors under a design-build (DB) environment. This is also in relation to designers’ negligence, but now pertaining to the duties they are expected to instead owe to owners. The findings also revealed that such risks may be of different magnitudes and may have varying likelihoods of being encountered owing to the various DB operational variations.