More often these days design professionals are offering construction management in their list of job titles. Still, determining professional and contractor liabilities associated with these ever-evolving services tends to be somewhat difficult. At the end of the day, issues related to the job falls upon these professionals and place the construction manager at risk. When dealing with general types of construction management, as a broker you must look at the risks involved and help your clients find better ways of managing those risks.
Advisors and Constructors face similar risks
The CM advisor approach is more suited to public-sector projects that involve multiple prime contractors or where competitive bidding is required. As a CM advisor, a design professional generally serves as an advisor to the owner throughout the course of the project. His or her duty includes providing pre-construction services such as estimating, scheduling and constructability reviews. In addition they must coordinate the work of one general contractor or several prime contractors.
The CM constructor typically works for the owner and alongside the prime design professional and is responsible for tasks of management as well as construction, and includes safety on the jobsite. The CM constructor assumes the same warranties as the general contractor by taking responsibility for the entire construction project, from permits, to bids, and right through to the punch list. The CM holds all subcontracts for construction as well.
Keep in mind that many (although not all) jurisdictions require a contractor’s license for anyone who performs the duties of a contractor. Performing any service without a required license is a violation of statute subject to sanctions.
Fortunately most professional liability (PL) policies will cover claims arising from the professional services a design professional renders as a construction manager. However, most PL policies don’t cover certain aspects of the construction risk (i.e., faulty workmanship fabrication, erection, installation, assembly or the supplying of products and materials). In addition, there is no coverage available for the economic risk of providing a guaranteed maximum price, as is often done by CM constructors.
Several areas of liability occur putting a construction manager at risk when providing CM services. The degree to which your client may assume these risks depends on their role and their responsibilities as stated in the contract.