Legal Environment and Contract Documents
The emergence of BIM as a vehicle for dramatic change in design and construction occurs in a legal environment that has not fully come to grips with all the risk management implications of the underlying technology of electronic representation, or transmission of documents of any type. Some concerns are obvious—what are the liabilities associated with participating and collaborating in the model? As the use of BIM expands, other concerns are only beginning to be recognized.
Other issues that should be understood and considered:
- Methods for maintaining version control of electronic documents, including a
depository of record copies of transmitted and received electronic documents. - Specific privacy and security requirements.
- Storage and retrieval requirements for electronic documents and data.
The parties should review contract provisions in the design and construction agreements that address the line and fl ow of communications among the project parties. This allows them to assess whether such provisions need modification in appropriate, limited circumstances to permit direct communications among parties not in contractual privily, such as the principal design professional and aspecialty contractor performing a portion of the design. - Contractual reporting requirements for known or observed errors or omissions in contract documents should be reviewed, to ascertain whether they are adequate and consistent given the potentially increased pace of electronic document exchanges.
- Confidentiality provisions should be reviewed for consistency with similar
requirements in exchange agreements.
Insurance
Any convergence of the design and construction processes signals the need for contractors to review not only their overall risk profiles, but also their risk-financing programs. BIM presents many of the same risk management questions contractors already face as they increasingly provide reconstruction services that require them to analyze, price, and suggest modifications to the architect’s design prior to its completion. Therefore, it is strongly advised that any contractor looking to participate in the BIM process consult with an insurance advisor to examine any potential increase in risk as well as the appropriateness of its current insurance coverage.
For example, the Commercial General Liability (CGL) policy should be examined. Unless so endorsed, the industry standard Insurance Services Organization (ISO) CGL policy does not contain an exclusion pertaining to the rendering of design and/or professional services. However, many insurers will add such exclusionary language by endorsement. The optimal situation for a contractor that undertakes design-build projects is to have a CGL policy with no professional services exclusion. The next-best option is to have the CGL policy endorsed with ISO form CG 22 80. This endorsement excludes coverage for claims arising out of the rendering of design services as a standalone service, but will provide coverage where the contractor also builds the project, i.e., design-build. Bear in mind that the CGL policy will respond only to claims for third-party Bodily Injury (BI) and/or Property Damage (PD) arising
out of a design error.
Exposures Checklist
If you answer yes to one or more of the following provisions of services, it is recommended that you discuss these exposures with both your legal and insurance advisers. Making these advisers aware of such exposures will allow for an appropriate dialogue to address the contractual and risk transfer/risk-financing options available for such exposures.
Surety Bonding Industry
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