Type: Law Bulletins
Date: 06/17/2013

Public Project Construction Managers Beware: New Project Delivery Methods May Alter Perception of the Role Played by Construction Manager-Advisors

In September 2011, the Ohio Construction Reform Statutes became law. The legislation allowed public sector owners to adopt project delivery methods that varied from the traditional design, multiple prime bid and construct methodology with a Construction Manager-Advisor (CMa). New project delivery methods were permitted, including General Contracting (GC), Construction Manager at-Risk (CMr), and design-build models. This change enhanced the authority that construction managers could exercise by allowing them to enter into contracts with constructors, thereby providing them with contractual authority to directly control the construction activities.

Source of Confusion

With the expanded variety of project delivery systems available to public owners, the role of the construction manager has changed from simply that of a CMa to possibly a CMr or a member of a design-build team. The latter two delivery methods include a so-called best value selection process for determining which bidder will be awarded public contracts. While the benefits of these options are apparent, the movement away from the traditional multiple prime project delivery method has at times resulted in unexpected consequences. For example, due to the intermediary role of the CMr or CMa and the scope of its interaction with governmental authorities such as the Ohio Environmental Protection Agency (Ohio EPA), there is an expectation that the CMr or CMa will obtain certain permits and bear responsibility for regulatory compliance. Construction managers and general contractors need to remain vigilant so that they do not take on additional liability – albeit unintentionally – when interacting with governmental representatives.

Additional Liability May Be Imposed

Unexpected consequences have occurred in a number of public construction projects. For instance, entities responsible for construction projects that disturb more than one acre of land must obtain an individual NPDES or general storm water discharge permit from Ohio EPA. A general contractor functioning as a CMr, or a participant in a design-build team for a general contractor, might be asked to, or required to, become a joint holder of the storm water permit along with the contractor and owner and may be characterized as an “operator” who has operational control over construction plans and specifications and day-to-day operational control of activities.

Under these circumstances, a traditional CMa or a general contractor may be subject to liability or demands for remedial measures because Ohio EPA considers that person a responsible party for compliance with all aspects of the storm water permit, despite the fact that the contract documents specifically assign that responsibility to another person or party (generally the owner or another contractor responsible for the land disturbance). Since the recently added project delivery systems are relatively new in Ohio, enforcement authorities may not understand the specific and limited roles played by the traditional CMa or general contractor with regard to directly managing construction activity, specifically storm water pollution minimization and compliance. Ultimately, this lack of knowledge could result in government charges/allegations that the CMa is an “operator,” responsible for unauthorized or improper discharge and financial responsibility for fines and penalties imposed by the Ohio EPA, despite the fact that the CMa has no contractual ability (no privity) to control the actions of the responsible parties.

Possible Solutions

To avoid assumption of liability and minimize exposure to financial risk, contractors who continue to serve in the traditional CMa role should take steps to minimize the risk that the governmental agencies will mischaracterize them as having operational control over various aspects of the jobsite, including storm water management:

  • If possible, fully define the responsibilities assumed by the construction manager-advisor (as well as those not assumed) in the contract documents.
  • Don’t step outside your role (i.e., the CMa cannot and should not speak for the responsible parties (generally the site development contractor and owner)).
  • Don’t take on more responsibility than required (e.g., in the case of storm water permits, do not escort Ohio EPA officials around a jobsite when the purpose of their visit is to inspect storm water discharge protection).
  • Give governmental representatives the contact name and telephone number of the party responsible on the site.
  • Be cautious of written communication wherein responsibility for work outside of your contractual sphere might be assumed.
  • Correct or clarify in writing any miscommunications or mistakes with regard to responsibilities.
By carefully defining the CMa’s role and by remaining diligent, a CMa may minimize its exposure to responsibility for work outside of its control. 

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