USA Law and Practice Contributed by: Richard L. Rosen, Leonard S. Salis and Dennison Marzocco, Rosen Karol Salis PLLC
Design-Bid-Build This is the traditional method of construction where the owner hires an architect or engineer to design the project. General contractors then bid on the project. The lowest bidder typically gets the assignment and is responsible for com - pleting the project according to the plans. Other factors, such as the general contractor’s reputa - tion (good or bad) may, however, play a part in the selection process. Design-Build This is when the owner hires a single design and construction firm to complete the project. Construction Manager at Risk This is a project delivery method where a con - struction manager oversees the project from start to finish and takes on a significant portion of the project’s risk by providing a guaranteed maximum price. The construction manager is involved early in the project and is responsible for managing the design phase. After the design phase is completed, the construction manager steps into the role of a general contractor and completes the project. Integrated Project Delivery This approach is used in highly complex projects in which the owner, architect, general contractor and other parties work collaboratively to devel - op the design and construction plan. Designing and calculating is a challenging aspect of this approach. 7.3 Management of Construction Risk Various devices can be used to manage and mit - igate construction risk in a project, all of which may be subject to various legal limitations and exclusions. Examples are as follows.
Contractual Indemnification This provides for one party to defend, indemnify and hold harmless the other party from certain losses or damages; for example, a contractor may be contractually bound to indemnify the owner from personal injury suits brought by workers and subcontractors related to the con - tractor’s negligence. Warranties These are promises by one party to the other party regarding the quality or performance of the workmanship and materials used in the con - struction; for example, a contractor may warrant that its work will be free from certain defects for a period of time following the completion of the work. Limitations of Liability These provisions limit the amount of damages that one party can recover from another party; for example, the contractor’s liability for the own - ers lost profits or business interruption may be limited to a defined amount or paid in a certain manner. Damage Waivers These typically provide for one party to agree to waive its right to recover for certain types of damages where a breach of contract or other event causes damage. It is typical during the course of each stage of design and construc - tion for a contractor to request the owner to sign damage waivers related to work that has been completed, inspected and accepted by the owner. 7.4 Management of Schedule-Related Risk Schedule-related risk is a significant issue for construction. However, there are various ways to mitigate the risk.
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