Design errors and omissions: recording them so recovery is possible
Every set of construction documents has gaps. Some are small and get resolved in an RFI. Some cost real money. The design agreement and the architect's professional liability policy exist for the second kind, but recovery under either depends on a record that was kept while the project was running.
Most owners never pursue recovery, and that is often the right commercial choice. The problem is owners who cannot pursue it because the register was never kept. This post is about keeping the record so the decision stays with the owner.
Error, omission, and betterment
Three words do most of the work in any design recovery conversation. An error is something drawn wrong: a beam sized too small, a duct that hits structure. An omission is something not drawn that should have been: a missing fire damper, an unspecified finish. Betterment is the value the owner would have paid anyway had the design been right the first time.
Recovery, where it happens, is usually for the cost above betterment. If a missing fire damper costs $2,400 to install during rough in and $6,100 to install after the ceiling is closed, the betterment is $2,400 and the recoverable amount is closer to $3,700. An owner who records only the $6,100 change order has lost that distinction.
What to record on each design gap change
The fields below turn a change order into evidence. They take minutes to fill in at the time and cannot be reconstructed later.
The document that was wrong
Sheet number, revision, and the specific detail or note. If an RFI identified the problem, the RFI number and the architect's response. The response often contains the admission that matters, in the form of a revised sketch.
The betterment estimate
What the work would have cost had it been in the GMP documents. This is an owner's estimate, and it can be rough. The contractor can sometimes provide it. Record it alongside the actual change order amount so the premium is visible.
The cause, and the contractor's proposed cause
Record design gap as the owner's cause. If the contractor proposed something else, keep that too. A change the contractor labeled coordination but the owner labeled design gap is a change both parties need to discuss before it is executed.
The design team's response
Whether the architect agreed, disagreed, or said nothing. A short note with a date. Silence over a long series of changes is itself a pattern.
Why the total matters more than any one change
A single design gap is a normal part of construction. Professional liability carriers expect some level of imperfection and design agreements often reflect that. What changes the conversation is the total, and the pattern behind it. Fifty small gaps in the mechanical drawings tell a different story than fifty small gaps spread across every discipline.
Consider a fictional $71 million K12 high school on CM at risk. Over the project the owner's register records 88 changes with a design gap cause, totalling $1.9 million in change orders with an estimated betterment of $1.1 million. The premium, about $800,000, is concentrated in the mechanical and electrical sets. The owner has a choice at closeout: raise it with the architect, negotiate a fee reduction, pursue the carrier, or let it go. Without the register, the owner would have had none of those choices, only a contingency that ran out and a vague sense that the drawings were not great.
What the record is not
The owner's register is not a claim. It does not decide whether the architect met the standard of care, and it should not try to. Whether an error is recoverable depends on the design agreement, the standard of care in the jurisdiction, and facts that a lawyer and an expert will look at later. Check your design agreement for notice requirements on design claims, because some require the owner to raise issues within a stated period.
What the register does is preserve the option. Costwitness keeps design gap as a cause on the change order register, with the betterment estimate and the source document on each entry, and reports the running total by discipline. The owner decides what to do with it.
This month
- Read the design agreement for any notice or claim period that applies to design deficiencies, and note the date it would expire.
- Go back through executed changes and mark every one that began with an RFI that produced a revised sketch, then assign a cause to each.
- Add a betterment estimate column to the register and fill it in for every design gap entry, even roughly.
Questions on this
Does recording a change as design gap damage the relationship with the architect?
It should not, if it is done plainly and from the start. Architects expect owners to track cause. What damages relationships is a surprise at closeout, when an owner presents a list that was never discussed. Sharing the running total quarterly keeps it ordinary.
Can the contractor be asked to separate betterment from premium on a PCO?
Yes, and many contractors will do it if asked at the time. It is much harder after the change is executed. Make it a standing request on any PCO the owner intends to classify as design gap.
Is every design gap a potential recovery?
No. Most are within the range of imperfection the design profession and its carriers treat as normal. The register is not a list of claims. It is a record that lets the owner see whether the total and the pattern are outside normal, and decide from there.
In the product
Change order register, Contingency ledger, Monthly owner report. Free tool: Change Order Exposure.
Keep reading
Earlier: Change order exposure by cause: splitting owner cost from contractor cost. Later: Markup on change orders: fee, general conditions and insurance. All articles on change orders.
See the cause register on a project like yours.
Thirty minutes on a call. The change order register with causes, the audit trail, and the notice clock, on a fictional project.