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Scopes of Services for Design Professionals Part 3 – Limitations: Introduction and Essentials

By Kevin O'Beirne, PE, FCSI, CCS, CCCA, CDT posted 06-27-2023 05:09 PM

This is the third in a six-part series on this blog addressing design professionals’ scopes of services, comprised of: (a) Part 1 – Key Concepts and Source Documents; (b) Part 2 – Elements of Design Professionals’ Scopes of Services; (c) Part 3 – Limitations: Introduction and Essentials; (d) Part 4 – Limitations: Construction Documents; (e) Part 5 – Limitations: Permitting and Disagreements; and (f) Part 6 – Elevated Standard of Care, construction Cost Estimates, and Phased Authorizations.
Introduction to Limiting the Scope of Services
In professional services contracts and construction contracts, risk is transferred to another party for a price. Because no reasonable contract is entirely without a cap of some sort on compensation, no contract for design professional services should include an open-ended scope of services obligating the design professional to perform, for a finite compensation amount, all services that might be necessary or desirable.
Limits in the scope are necessary to bind the design professional to services for which appropriate compensation is reasonably expected. When a client seeks to transfer to the design professional substantial risk and responsibility in return for very low compensation, the client’s expectations might be unrealistic. After all, they should not expect the design professional to undertake unlimited fiduciary responsibilities in return for compensation of only $10, so the scope of services is inherently both a scope-defining and scope -limiting document
A detailed scope of services takes time and effort to develop. Because many architectural and engineering consultants usually juggle many priorities, they often adopt the expedient of preparing brief, generalized scopes of services. One or both parties may later rue broad scope language; often, the party with the regrets is the design professional.
Many projects have course changes and modifications. When a change in the project prompts an amendment for a change in scope, compensation, and/or time of performance, it is usually essential that the scope of services clearly addresses what is, and is not, included, to serve as the basis for negotiating an equitable amendment. However, when the original scope of services uses broad wording, negotiating an equitable amendment may be more challenging than might be the case with clear, detailed scope language. Examples of broadly worded scope language, repeatedly seen by this writer, include, “Engineer shall prepare all drawings and specifications for the project,” “Consultant shall obtain for the Client all necessary permits and approvals,” and “Architect shall review and approve, or take other appropriate action, on all shop drawings and contractor’s other submittals.” Those are all open-ended obligations that provide no basis for an equitable amendment and, thus, present significant risk for the design professional.
Some clients may prefer open-ended language in their design professionals’ scopes of services, perhaps believing it reduces the number of times the design professional “puts their hand out” for those irritating amendments. However, it is in the client’s interest that the design professional is reasonably compensated for its services. When a design professional is losing money on a project, they might consider seeking ways to fulfill their contractual obligations by the shortest means possible, with the least cost to themselves. This means less time and expertise devoted to solving the client’s maladies. No one wants to hire the physician who devotes the least time possible to diagnosing and treating their patient, or do business with a physician who never sees them but has only their less experienced, less expensive employees diagnose patients’ problems. The same might be true for design professional services. While most design professionals and physicians act ethically and will not consciously provide lower-grade services merely to reduce their own costs, the temptation to reduce financial losses may be strong.  Thus, a detailed scope of services, with clearly defined limits, is in the interest of both the client and design professional, and serves as a clear starting point for negotiating equitable amendments, when necessary.  
Essential Limitations
Factors over which the design professional has little or no control contribute significantly to overruns in design professionals’ budgets and “scope creep”; the latter term refers to the slow but inexorable expansion of a design professional’s scope over time, without an associated amendment. Such matters include, among other things,: (1) expansion of the facilities to be evaluated, designed, and constructed; (2) duration of the construction stage; and (3) extent of procurement and construction stage services over which the design professional has little or no control.
Design professionals’ scopes of services should indicate the extent of the facilities to be evaluated, designed, and constructed. Some scopes of services reviewed by this writer over many years were very unspecific regarding the facilities covered by the professional services, thus exposing the design professional to significant budget and time-related risk. For example: “Engineer will prepare bidding documents, including drawings and specifications, necessary for constructing the project.” Such language may allow the client to expand the project’s scope as the design progresses. This writer has frequently observed project owners expanding the project’s scope during design, often without considering the effect such changes will have on the design professional’s budget and time of performance.
Also common is that some design professionals, perhaps focused on client service and “getting the project done”, implement the directed changes in scope without advising their client, as soon as possible, of the change’s effect on compensation and time of performance.  When the design professional eventually submits an amendment to their client, the client may be surprised and irritated at the unexpected request for increased compensation and delays. When the scope of services includes an appropriate indication of the extent of the physical facilities covered by the professional services contract, both parties have a basis for negotiating an amendment should the assumed scope of facilities change.
Just one example of scope language addressing the type and extent of facilities is:
·       “Improvements include two new secondary clarifiers, each 100 feet in diameter, and standalone return sludge pump station with four identical return sludge pumps and three identical waste sludge pumps, each with variable frequency drives (VFD). One flow meter per pump array is included. Flow meters, VFDs, and pump status signals will be connected to the facility’s SCADA system.” .
Indication of the facilities covered by the scope of services should be sufficient for the project. It may not always be sufficient to merely indicate a building by name, because the size, purpose and content of the building may change.  Often, the more detailed is the listing of facilities, whether existing or proposed, to which the scope pertains, the better it will be for both parties.
When the extent of such facilities cannot be accurately determined at the time the scope and budget are prepared, consider indicating the assumed basis for the scope, which can later be revised via an amendment, when necessary.
When the design professional will have little or no control over the quantities or extent of certain elements of its services, and where the design professional’s compensation is on a lump sum basis or has a not-to-exceed limit,  consider indicating quantity limits in the scope. For example:
·       “Architect will attend up to four monthly progress meetings with Owner. Such meetings will be held at Owner’s office at [indicate location] and will be attended by Architect’s project manager and project architect.”
·       “Engineer shall review, take appropriate action on, and comment on up to 250 Contractor-furnished Submittals, including resubmittals.”
The latter example may be adapted for a variety of construction stage documents, including requests for interpretation (RFI), contractor change proposals, contract modifications, contractor progress payment requests, and perhaps others.
When the scope of services expressly indicates quantities, such as a maximum number of hours allocated for an activity or the maximum number of contractor submittals anticipated in the budget, the potential exists that the client may seek a contractual reduction in compensation (credit) from the consultant when final quantities are less than those indicated. Such a request is understandable for budget-conscious clients. In practice, however, such credits may be difficult to identify or obtain. The reality is a budget under-run on one activity is often offset by a budget overrun on another activity. For example, where the scope limited the consultant to 250 submittals and only 230 were received and reviewed, the consultant may counter that certain submittals took longer than the average, per-submittal budget used in determining the consultant’s original compensation. Clients who desire such credits may find it more appealing to compensate their consultants on a multiplier basis, fixed hourly rates by employee or employee grade, or cost-plus-a-fee basis, rather than lump sums. Also, scope writers should consider incorporating language allowing the design professional to reallocate labor and costs among the various activities and tasks of the scope without limitations to minimize clients trying to micromanaging scope-and-fee allocations and creating unnecessary barriers between tasks.
Another matter over which the design professional has no control, and therefore cannot budget properly without presumed scope limits, is substitution requests submitted by bidders and the contractor.  Because, by definition, substitutes, until approved via a contract modification, do not comply with the contract documents, substitutes may also require design changes. Evaluating substitution requests and making associated design changes, when necessary, can be both time consuming and require significant effort. Therefore, example language such as the following may be appropriate:
·       “Architect’s bidding phase services include evaluating up to [four] requests from prospective bidders or suppliers for approval of ‘or-equal’ items, and up to [two] requests for approval of substitutes during the bidding phase. Such requests are limited to requests received no less than 15 days prior to the bid opening and exclude changes to major elements of the project, including [indicate].”
·       “Engineer’s scope and budget expressly do not include evaluating Contractor substitution requests or redesign necessitated by approval of substitutes. Such services, if necessary, will be Additional Services. The proposed construction contract will include EJCDC C-700—2018 Standard General Conditions, which requires Contractor to reimburse Owner for Owner’s costs incurred relative to construction phase substitution requests and associated redesign.”
Regarding substitutes, the examples above reflect that AIA A701—2018, Instructions to Bidders, allows, and virtually encourages, bidding stage substitution requests, whereas the default language of EJCDC C-200—2018, Instructions to Bidders for Construction Contracts, prohibits bidding stage requests for approval of substitutes and “or-equals”. In contrast, AIA A201—2017, Standard General Conditions of the Contract for Construction, hardly mentions construction stage substitutes, whereas EJCDC C-700—2018, Standard General Conditions of the Construction Contract, expressly addresses construction stage substitution requests in relative detail.
Another common source of disagreement between design professionals and their clients are construction delays caused by the contractor; see: “Delays in Construction: A Common Source of Claims”, “Liquidated Damages: Compensation for Late Completion”, and “Liquidated Damages: Documenting the Basis for Damages for Late Completion”, previously posted on this  blog. The design professional has no control over the contractor’s delays and may incur substantial additional costs to continue performing its services when the work is late, especially relative to onsite construction observation services. Therefore, consider including the following in scopes of services
·       “[Architect’s] budget for construction phase services is based on the Contractor being competent and completing the construction within the contract times indicated in the construction documents issued at the time the advertisement for bids was published. Should the construction be delayed for reasons outside [Architect’s] control, the necessary extra services shall be Additional Services.”
Appropriate, reasonable, and clearly indicated limitations in the design professional’s scope of services benefits both parties, serves as the basis for negotiating equitable amendments when needed, to the contract, and helps ensure the design professional is reasonably compensated and thus will not be tempted to cut corners. Some of the most important and basic limitations in a scope of services should include: indicating the extent of the facilities to be evaluated, designed, and constructed; quantifying the extent of services over which the design professional has little or no control, such as the quantity of contractors’ submittals, RFIs, change proposals, and others; addressing the extent of the design professional’s services regarding substitutes proposed during bidding and construction; and others.
Forthcoming installments in this series include: Part 4 – Limitations: Construction Documents; Part 5 – Limitations: Permitting and Disagreements; and Part 6 – Elevated Standard of Care, construction Cost Estimates, and Phased Authorizations. 
Acknowledgments: The author gratefully acknowledges the assistance of Bruce Firkins, PE, PLS, of Bolton & Menk, Inc., in Minneapolis, MN. Mr. Firkins is the chair of EJCDC’s Engineering (E-Series) Subcommittee and kindly reviewed and commented on drafts of this article..
Copyright 2022-2023 by Kevin O’Beirne
The content of this blog post is by the author alone and should not be attributed to any other individual or entity.
The author of this blog post is not an attorney and nothing in this blog post constitutes legal advice. Readers in need of legal advice should consult with a qualified, experienced attorney..
Kevin O’Beirne, PE, FCSI, CCS, CCCA is a professional engineer licensed in NY and PA with over 35 years of experience designing and constructing water and wastewater infrastructure for public and private clients.  He is the engineering specifications manager for a global engineering and architecture design firm.  He has been a member of various CSI national committees and is the certification chair of CSI’s Buffalo-Western New York Chapter.  He is an ACEC voting delegate in the Engineers Joint Contract Documents Committee (EJCDC) and lives and works in the Buffalo NY area.  Kevin O’Beirne’s LinkedIn page.