A scene that plays out thousands of times a year, and sucks countless millions of dollars of damages and attorneys’ fees out of the pockets of owners, contractors, and subcontractors, goes something like this. Halfway through construction of a large apartment building, inspectors notice some minor racking of the frame in the face of unusually high wind. The project is suspended for additional inspection, and it turns out that some of the structural members are slightly undersized. It is clear that remedial work and supplemental engineering is necessary to protect the structural integrity of the building. Thus the battle begins over who will bear the costs of the remedial work and the resulting delay damages.
The architect’s structural engineer points out that some of the members do not strictly comply with the plans and specifications. The owner then asserts a claim against the contractor. The contractor points out that the owner always promoted value engineering on the project, in light of which the contractor persuaded its steel fabricator to think about some modest changes to reduce costs. The contractor then brandishes out a sheaf of shop drawings that it passed through to the architect, whose team stamped the drawings “approved for construction” with typical boilerplate on the stamp about design intent, etc.
So who eats the losses under this scenario? The answer can be a tad tricky and depends on a number of facts, but for this brief introduction I want to reject immediately the most common response: “Because the contractor built in accordance with approved shop drawings, it cannot be liable for the deficient construction.” That statement, as intuitively plausible as it may seem, is not a viable defense.
Sure, the Spearin doctrine says that when a contractor builds in accordance with contract documents, it is not responsible for any resulting deficiencies in the building. But the catch here is that shop drawings are not contract documents. And that makes all the difference in the world.
Let me repeat: shop drawing are not contract documents. A contractor is obligated to build in accordance with the contract documents. A shop drawing, even one approved by the architect, is not a contract document. And that brute fact puts contractors and subcontractors at risk every day, because building in accordance with an “approved” shop drawing does not constitute building in accordance with contract documents.
That does not mean that the shop drawing review process is a waste of time; indeed, it is essential to any decent-sized project. But the proper understanding and use of the shop drawing process are vital to avoid the fiasco described above. In a nutshell, the shop drawing process gives subcontractors and contractors the opportunity to supplement plans and specifications as necessary to spell out details of construction. During that process, it also gives subcontractors and contractors the opportunity to note omissions from (or inconsistencies within) plans and specifications, or even to engage in perfectly helpful value engineering. But simply passing shop drawings through for “approval” is not enough to protect the subcontractor and contractor.
The very modest investment of time it takes to handle shop drawings properly will pay many times over in avoiding disputes. In addition, there are some legal doctrines that can help ameliorate the effects of botching the shop drawing process. These and other issues will be the subject of a 90-minute webinar entitled Shop Drawings: Risks & Obligations in the Preparation and Review Process. The program takes place on Wednesday, June 14 at 1:00 PM Eastern and offers a recording option to help everyone take advantage of this training opportunity. This is a live online interactive program that anyone in your company can attend from the convenience of your conference room.