Design liability and right-of-way risk allocation are topics addressed in a legal research digest recently published by the Transportation Research Board’s National Cooperative Highway Research Program (NCHRP).  The report, which can be downloaded here [Liability of Design-Builders for Design, Construction, and Acquisition Claims], discusses statutes, case law and contract language relevant to design liability, addresses how the right of way acquisition process interrelates with design-build projects, and analyzes how design-build contracts allocate the related risks.  The report was authored by Michael Loulakis (Capital Project Strategies, LLC); Nancy C. Smith, Donna L. Brady, and Rick E. Rayl (Nossaman LLP); and Douglas D. Gransberg (Gransberg and Associates).  Additional Nossaman attorneys also assisted in research and drafting, including Steve Roberts, Casey Johnson, Steven Hardt and Frank Liu.

This report provides information regarding a wide range of legal issues relevant both to transportation agencies interested in using design-build and the consultants and contractors who work on design-build projects.  Topics addressed in the report include:

  • Principles of Construction and Design Liability, including standards of care, theSpearin doctrine, and rights of third parties to sue designers
  • Design-Build Contract Clauses Affecting Liability, including disclaimers of liability, provisions regarding design development, standard of care/warranty, indemnity and limitations of liability
  • Procurement and Contract Administration Issues Affecting Design and Design Liability, including owner-provided design requirements, design review process, issues relating to differing site conditions, and alternative technical concepts
  • Right-of-Way and Design-Build Processes, including a discussion of federal requirements affecting property acquisitions and different approaches to allocation of responsibility and risk for right-of-way acquisition
  • Case Law Addressing Design and Construction Liability

The report includes appendices providing summary-level information regarding:

  • Right-of-Way Requirements and Contract Terms for a number of projects
  • Anti-Indemnity Statutes Applicable to Public Agency Contracts
  • Statutes of Repose
  • Certificate of Merit Statutes
  • Sovereign Immunity Statutes in Various States

The report also notes and discusses key proposed changes to the federal regulations that govern design-build procurements.  Those changes were proposed in November 2014 and remain pending.  It is not yet clear when – or even whether – those changes will take effect.  The proposed regulations can be tracked at http://www.regulations.gov/#!docketDetail;D=FHWA-2014-0026.