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D4COST Software

  Limits to the Architect’s Authority to Reject Defective Work
Such Decisions Cannot Be Arbitrary and Based Solely on Personal Opinion

Arthur O'Leary, FAIA, MRIAI
 


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Assuring Construction Quality
Informed wisdom among experienced owners dictates having the architect oversee the contractor’s work as it progresses with the objective of assuring that the finished product will be in accordance with the contract documents. The owner would be comfortable with the expectation that the project is being built as intended and specified. In the event that defective or erroneous work is being carried out, the architect, hopefully, will see it and order it corrected or removed and replaced.

But this will not happen unless the construction contract subjects the contractor to the architect’s authority to judge the work and condemn it if necessary. Furthermore, the contract must grant the architect some practical way of enforcing such judgments.

On those rare occasions when workmanship or materials must be condemned, the architect always hopes that the contractor will accede willingly and without argument or rancor. However, when the rejection of work imposes a significant financial burden and loss of contract time, some contractors will not give in easily and will instead resist by all available means. Some contractors will defend rejected work even more strenuously when time delay would result in liability for payment of liquidated damages.

Source of Architect’s Authority
The architect’s authority to reject unsatisfactory work must be founded and defined in the construction contract. Without contractual authority, the architect lacks neither the power to pass judgment on the contractor’s workmanship or materials nor the power to impose effective sanctions.

Most construction contracts will include the AIA General Conditions (A201) or something similar. (Note 1) This part of the contract confers upon the architect the power to reject work that does not conform to the requirements of the contract documents.

Subparagraph 3.5.1 of A201 states that work not conforming to the contract documents and substitutions not properly approved and authorized may be considered defective. (Note 2)

Subparagraph 4.2.6 gives the architect the authority to reject work that does not conform to the contract documents. (Note 3)

The architect’s leverage to enforce instructions of condemnation is in controlling of payments to the contractor. A201 allows the architect to deduct the value of defective work not remedied from any payment certificate or to nullify any previous certificate to the extent necessary to protect the owner. (Note 4)

Considering the substantial possibility that the contractor will vigorously oppose the architect’s rejection of work, the architect should be very careful in judging the work and meticulous in documenting physical conditions and all administrative actions taken.

Standards for Judging
The primary criteria to be applied in weighing the acceptability of the contractor’s work are the requirements specified in the contract documents. An architect’s personal subjective standards are not relevant. In judging the suitability of workmanship or materials, the specified standards such as ASTM specifications, industry standards, building codes, and other published standards should be applied to determine acceptable minimums.

The architect cannot insist on a higher or different standard than that actually specified. If an architect expects more than the minimum levels acceptable under a certain standard, then it should have been so specified so the contractor could have priced it accordingly.

In condemning work, the architect should be prepared to make reference to the specific manner in which the specified standards have been violated. In some cases the basis of rejection will be failure to comply with previously submitted and approved samples, product data, or shop drawings.

The architect’s rejection of unacceptable work should always be prompt. It is not fair to the contractor to allow unsatisfactory work to stand for some time after it is available for examination before it is rejected.

The rejection should always be in writing and dated, with a copy to the owner. It does not have to be in any particular format and could be expressed as a comment in a field observation report or in the form of a memorandum or letter.

In some circumstances the architect cannot make a final determination of the acceptability of work without testing for strength or other physical characteristics. A201, 4.2.6 authorizes the architect to require additional testing or inspection of the work if it is considered necessary or advisable. Such additional testing must be paid for by the owner if the work proves to be in conformity with the specifications and by the contractor if it does not. (A201, 13.5.2 and 13.5.3)

Only the Owner Can Accept Defective Work
The contract allows the owner to accept non-conforming or defective work if that is preferable, rather than requiring its removal and replacement or correction. The contract price is then reduced as appropriate and equitable. 

In the event that the owner and contractor cannot agree on a price adjustment, the architect must make a decision for them. (A201, 12.3.1) If the architect’s determination is not acceptable to either or both parties, the matter may be appealed to mediation within thirty days. Otherwise, the architect’s decision becomes final. (A201, 4.5)

If the matter is one involving aesthetic effect, the architect’s decision is final without possibility of appeal to mediation or arbitration. (A201, 4.2.13 and 4.5.1)

The AIA General Conditions does not authorize the architect to unilaterally accept defective or non-conforming work. To do so without the owner’s knowledge and concurrence could be considered a breach of the architect’s fiduciary duty to the owner.

Substantial Performance
If a contractor in good faith uses a wrong material that is as good as, or almost as good as, what was specified, judges and arbitrators are reluctant to order removal and replacement, as this seems harsh and wasteful. The contractor is considered to have substantially performed the contract. They are more inclined to allow a credit to the owner in an amount that would compensate for any reduction in cost or market value. For example, using ash cabinets when birch is specified, or using brand “x” hardware when brand “y” is specified would probably not reduce the market value, even though the cost might be less. If an architect takes this same approach in administering the contract it is necessary to obtain the owner’s prior concurrence, as the architect’s authority does not extend to the imposition of compromises on the owner or contractor.

If the contractor does not act in good faith however, the doctrine of substantial performance would not apply and in that case judges and arbitrators have no trouble in charging the contractor for the value of removal and replacement or correction of the non-conforming work. It would be considered bad faith if a contractor submits a request for substitution that is denied by the architect and the contractor goes ahead and uses the rejected material anyway. This would not qualify as substantial performance.

If an inadvertent error, no matter how innocent, results in conditions not suitable for the proper function, safety, or stability of the building or not suitable or compatible with the architect’s design or aesthetic intent, it must be appropriately rectified by the contractor.

Consequential Damages
When a construction error results in damage to other parts of the building or to its contents, the architect’s rejection decision should include the cost of repairing any resulting consequential damage. For example, if roofing or flashings are improperly installed and they allow rainwater intrusion, any resulting damage to interior surfaces is considered consequential damage. The cost of repairing such consequential damage should be charged to the contractor.

If rectification of the damage involves additional architectural fees, such as for redesign or excessive administration, they should be billed to the owner and the construction contract sum reduced accordingly. (Note 5)

Owner’s Duty to Mitigate Damages
If the owner has occupancy or control of the building, as after completion or in remodeling work, the owner must do all that is possible to limit the amount of damage caused by the contractor’s defective or non-conforming work. For example, when there is a roof leak, the owner should move, remove, or cover valuables that might get wet and place protective plastic sheeting or vessels where needed. This is in satisfaction of the implied contractual duty to mitigate damages.

If the owner fails to lessen damages when possible, it would be difficult to hold the contractor responsible for consequential damages. All of the owner’s extra costs for necessary mitigation efforts should be charged to the contractor.

Architect’s Decision to Reject Work
The architect must make the final decision as to whether or not to reject the contractor’s defective or non-conforming work. Although the architect does not have the power to accept deviations from the contract requirements, the architect in some cases should advise the owner to accept certain deviating work. The architect’s duty would include a fair and impartial analysis of the advantages and disadvantages of retaining the contractor’s work. Factors to be considered in the architect’s recommendation include safety, structural stability, longevity, maintenance costs, appearance, and suitability for the intended purpose.

The architect’s final decision to reject should be an independent determination, without consideration of pressures imposed by the contractor or owner. The fact that a building inspector, lender’s representative, or other third party may be willing to accept a deviation from the contract requirements is irrelevant.

As with all other final determinations, the architect should always carefully examine the contract documents, perform the necessary technical research, order testing if appropriate, and obtain the full position of the owner and contractor before finalizing the decision. The rejection should be dated, in writing, should make reference to the specified standards, and should clearly state the basis and conditions of rejection. (Note 6)

Notes
1. General Conditions of the Contract for Construction, AIA Document A201-1997.
2. A201, Subparagraph 3.5.1: The Contractor warrants to the Owner and Architect that materials and equipment furnished under the Contract will be of good quality and new unless otherwise required or permitted by the Contract Documents, that the Work will be free from defects not inherent in the quality required or permitted, and that the Work will conform to the requirements of the Contract Documents. Work not conforming to these requirements, including substitutions not properly approved and authorized, may be considered defective. The Contractor’s warranty excludes remedy for damage or defect caused by abuse, modifications not executed by the Contractor, improper or insufficient maintenance, improper operation, or normal wear and tear and normal usage. If required by the Architect, the Contractor shall furnish satisfactory evidence as to the kind and quality of materials and equipment.
3. A201, Subparagraph 4.2.6: The Architect will have authority to reject Work which does not conform to the Contract Documents. Whenever the Architect considers it necessary or advisable, the Architect will have authority to require additional inspection or testing of the Work in accordance with Subparagraphs 13.5.2 and 13.5.3, whether or not such Work is fabricated, installed or completed. However, neither this authority of the Architect nor a decision made in good faith either to exercise or not to exercise such authority shall give rise to a duty or responsibility of the Architect to the Contractor, Subcontractors, material and equipment suppliers, their agents or employees, or other persons or entities performing portions of the Work.
4. A201, Clause 9.5.1.1.
5. A201, Subparagraphs 4.3.9, 10.2.1.2, and 10.2.5.
6. This article is based on a similar article first published in Design Cost & Data, Mar-Jun 1991 Issue. For more information on this and related topics, see A Guide to Successful Construction - Effective Contract Administration, by Arthur F. O’Leary, FAIA, MRIAI.

Arthur O’Leary solicits suggestions from the readers of Design Cost Data for subjects they would like to see covered in the future. Please email him at art@dcd.com with any questions, thoughts, or subjects that you would like to see covered related to the practice of architecture or construction law.



“A Guide to Successful Construction: Effective Contract Administration” by Arthur F. O’Leary, FAIA, MRIAI or “Construction Nightmare Jobs From Hell & How To Avoid Them” by Arthur F. O’Leary and James Acret are available from bookworkz.com or call DCD at 800-533-5680.


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