Keeping a Lid on Code Claims

A XL Design Professional study of closed architectural claims indicates that code-related claims are a significant problem for architects. The most notable problematic factors were:

• Egress
• Accessibility
• Fire protection
• Zoning issues

Of these, fire protection problems were found in over 50% of the claims reviewed. Code interpretation and code inspection problems were identified as major causes in many of these claims.

The XL Design Professional study clearly identified a strong relationship between the claims and the code compliance process. Problems with the process included:

• Schedule and budget constraints – Failure by the architect to manage the design budget and schedule to adequately address the code requirements was more often the cause of claims than a lack of technical expertise.
• Consistency in the interpretation of codes – Working with building officials and code most challenging risk management issue relating to code compliant designs.
• Client communications – Failure to educate the client and keep him or her involved in the code process was another sure-fire prescription for trouble.

Managing the Problem

Controlling your liability surrounding code compliance issues has less to do with technical competency than with sound management practices. This means educating the client, avoiding contractual pitfalls and developing a professional working relationship with "city hall." All take patience, open communication sand a lot of time and effort.

Planning for Code Compliance

Code compliance should be addressed at the beginning of every project, even before your agreement with the client is executed. In developing the scope of services, fee and schedule, take into consideration the complexity of the code issues and discuss your concerns openly with your client. Explain the challenges, unknowns and time demands of the code process and let your client know that the process is highly dependent on others.

If the project involves a significant number of code issues, consider using a code consultant or a fee schedule that provides for hourly compensation for code review activities. You might offer your client a "cost-plus" or a "cost-plus-not-to-exceed" fee structure and "cost-plus" fee models that might be of value in negotiating a fair, equitable fee structure for code design.

Contract Language

Be careful when negotiating your agreement. Client-written contracts often ask architects to certify, warrant or guarantee that the design complies with all applicable codes. Although certifications, guarantees and warranties may be commonplace in a constructor’s contract, they have no place in your agreement. As a design professional, you are already required to comply with laws, codes and regulations. Failure to design to the requirements of local building codes is negligence per se. In fact, designing to code is the very least you must do. Under certain circumstances, merely designing to meet minimum code requirements still may be negligence if the circumstances and the applicable standard of care dictate a design solution that clearly exceeds the code

By certifying or warranting something, you are assuming a level of liability well beyond the standard of care required by law. As a professional, all you need do is conform to the standard of are as practiced by your peers. And that’s what your professional liability insurance covers. It is important to remember that your professional liability insurance is not intended to cover breach of contract or breach of warranty, or a promise to perform to a higher standard of care than required by law.

Negotiate, if possible, contract language similar to the following:

• The Consultant shall exercise usual and customary professional care in his or her efforts to comply with applicable codes, regulations and laws in effect as of the date of execution of this Agreement.
• (Policyholders: Refer to XL Design Professional’s Contract Guide for more information about negotiating contract clauses pertaining to codes and standards.)
• Reconciling Code Compliance with the Standard of Care
• If your design meets the code, you can still be found negligent if experts believe that a more conservative design was needed over and above what the specified code requires.

At XL Design Professionals, we sometimes see situations where the consultant believes that a conservative design that exceeds code is necessary. The owner, on the other hand, wants to pay for the minimum design and construction that meets code.

In these instances, you have two options:

1. Walk away from the project under the dispute provisions of your contract (assuming you have negotiated a dispute provision that allows this), or
2. Proceed with the project, designing it to code, if:
   • You believe that complying with minimum code does not endanger the public health, welfare and safety (which would be a breach of your public responsibilities under your license), and
   • You have alerted the owner to your concerns, explaining in writing and in language that can be understood by the owner, the reasons for your more conservative design and the potential risks that the owner is incurring by insisting on a minimum code design, and
   • You have negotiated an indemnity from the owner, including an express indemnity for any third-party claims. (This, of course, will be the most difficult measure to achieve.)

Orchestrating the Building and Occupancy Permit Process

Managing the permit process begins with obtaining a building permit and continues throughout the project until the issuance of the occupancy permit. This takes patience, perseverance and strong management skills. You need to develop a good working relationship with the building department so you can navigate through the maze of bureaucratic procedures and paperwork. Getting to know your counterparts at "city hall" is an absolute necessity. Expect to spend significant time with the code officials and their inspection staff, and commit to regular meetings and ongoing follow-up. Learn how to "play the game" or forever feel out of touch with the code approval process.

Finally, take every opportunity to educate your clients to the realities of the code review process. Start with the scope of services and don’t stop until the occupancy permit is issued. It is important that clients realize the significant role that code compliance plays in the success or failure of their projects. Your clients must understand that code compliance is a moving target that rarely comes to rest until the project is constructed and the occupancy permit is issued. Explain that changes will almost always be needed to reconcile a two-dimensional design document with the realities of a three-dimensional world, a world of complex code books, overworked code officials, incomplete information, never ending decision-making and less than perfect design and construction.