Inspection, Acceptance, Warranties, and Commissioning
From the owner’s perspective, the primary objectives of any construction project generally fall into three categories: cost, schedule, and quality. The owner naturally desires high-quality construction, on schedule, and at a low cost. Unfortunately, these three objectives sometimes conflict with one another, and certain trade-offs are required. The natural give-and-take that occurs among these three project objectives is perhaps best illustrated by the remark often made by contractors to owners in jest: “Cost, schedule, and quality—pick any two; but you can’t have all three.” As the saying goes, many a truth is sometimes spoken in jest.
Other chapters of this book focus on what happens when construction costs escalate or schedule delays occur. This chapter focuses on the third prong of the cost/schedule/quality triumvirate by discussing issues that relate to construction quality: (1) inspections, (2) acceptance, (3) warranties, and (4) commissioning.
Inspections are the primary vehicle employed by an owner during the course of construction to ensure that appropriate quality standards are being met. Inspections typically are performed by the owner or the owner’s authorized representative periodically during the course of construction and again upon project completion. Timely and appropriate inspections afford an informed owner and contractor an opportunity to address quality problems before the work is complete and allow any necessary corrective work to be implemented when it is less costly.
Acceptance is a power generally vested by contract in the owner or the owner’s representative (e.g., the project architect or engineer). The owner’s right to inspect and accept the contractor’s work before payment can be a valuable tool if used properly. An owner should employ inspection and acceptance procedures that will identify and appropriately address detectable defects in the work and before they are “covered up.” Most construction contracts state that the owner’s “acceptance” of the work and payment for the work do not preclude the owner from later objecting to defective work. But an owner that fails to inspect the work and to reject nonconforming work may be doing itself a great disservice. Project commissioning is a comprehensive approach to quality assurance and acceptance, as well as a determination that building systems function as intended.
The word warranties has several different meanings in the construction context. One way is to refer to the various express and implied promises set out in every construction contract. Some, but not all, of these promises relate to quality issues. An example is the express warranty whereby the contractor promises to perform its work in a “good and workmanlike manner.” Another use of the word “warranties” is to describe the obligations of the contractor or a subcontractor, supplier, or manufacturer to address any quality problems that may be discovered after construction is complete. A construction contract typically provides that the contractor “warrants” its work for a period of one year (or some other defined time period) after substantial completion. This is usually a “repair” warranty, which requires the contractor to correct defective work upon notice given within the one-year (or other contractually defined) period. In most contracts—for example, the AIA A201 General Conditions of the Contract for Construction (2007 ed.)—the contractor also gives a warranty that its work is performed in a workmanlike manner and that all materials are new and conform to the contract requirements. The term of this warranty is limited only by the applicable statute of limitation for breach of contract claims.
It is also common that certain subcontractors and manufacturers of certain products and systems installed in a project will provide warranties. One purpose of such warranties is to allocate responsibility for defective work, equipment, and materials or for equipment and materials that cease to function properly after operating for a period of time.
Owners of both private and public construction projects generally employ representatives to inspect the quality of the contractor’s work. In private construction, a third party specially retained by the owner often performs these inspections. In public construction, however, government-employed inspectors often handle such inspections.
Inspection protects the owner, not the contractor. Therefore, the owner generally has no duty to inspect beyond its contract obligations. Even if the contract allows for owner inspection, such a provision generally is not interpreted as obligating the owner to inspect.1
If the owner assumes a contractual obligation to inspect, the owner can find itself liable for defective inspections or a failure to inspect. In Continental Insurance Co. v. City of Virginia Beach,2 when the contractor filed bankruptcy during construction, the public owner called on the contractor’s surety to complete the project. After discovering that the contractor’s work had not been properly performed, the surety sued the city for payments made to the contractor, which the surety contended could have been withheld and available to the surety if the defective work had been discovered through the city’s inspection. The court found that the city had assumed the duty of inspecting and testing the contractor’s work. The court held that the city had breached its inspection obligations, thereby prejudicing the surety when payments for defective work were made to the contractor. As a result, the court held that the surety was discharged from its bond obligations to the extent it was prejudiced by the city’s conduct.3
Owners often place the burden of inspections and quality control on the contractor by requiring the contractor to adhere to stringent quality control specifications, which may include the use of comprehensive quality control procedures during construction. Failure to inspect effectively, however, may affect the owner’s rights under applicable warranties once the project is accepted. Furthermore, the owner cannot, with impunity, perform inspections in such a manner as to delay or disrupt the contractor’s work or to alter contract requirements.
B. Standard Inspection Clauses
The rights and responsibilities of the owner and contractor in a typical construction contract regarding inspections are illustrated by the standard provisions found in industry documents. The standard clause used in federal government construction contracting, entitled Inspection of Construction, is set forth in Federal Acquisition Regulation (FAR) § 52.246–12. Examples of standard clauses used in many private construction contracts are found in: ConsensusDocs 200 Standard Agreement and General Conditions Between Owner and Constructor (© 2011, Revised 2014) [hereinafter ConsensusDocs 200], Section 3.7, “Tests and Inspections”; AIA A201, Article 12, “Uncovering and Correction of Work”; and Engineers Joint Contract Documents Committee C-700, Standard General Conditions of the Construction Contract (2013 ed.) [hereinafter EJCDC C-700], Paragraph 14.05, “Uncovering Work.”
1. Federal Government Contracting Inspection Clauses
FAR § 52.246–12 specifies that the government can inspect “at all reasonable times before acceptance to ensure strict compliance with the terms of the contract.” This clause provides that the inspection is solely for the government’s benefit and does not constitute or imply acceptance of the contractor’s work. The contractor, therefore, still must ensure compliance with contract requirements even though the government has conducted inspections.
Other standard federal government contract clauses relate to inspection as well. The “Material and Workmanship” clause, FAR § 52.236–5, provides that materials employed are to be “new and of the most suitable grade for the purposes intended” unless the contract specifically provides otherwise; that references to products by trade name are intended to set a standard of quality and not to limit competition; that anything installed without the required approval may be rejected; and that work must be performed in a “skillful and workmanlike manner.”
The “Permits and Responsibilities” clause of the standard federal government construction contract, FAR § 52.236–7, requires the contractor to take proper precautions to protect the work, the workers, the property of others, and third parties. The clause states that the contractor is responsible for damages to persons or property caused by the contractor’s fault or negligence, and places responsibility on the contractor for all materials delivered and work performed up until completion and acceptance by the government.4
The standard federal government “Use and Possession Prior to Completion” clause, FAR § 52.236–11, provides that the owner may take possession of or use a partially or totally completed part of a project without being deemed to have accepted the work. Before such possession or use, the contracting officer must give the contractor a list of work remaining to be done on the relevant portion of the project. Even if the owner fails to list a particular defect or item of work, however, the contractor still must comply with the contract terms.5
2. Industry Form Contract Inspection Clauses
For private contracts, forms such as ConsensusDocs 200 provide that the contractor must schedule all required tests, approvals, and inspections so as not to delay the project work and give proper notice to all required parties.6 ConsensusDocs 200 also provides that the owner is responsible for retaining independent testing firms and paying for the inspections; but the contractor is responsible for obtaining the certificates of testing, approval, and inspections.7 The ConsensusDocs 200 contract further provides that the contractor will be responsible for the costs of correction and retesting.8
ConsensusDocs 200 also provides that the owner can direct the contractor to uncover work that the owner did not require to be inspected so that the work can be inspected.9 If the work was properly performed or if the defective condition was caused by the owner or others, then the owner will pay for the costs of uncovering and inspecting the work and placing it back in its pre-inspection form. If the work does not conform to the contract requirements, the contractor must pay for the uncovering and correction of the work.10
AIA A201 provides that the contractor is responsible during construction for inspection of the work already performed to determine that the work conforms to the contract documents so additional work can be performed.11 The contractor is also required to secure and pay for inspections necessary for the proper execution and completion of the contract work and to obtain any required certificates of testing, inspection, or approval.12 The contractor bears the cost of correcting the failure if there is a defect in the contractor’s work.13
EJCDC C-700 generally provides that the contractor must “supervise, inspect, and direct the Work competently and efficiently…”14 Under this industry form document, the contractor also must inspect the work of others and report to the engineer any impacts of such other work on the contractor’s work (except for latent defects and deficiencies in such other work).15 EJCDC C-700 provides that the owner must pay the contractor “for an independent testing laboratory to perform all inspections,” tests, and approvals required by the contract documents,16 provided, however, the contractor is responsible for testing, inspection, and approvals: (1) required by any governing body having jurisdiction over the project; (2) necessary for the owner’s and engineer’s acceptance of materials, mix designs, or equipment incorporated in the work; (3) required as part of uncovering of defective work caused by the contractor; and (4) if expressly required by the contract documents.17
C. Safety-Related Inspection Obligations
Contracts may also impose safety-related inspection obligations in specific circumstances as well. For example, Article 10 of AIA A201 also makes the contractor responsible for initiating, maintaining, and supervising all safety precautions and programs in connection with contract performance, and requires the contractor to take reasonable precautions for the safety and protection of employees and other persons, the work itself (and materials and equipment incorporated or to be incorporated therein), and other property at or adjacent to the site.18 ConsensusDocs 200 also provides that the contractor is responsible for safety precautions and programs and that the contractor must provide the owner with notices required for safety purposes.19 EJCDC C-700 broadly states that the contractor “shall be solely responsible for initiating, maintaining and supervising all safety precautions and programs in connection with the Work.”20
The contractor is not, however, an insurer and therefore is not responsible for all jobsite injuries. For example, in Delaware, an employee of an independent contractor was denied recovery against the general contractor when the employee fell off the roof of a new home. The court stated that a general contractor that supervises jobsite safety conditions by making checklists, reporting safety issues to the independent contractor, and even terminating the independent contractor if the safety issues persist, has not assumed a duty to protect the safety of the independent contractor’s employees. The independent contractor was responsible for correcting any safety issues. Since the general contractor did not undertake responsibility for implementing safety measures, the employee of the independent contractor recovered nothing from the general contractor.21
D. Costs of Inspection
Although the owner may bear its own inspection costs, the contractor generally is required to bear the expense of providing the inspector with the facilities, labor, or material reasonably necessary to perform the test or inspection.22 Circumstances may exist, however, that would entitle the contractor to be reimbursed for expenses incurred for inspection or testing. For example, if the owner increases the cost of conducting the inspection or test by changing the location or requiring special inspection devices, the contractor may recover additional costs.23
The owner generally may examine completed work and require the contractor to remove or tear out defective or nonconforming work. If the work is defective or does not conform to the specification, the contractor must pay the costs of both the inspection and correction of the work. If inspection reveals the work is satisfactory, the contractor is entitled to a price adjustment for the additional costs and a time extension if completion is delayed.24
The cost of reinspection generally is assigned to the party whose action or inaction resulted in the reinspection.25 If, for example, the contractor’s work was not sufficiently complete at the time of the original inspection, the contractor should pay the costs of reinspection. Similarly, if the reinspection is the result of an earlier rejection, the contractor is responsible for the additional costs.26 Before any reinspection, however, the owner must provide a reasonable notification and a reasonable amount of time for the contractor to correct or complete the work.
ConsensusDocs 200 provides that the owner is responsible for inspection costs.27 But the contractor will be responsible for the cost of correction and retesting if the contractor’s work fails a test.28 Section 12.2.4 of AIA A201 requires the contractor to “bear the cost of correcting destroyed or damaged construction, whether completed or partially completed, of the Owner or separate contractors caused by the Contractor’s correction or removal of work that is not in accordance with the requirements of the Contract Documents.” Section 12.3 of AIA A201 authorizes the owner to accept nonconforming work instead of having it removed and replaced, and to reduce the contract price to account for such defective work. EJCDC C-700 makes the contractor responsible for the costs to repair defective work, that is, work not in accordance with the contract documents. Paragraph 14.04 of EJCDC C-700 allows the owner to accept defective work, but if the owner so chooses, the contractor is still responsible for:
all claims, costs, losses, and damages attributable to Owner’s evaluation of and determination to accept such defective Work…and for the diminished value of the Work to the extent not otherwise paid by Contractor pursuant to this sentence.
E. The Owner’s Right to Inspect
1. The Right, Not the Duty
Thorough, but reasonable, contemporaneous inspections can be the contractor’s best friend. Such inspections allow the owner or its representative to monitor the work periodically and inspect for deviations from the plans and specifications. If deficiencies do exist, and the owner or its representative reasonably objects, performance can be modified to make the work acceptable with minimal cost. In the event of an ambiguous requirement, the owner’s acquiescence to the work, as performed by the contractor, may show that the owner agreed with the contractor’s interpretation at the time of performance.29
Aware of the risks of overlooking defects during inspection, owners have sought to minimize contractors’ ability to rely on owners’ inspections. For example, AIA A201 provides in Section 9.4.2, with regard to the effect of issuing a Certificate for Payment, that “the issuance of a Certificate for Payment will not be a representation that the Architect has…made exhaustive or continuous on-site inspections to check the quality or quantity of the Work…”
The standard federal government “Inspection of Construction” clause, FAR § 52.246–12, is more specific: “Government inspections and tests are for the sole benefit of the Government and do not [r]elieve the Contractor of responsibility for providing adequate quality control measures…[or] [c]onstitute or imply acceptance…” This provision makes it clear that no inspection duty is imposed on the government; rather, the government has the right to inspect should it so desire.
The owner has an affirmative duty to inspect the work when the contract specifically contemplates or requires that the owner perform certain tests during the work.30 The owner may lose some of its specific rights and remedies if it fails to inspect or test in accordance with the contract terms, such as the right to reject items or have defects corrected if the contractor’s work fails a test, when a reasonable inspection would have uncovered such defects.
2. Scope of Inspection
The scope of the owner’s inspection rights often leads to disputes regarding the interpretation of specifications, quality of workmanship, and other “quality” determinations. The scope of an owner’s inspection is usually set forth in the contract. Inspections must be reasonable in scope when no specific inspection requirements are set forth. In federal government work, the scope of the inspection requirements depends on an analysis of the type of work to be delivered.
The standard federal government inspection clause generally controls construction contracts. The FAR, however, establishes four categories of contract quality requirements: (1) reliance on the contractor’s existing quality assurance systems as a substitute for government inspection and testing for commercial items; (2) government reliance on the contractor to perform all inspections and testing; (3) “standard” inspection requirements contained in the standard clauses, calling for inspections to be performed by both the contractor and the government; and (4) “higher-level quality requirements” prescribing more stringent inspections to be performed by the government.31
In most construction projects, the government will perform either the standard inspection or the higher-level quality inspection. The requirements for the standard inspection are set forth in the inspection clause, which provides that: (1) the contractor must establish an inspection system; (2) the government may inspect during performance; and (3) the contractor must maintain inspection records.32 The higher-level quality inspection requirements generally are set forth in special supplementary contract clauses implementing stricter quality control requirements.33
Even if the scope of inspections is set forth in the contract, as a general rule, the federal government may impose an unspecified alternative test as a basis for determining contract compliance. The new test must reasonably measure contract compliance. If the “specified” test can be viewed as establishing a standard of performance, however, a different test increasing the level of performance cannot be substituted without a change to the contract price.34
Not only does the government have the right to inspect at all places and times; the government also has the right to reinspect the same performance. Generally, the government may conduct reasonable, continuing inspections at any time before acceptance.35 There are exceptions regarding the government’s right to reinspect. Multiple inspections cannot be wholly inconsistent. Subjecting the contractor to inconsistent inspections amounts to an unreasonable interference with the contractor’s work and entitles the contractor to compensation.36
F. Rejection and Correction
After inspection, an owner has the right to accept the performance, reject the performance if it is nonconforming, require correction of nonconforming performance, or, in appropriate circumstances, terminate the contract for default.37 To enforce its rejection/correction remedy, the federal government must provide the contractor with notice of the alleged discrepancy within a “reasonable time” after discovery of the defects. The notice must include the reasons for the rejection.38 When the government fails to provide the reasons for the rejection in the initial notice and the contractor is prejudiced by such failure, the rejection can be overturned as ineffective. Furthermore, a failure to reject the performance in a reasonable time can be interpreted as an implied acceptance of the contractor’s performance.39
If the federal government rejects performance, ordinarily it must give the contractor an opportunity to correct the defects if they can be cured within the contract schedule.40 If the contracting officer orders correction instead of rejecting and requiring replacement of the work, the contractor is entitled to a reasonable time to make the correction, without regard to the original schedule.41
If the contractor fails to timely replace or correct rejected work, the federal government has three remedies. The government can: (1) terminate the contract for default and reprocure the supplies, services, or construction; (2) replace or correct the defective supplies, services, or construction by contract or by using government resources, at the contractor’s expense, under the inspection clause; or (3) retain the nonconforming supplies, services, or construction and reduce the contract price based on the difference in value between the work as delivered and the work contemplated by the contract.42
G. Limitation on Owner’s Inspections
Despite the owner’s broad inspection rights, improper inspections can give rise to certain rights and remedies on the contractor’s part—if, for example, “constructive changes” to the work or delays and disruptions result from the owner’s inspections. Several issues must be addressed to determine whether an improper inspection might be a “constructive change.”
Differences in opinion regarding the standards of performance required by the contract or the correct inspection test to be used often cause contractors to claim they are being required to perform extra work. Even if the contractor’s interpretation was correct and the inspector was wrong, the contractor still may be confronted with the argument that the inspector lacked the authority to change the contract and bind the owner.
The issue of the inspector’s authority can be complicated. Inspectors seldom have authority to change the contract requirements, but they do have authority to reject work. It is usually held, therefore, that an erroneous rejection is within the inspector’s authority and can form the basis of a contract extra. This assumes, of course, proper notice by the contractor and “performance under protest.”43 To avoid disputes over authority, the best procedure is to routinely provide written notice to an authorized owner-representative whenever the actions of an inspector are causing performance delay and cost beyond that contemplated by the contract.
The federal government frequently argues that its inspectors lack the authority to effect a constructive change. In one case, the government’s specifications for brick were strict, and the contractor’s chief mason complied with the requirements by rejecting between 20 and 25 percent of the brick. The manufacturer, the government’s onsite representative, and the architect agreed that the contractor was being overly critical and told the brick mason to stop rejecting brick. Thereafter, the government rejected the brickwork due to an undesirable basket-weave appearance and directed the contractor to remove and replace the brick.
The contractor demanded an equitable adjustment for its costs in removing and replacing the brick. The government argued that its onsite representative was not authorized to direct the contractor to stop rejecting brick. The board of contract appeals held that the inspector’s authority depends on the facts and conduct of each case and that the contracting officer can authorize technical personnel (such as inspectors) to give guidance or instruction about specification problems. Therefore, the government was liable for the constructive change that caused the placement and removal of the defective brick.44
2. Higher Standards of Performance
The owner may perform any reasonable inspection. But if the owner requires a higher standard of performance through the use of inspection procedures or tests more stringent than those called for by the contract or inconsistent with industry practice, the contractor should be entitled to additional compensation.45 Similarly, if the inspector requires the contractor to use materials or construction methods that the contract does not require and that cost more than the contractor’s chosen materials or methods, a compensable change may result.46
Problems may occur where the contract does not clearly define either the standard of workmanship required of the contractor or the standard of inspection to be employed. In such cases, inspectors often will rely on industry standards and trade customs, or even on subjective standards such as “skillful and workmanlike” construction. Where the use of such criteria actually requires a level of performance in excess of that reasonably contemplated when the parties entered into the contract, the contractor may be entitled to extra compensation.
For example, an inspector’s use of straightedges and other measuring tools to check stud alignment has been held to amount to a change when no such method was specified in the contract and the normal industry practice was to check such alignment by visual inspection.47
3. Rejecting Acceptable Work
An inspector’s wrongful rejection of acceptable work involves issues similar to the imposition of increased standards of performance. If work that should have been accepted is “corrected” to a higher standard of quality and additional costs are incurred in the process, a compensable change has occurred.48
Where specifications are ambiguous, an inspector’s silent acquiescence while the contractor performs in accordance with its own reasonable interpretation of the performance standards may establish that the contractor’s approach was reasonable and the work acceptable.49 Also, if the owner submits to the contractor what purports to be a complete list of defects in the work, the owner may later be prevented from rejecting work that had been corrected pursuant to such list on the grounds that its list amounted to a binding interpretation of ambiguous specifications.50
Generally, the owner can reject defective work at any time before acceptance of the work, and an inspector’s observation of nonconforming work does not necessarily preclude later rejection.51 If an owner’s delay in rejecting nonconforming work substantially prejudiced the contractor, however, the owner may be estopped, or prevented, from later rejecting such work.52 If the contractor has given clear notice of its interpretation of the standards and methods of performance that were used and that later became the subject of the dispute, then a finding of estoppel is more likely.
4. Delay and Disruption
Each construction contract includes an implied obligation on the owner not to unduly delay or hinder the contractor’s work. This duty extends to the owner’s exercise of its inspection rights. The standard federal inspection clause for construction contracts, FAR § 52.246–12(e), includes this as an express obligation where it states: “[T]he Government shall perform all inspection and tests in a manner that will not unnecessarily delay the work.”
This principle is similarly recognized in AIA A201 Section 9.10.1, which requires that the architect, upon receipt of a final payment application and the contractor’s written notice that the work is ready for final inspection and acceptance, “will promptly make such inspection.” Subsection 9.6.1 of ConsensusDocs 200 contains a similar requirement for prompt inspections by the owner and its design professional (architect or engineer). Likewise, Paragraph 15.05 of EJCDC C-700 requires the engineer to “promptly make a final inspection with Owner and Contractor…” Where the owner has unreasonably delayed or interfered with the contractor in conducting the final inspection, the contractor may be entitled to a time extension and recovery of additional costs or breach of contract damages.
The surrounding facts and circumstances will determine whether a particular delay was unreasonable. The basic test is whether the inspector’s actions were reasonably necessary to protect the owner’s interests or whether the owner’s legitimate objectives could have been accomplished by some other, less disruptive, means.53
Compensable delays also may be caused by multiple and inconsistent inspections.54 Likewise, the owner’s failure to make a timely inspection after a request by the contractor may result in owner liability.55 What may be a timely inspection in one situation can amount to an unreasonable delay in another. For example, in one case, a government inspection three days after the contractor’s request was held to be an unreasonable delay, but in another case a 10-day delay was not sufficient to make the inspection untimely.56 In both cases, the determination of reasonableness of the delay considered the state of the work and the nature of the work being inspected.
Unreasonable delays in reviewing and approving shop drawings, equipment submittals, material submittals, plans of operations, and the owner’s determinations as to what corrective action is required when defects are discovered have all been held to entitle the contractor to relief. Likewise, when an inspector interferes with a contractor’s employees, disrupts the performance sequence, or otherwise causes the work to be performed less efficiently, the contractor may be entitled to be reimbursed for the cost of resulting extra work. Such actions may also be deemed a breach of contract.57
H. Inspection by the Design Professional or Inspector
The party inspecting the work must perform such inspections adequately and without negligence. Architects, engineers, construction managers, and government inspectors may be liable to the owner, contractor, or other third parties as a result of failing to fulfill their inspection duties.
The contract’s inspection standards should be construed so as to reconcile inconsistencies. Where one contract provision called for inspections to be performed by sampling supplies by lot while another provision called for all supplies to meet specific standards, the court reconciled the alleged differences in the inspection standards, finding that the inspections of the lots did not override the rights of the owner and contractor to reject individual materials that did not meet the specific standards.58
Generally, a design professional is required to visit the site at regular intervals but is not required to perform exhaustive or continuous onsite inspections to check the quality or quantity of the work.59 The design professional also generally must inform the owner of the work’s progress and guard the owner against defects and deficiencies in the work.
If an inspecting party such as an architect or engineer fails to make adequate periodic inspections during the work, an owner may challenge whether that architect or engineer is immune from liability by virtue of a contract provision stating that the architect or engineer is not responsible for the contractor’s acts or omissions. In one case, the court noted that the architect had to visit the site periodically to be familiar with the progress and quality of the work, keep the owner informed about the work’s progress and quality, and guard the owner against defects in the work. Furthermore, the architect’s obligation to issue certificates of payment required familiarity with both quantity and quality of work. Therefore, the exculpatory provision excusing the architect from responsibility for construction methods and for the acts or omissions of the contractor did not immunize the architect from liability flowing from a breach of its duty to the owner.60
In another case, a design professional was held liable to an owner and the contractor’s surety for negligently inspecting a roof. Even after repeated warnings by a roofing expert that the roof was not being installed in accordance with the contract specifications, the design professional’s resident inspector informed the owner that the roof was fine and that “you don’t have to worry about it.” In reliance on the inspector’s assurances, the owner accepted the building and released all payments to the contractor. A few months later, the roof began to leak and the contractor’s attempts to solve the problem were unsuccessful.
The court ruled that the design professional had a duty to inspect the roof construction and to protect the owner against poor work by the contractor. A design professional is required to exercise ordinary professional skill and diligence, and this duty is nondelegable. Since the design professional breached its obligation to the owner under the above circumstances, the design professional was liable.61
I. Inspection by the Contractor
The contractor’s inspection duties in the routine performance of a construction contract typically include not only the inspection of the work in place, but an inspection of job conditions, including job cleanup, potential safety hazards, and monitoring work progress and schedule. In addition to inspecting its own work, the contractor must inspect the work of its subcontractors and material suppliers.
Many construction contracts impose specific duties on the contractor to perform such inspections. (See Section I.B of this chapter.) Even if no express contractual duty applies, prudence dictates that such inspections be carried out routinely. A regular process should be implemented for reporting and exchanging information in order for the contractor to promptly, expeditiously, and economically complete the project. Additionally, contractors generally cannot rely on inspection provisions allowing owners to perform inspections to relieve the contractor of its duty to perform its work properly if the owner’s inspection fails to detect deficiencies in the contractor’s work.62
The contractor also may have to obtain test results on work in place or materials to be used. Normally such tests are obtained through designated independent testing laboratories. For example, one usually must make test cylinders of structural concrete placed. Sometimes such tests are prescribed by the specifications, and in other cases they are imposed by industry standards incorporated in the contract documents. These inspections not only satisfy the contractor’s obligations to the owner but also help the contractor monitor its own work. If a failure occurs, such test results can also serve as relevant evidence in any corresponding dispute.
In federal government construction, the standard federal inspection clause places primary responsibility for contract compliance on the contractor. In addition, most federal agencies have included provisions in construction contracts that require the contractor to conduct inspections and ensure that the work complies with the plans and specifications. For example, one clause provides that “[t]he Contractor shall maintain an adequate inspection system and perform such inspections as will ensure that the work performed under the contract conforms to contract requirements. The Contractor shall maintain complete inspection records and make them available to the Government.”63 Similarly, the contract and applicable regulations also may include various contractor record-keeping and certification requirements. In one case, the board of contract appeals strictly interpreted such a provision.64