Considerations for the design consultant

BY ROBERT KENNALEY AND JOSH WINTER

This month we revisit a topic we have not written on for some time: the role of the design consultant, with respect to contractual relationships, the tender process, and review and inspection responsibilities.

Many design consultants want to control the quality of their work. Accordingly, they either hire the contractor directly or insist a contractor of their choosing be employed. Design consultants, however, should never hire the contractor or perform the physical work themselves unless they are prepared to meet all of the contractor’s obligations. They must have the proper insurance, be responsible for the contractor’s defaults and be prepared to ensure that all applicable laws are followed on site, including the many requirements of the Occupational Health and Safety Act.

TAKING ON ADDITIONAL ROLES

The owner, and not the consultant, should generally contract with the contractor for the physical installation of the consultant’s design. The designer may also offer other services, including the administration of a tender process for the selection of a contractor and contract administration services, including payment approvals, the review and approval of change requests, and the review and inspection of the work. Through these services, the consultant can play a role in ensuring the quality of the finished product.

In administering a tender process, the design consultant generally acts as the agent of the owner and must therefore understand the owner’s legal obligations in that regard. If the consultant breaches the owner’s obligations to one or more bidders in the process, the owner may have recourse against the consultant in the event of a claim.

The law of tendering in Canada is developing, and it is not possible to review in this space the many issues that can arise with respect to a tender. However, there are general principles which consultants in those administrative roles should review. If the process involves any suggestion that those providing quotes are bidding on the same scope and are expected to hold their prices capable of acceptance for some period of time, for example, a tender process is likely established and tendering obligations would arise. We will briefly review these below.

MAINTAINING A LEVEL PLAYING FIELD

Tender documents themselves can be lengthy and complicated or limited to a set of drawings and a request for quotations. All relevant information which might help the bidder’s price the work and which is known to, or in the possession of the owner or the consultant, should be disclosed as part of the tender package. Bidders must also be given equal access to all available information. Thus, where one bidder seeks a clarification of the tender documents prior to submitting its bid, clarifications or further information should be provided, if at all, to all bidders.

Consultants should also ensure that the contract between the owner and the contractor, (whether it is put out to tender or otherwise) requires the contractor to follow the instructions of the consultant in making the work available for inspection and correction of deficiencies.

Consultants who administer a tender process on behalf of an owner, should never themselves award the contract, but should only make recommendations to the client. In that regard, only compliant bids should be accepted for consideration. Bids which contain clarifications should generally be rejected. Rather than submitting a clarification with the bid (to state, for example, that the price does not include for fiber-based filter cloth), bidders should request clarification before submitting the bid (to ask, for example, what quality of filter cloth is to be used). Also, any bid which could be interpreted as a ‘counter-offer’ should be rejected. This occurs where a bidder suggests the work would be cheaper or better if a certain change to the drawings or specifications were approved.

Bids should only be evaluated on the basis of criteria disclosed in the tender documents. If in evaluating the bids, the consultant or owner wants to consider their history of working with the bidder, or the bidder’s qualifications, location or experience, or any factor other than price, the bidders should be told of this fact when they are asked to submit a bid.

In addition, there is an overriding obligation on owners and their agents who administer the tender process to treat all compliant bidders fairly. What must be done to meet this obligation will, of course, vary under different circumstances. Consultants should keep this obligation in mind when the owner indicates it would like to negotiate a better price after bids have been received. A failure to treat all bidders fairly could result in a claim against the owner.

In the end, if a consultant wishes to recommend a bidder who did not submit the lowest price, they should have a good reason for doing so based on criteria which was disclosed in the tender documents. Where a bid is so low as to suggest the bidder has made a mistake, inquiries should be made to the bidder to determine why the bid was so low. This avoids the situation where the bidder later objects he had a different, but appropriate, method of work which made their bid cheaper.

REVIEW AND INSPECTION RESPONSIBILITIES

Moving along in discussing the role of the consultant, and absent expressed terms to the contrary, consultants may be expected to inspect the work. Consultants who wish to avoid inspection responsibilities should therefore expressly exclude them in their design services agreements.

Consultants who agree to perform review and inspection responsibilities will be required to exercise reasonable care and skill in that regard. This generally involves being on site to ensure key elements of the work are installed properly, which usually involves ensuring important stages of the work have been inspected before it is covered up. The scope of the inspection responsibility should be made clear in the consultant’s agreement to avoid confusion.

Consultants should not agree to provide “supervision” of construction because consultants will not be ‘looking over the contractor’s shoulder’ as the work is performed. Limiting the responsibility to inspection, rather than supervision, is generally sufficient to meet the client’s needs.

Rob Kennaley and Josh Winter practice construction law in Toronto and Simcoe, Ont. They speak and write on construction law issues and can be reached for comment at 416-700-4142 or at rjk@kennaley.ca and jwinter@kennaley.ca. This material is for information purposes and is not intended to provide legal advice. Readers who have concerns about any particular circumstances are encouraged to seek independent legal advice in that regards.

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