Risks of BIM

by Pepper Hamilton LLP
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This article was published in the December 22, 2016 issue of Construction Today. Copyright 2016, Knighthouse Publishing. Reprinted with permission.

When building information modeling (BIM) technology first gained widespread use, commentators warned of new legal risks posed by the information sharing and collaboration essential to the process. Contractors and designers became worried that BIM could alter the traditional allocation of risk between them. 

The potential impact of BIM on the implied warranty of constructability, also known as the Spearin Doctrine, drew particular attention. The doctrine, named for a 1918 Supreme Court decision, provides that by issuing plans and specifications, the government impliedly warrants their adequacy and if the contractor builds in accordance therewith, it cannot be liable for any deficiency in the finished product, and is entitled to be compensated for any increased costs of construction. 

Pundits warned that the collaboration and information-sharing between designer and builder could render the implied warranty of adequacy inapplicable. In support of their prediction, they pointed to what they perceived as an erosion in Spearin that predated the implementation of BIM. As project delivery systems had become more integrated, the bright line between design and construction had blurred and with it the allocation of risk. They posited that BIM would further erode the doctrine, or destroy it altogether.

Concerns also arose as to the creation of new theories of liability among owner, contractor and architect. If conflicts went undetected and manifested during construction, the issue of responsibility could be muddled. Was the problem due to an error in the design, the information supplied by the contractor, the BIM software or some combination of all three?  If the error stemmed from contractor-supplied information, or if the contractor failed to detect conflicts that should have been apparent from the modeling, would it be liable to the architect and/or owner?  Similarly, if the architect failed to address conflicts between the design and shop drawings or product details, would it be liable for the costs to correct or the resultant delay? 

Proponents assured that BIM could be implemented while preserving the traditional allocation of risk among owner, designer and builder. Proposed contract language was developed that maintained the lack of privity between designer and contractor, reaffirmed the architect’s sole responsibility for design, and preserved the owner’s liability under Spearin.

Affirmations and disclaimers cannot, however, alter the fact that being able to rely on the accuracy of shared information is critically important. Recognizing the importance of ensuring that the information provided was accurate and reliable would create a duty, however, and duty usually carries with it liability. But, it was the fear of such liability that necessitated the affirmations and disclaimers in the first place. In an attempt to solve this conundrum, some contracts walk a very fine line; they acknowledge that each party had a duty to ensure the information it provides is accurate, but either disclaims any right to rely on the information or limits the liability of the party that provides it.

But will courts give effect to this language, or will they look past it and assess liability in accordance with the practical realities? Given that there have been very few reported decisions applying or interpreting BIM contract terms, we simply do not yet know. There are a number of established legal theories that could be applied to find liability despite the contract language, however.  To begin with, it is important to note that the Spearin Doctrine created an implied duty based on the realities of the design-bid-build construction process. 

Disclaimers of liability have routinely found to be unenforceable, and clauses requiring inspection of the site or review the plans do not lessen the contractor’s right to rely on the accuracy of the documents. Will courts view BIM through the same lens and find implied warranties and obligations in the practical requirements of the technology? And will they similarly refuse to enforce contractual disclaimers and limitations that are contrary to those realities?

Will courts recognize liability outside the contract; for example, for negligence?  Contractual disclaimers and limitations of liability might not limit or bar such claims. In traditional contracting arrangements, the main barriers to extra-contractual remedies are the economic loss doctrine and its close cousin, the gist of the action doctrine. Where applicable, both prevent a party from attempting to avoid contract limitations by bringing claim for “negligent” performance of contractual obligations.  But there are recognized exceptions that might be applied to BIM.

Rules May Not Apply

First, in some jurisdictions, under certain circumstances, the doctrines do not apply to the provision of services, particularly professional services. Therefore, if the sharing of information and collaboration in the design effort is considered to be a pre-construction or delegated design service, the rules may not apply to preclude negligence claims. 

Second, the doctrines have been held not to apply to the negligent provision of information.  A number of states recognize a cause of action for the negligent provision of information under §552 of the Restatement (Second) of Torts, which recognizes claims against  “one who, in the course of his business … supplies false information for the guidance of others in their business transactions … if [the provider] fails to exercise reasonable care or competence in obtaining or communicating the information.”  Finally, the doctrines are generally inapplicable when the claim involves personal injury or damage to property.

Make No Assumptions

Given the lack of reported cases interpreting or applying BIM contract language, we do not yet know the answers to these questions. The purpose of raising them is not to discourage the use of BIM. The technology is a powerful tool, and is proven to be effective in the early detection and elimination of design errors and conflicts. In fact, the lack of reported case law may be a testament to the effectiveness of the technology.  

But, the participants, contractors in particular, cannot casually use the technology assuming they are protected from liability in the event that something goes wrong.  Each must make a real commitment to participate as a partner in the process and ensure that the information it contributes is accurate and complete.  In other words, it must actively manage and mitigate the risks of collaboration in order to fully enjoy its benefits.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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