Chapter 7 - § 7.3 • DUTIES AND RESPONSIBILITIES OF THE OWNER

• Jurisdiction: Colorado

§ 7.3 • DUTIES AND RESPONSIBILITIES OF THE OWNER

§ 7.3.1-Responsibility for Owner-Supplied Information

The owner is required to supply information that will be used by the project team in designing and constructing the project. Owner-supplied information commonly includes boundary surveys; utility locations and easements; data concerning existing buildings or other improvements on the site; geotechnical reports; and, where appropriate, available information concerning hazardous materials or environmental conditions. The owner also has primary responsibility for providing "building programming" information, which is comprised of items such as size, type, style, special requirements, and budget for the project. The design team is ordinarily entitled to rely upon the accuracy and completeness of owner-supplied information in developing plans and specifications for the project. Likewise, the contractor will rely upon owner-supplied information in fixing pricing or bids for the project. Courts in other states have recognized this principle.¹

§ 7.3.2-Responsibility for Sufficiency of Plans and Specifications

While the owner may have a claim against its design professionals for errors or omissions in the plans and specifications that result in damage to the owner, the law imposes an implied warranty upon the owner with regard to the sufficiency of the plans and specifications furnished to the contractor for use in construction, even though these plans and specifications were prepared by the design professional. The Spearin doctrine, adopted in Colorado, holds that a contractor is not responsible for the consequences of defects in the plans and specifications not known to the contractor at the time of contracting, and the owner may be liable to the contractor for the accuracy of the plans.² See § 7.4.2. The law in Colorado is still unclear about whether an owner may contractually delegate responsibility for the inspection of site conditions to the contractor.³ However, Colorado courts are reluctant to frustrate the purpose of a differing site conditions clause by relying on other liability-shifting provisions.⁴

Practice Pointer
No Colorado case has addressed whether omissions in the plans and specifications resulting from limitations of an owner's design budget are the ultimate responsibility of the owner. However, an owner must always be mindful that it "gets what it pays for." As a general rule, projects with unreasonably low design budgets generate more claims than those with adequately funded design budgets. Design fees can vary widely based upon the type of project, its complexity, whether it is generic or unique, and whether it involves the development of complex operational systems. Design fees can be a fixed flat fee but are typically negotiated as a percentage of the construction cost.

§ 7.3.3-Adequate Financing

In private projects, the design professional and contractor proceed based upon an assumption that the owner is acting in good faith and has adequate financial resources to fulfill its obligations to each of them. Contracts sometimes require the owner, upon request, to furnish the architect and contractor with evidence that financial arrangements have been made that are adequate to fulfill the owner's obligations. If the owner does not have adequate financing and hides this issue from the project team, such a contractual requirement may be of little help to an unpaid architect or contractor.

Practice Pointer
An inadequately funded project is a recipe for dispute and can be an accurate indicator of a future claim. Contractors and designers will frequently go to great lengths to help the owner find a way to complete the project within an inadequate budget, resulting in either cut corners or a completed project that does not meet the owner's expectations.

Public projects are subject to certain constraints with regard to fiscal appropriations. See § 5.13.2 for a discussion of this issue.

§ 7.3.4-Payment

The owner is required to comply with the terms of contractual agreements with the architect, engineer, construction manager, and contractor concerning payment. General rules of contract law apply to this obligation, although contractual terms vary significantly and must be examined in detail. An owner's right to withhold payment, or partial payment...