Project closeout represents a unique set of risks for the design professional. Not only is the design professional engaged in closing out its contract with the client, but also the client’s contract with the project contractor. As a consequence, the design professional is responsible for ensuring that it has fulfilled its responsibilities to the client and that the contractor has fulfilled theirs. Each responsibility carries associated risks that the design professional must recognize and attempt to control.

As-Built Drawings

Despite being required to conduct only periodic visits to the project site during construction, typically, the design professional is expected to prepare and seal drawings representing the project as-builts or record drawings. As a result, the design professional is called upon to use information provided to it by the contractor. Unfortunately, any misrepresentation of the actual conditions on the as-built or record drawings may result in a claim being asserted against the design professional and not the contractor.

In order to control its risk exposure, the design professional should avoid signing and sealing as-built or record drawings where the design professional cannot reasonably guarantee the information contained in the as-built or record drawings, or where the design professional cannot rely on the information being provided by the contractor or client. Unless the design professional is on site throughout construction, the design professional will have to utilize information regarding construction that is provided by the contractor and other third parties. The design professional may become liable for the accuracy and validity of the information provided to it by others once the information in is incorporated into the design professional’s as-built or record drawings.

Therefore, the design professional should establish with the client that it will prepare as-built or record drawings that reflect the conditions to the “best knowledge” of the design professional based its periodic observations of the site and information provided by others. This understanding should be established prior to the commencement of the project. The design professional’s risk exposure related to the development of as-built or record drawings should be described in the parties’ contract. The design professional should also seek to set the scope of any indemnification and/or release it wants from the client for claims that may arise as a result of information contained in the as-built or record drawings that were provided to the design professional by others.

Punchlist and Final Completion

Similar to the preparation of as-built drawings, the design professional is usually requested to “certify” that the project has been properly and fully completed by the contractor based upon the knowledge gained by the design professional through periodic site visits. If latent defects are discovered subsequent to the design professional’s “certification,” the design professional may be deemed responsible as a result of failing to discover same.

In order to avoid the aforementioned risk, the design professional should seek to limit its role in close-out to “assisting” or “aiding” the client in determining that the project is complete. If required by the client to “certify” completion, the design professional should obtain disclaimers that the certification is based upon its “best knowledge” and does not guarantee that defects do not exist. It should be clear that the contractor is solely responsible for any defective or deficient work regardless of the review or certification provided by the design professional. The disclaimer should also apply to any punchlist prepared by the design professional. The design professional should not be held liable for any defective or deficient work that is not placed on the punchlist that the design professional could not reasonably observe. Without the aforementioned protections, the design professional may find itself defending against claims that represent liability it should not be assuming.

Warranties and Guarantees

Many materials and most equipment incorporated into the project are accompanied by warranties and guarantees. Repeatedly, design professionals are requested by clients to assume responsibility for obtaining all warranties and guarantees from the contractor during the close out phase. The volume of warranties and guarantees can be daunting for the design professional. As a means to prevent a warranty or guaranty from slipping through the cracks, the design professional should prepare a checklist of project/contract required guarantees and warranties at the start of the project. The checklist should be used to make certain the required guarantees and warranties are received and turned over to the client.

It should be noted that contractors will submit warranties and guarantees as equipment and material is installed in the project. The design professional should be careful to accept submitted warranties and guarantees under the condition that the warranty period does not commence to run prior to the completion of the project. Otherwise, the warranty periods may begin to run prior to the start-up or use of the corresponding piece of equipment. All warranty and guaranty periods should be coordinated with the completion of the project.

The design professional should also be wary of obligations that require it to participate in project site reviews after the experience of maintenance warranty or operation periods. Typically conducted a year after the project is completed; the purpose of the review is to determine the condition of the project and equipment and materials contained therein. Unfortunately, the performance of this review is complicated by wear and tear on the structure, and the building’s use. Residences and commercial retail and office buildings will be filled with furniture, sales counters, products, storage materials, supplies and people when the review is conducted. As a consequence, the design professional’s ability to thoroughly review the building will be hindered by impaired access and sight lines. The design professional should make sure that its contract recognizes that its warranty period review will be affected and limited by the above items.

Final Payment

Final payment to design professionals is sometimes tied to a release of claim rights against the client. This puts the design professional in a position of either dropping claims or not accepting final payment. It may also result in a waiver of future claims the design professional may have against the client. For example, the design professional may be prevented from asserting a crossclaim against the client if a latent defect is discovered on the project after completion which leads the client to institute an action against the contractor and design professional. Even if the underlying defect is related to direction provided by the client to the contractor and the design professional has no responsibility for it, the design professional may be precluded from seeking indemnification or recovery from the client as a result of accepting final payment under the above conditions. A design professional should not accept a provision that conditions receipt of final payment upon a waiver of claims.