Whose Design is it Anyway? Lessons from Workman Properties v. Adi Building

There is a popular misconception that an unamended JCT Design & Build Contract (2016 or 2024 version) makes the contractor fully responsible for the design of the works. It does not: it only makes the contractor responsible for completing the design in the Employer’s Requirements.

This can result in a lack of clarity as to who is responsible if a design error occurs. Most developers therefore amend the standard form to place full and complete design risk on the contractor. Although there are variations in how this is done to ensure full risk of design is placed on the contractor, legal practices who specialise in construction law (such as us) typically do this is a very similar way – as discussed below.

This very issue came up for discussion in a case late last year, Workman Properties Ltd v. Adi Building and Refurbishment Ltd [2024], in which both parties claimed the other had responsibility for early stages of the design.

Background to the case

Workman and Adi entered into a JCT Design & Build Contract 2016 (with bespoke amendments as set out in a Schedule of Amendments) pursuant to which Adi was to design and construct certain works. The Employer’s Requirements were stated to contain design up to RIBA Plan of Work Stage 4, but Adi (the contractor) said they were in fact not that far progressed and as a result it said it was delayed and incurred significant cost in completing the design. The employer’s position was that the risk of the design (and whether it had been designed up to RIBA Stage 4) had been accepted by Adi under the contract.

The Employer’s Requirements stated at paragraph 1.4 that the contractor “will be fully responsible for the complete design, construction, completion, commissioning and defects rectification of the works” and that “Significant design has been developed to date which has been taken to end of RIBA Stage 4 with some parts of contractor specialist design elements together with Services design to Stage 4 (i) with generic design and performance requirements in order to deliver what the Employer is requiring within their controlled budget”.

To cut a long story short, Adi went to a first adjudication seeking a declaration that the Employer, Workman, had warranted the design in the ERs would be completed up to Stage 4 through its statement in the second sentence of paragraph 1.4 that “significant design had been developed to date…in order to deliver what the Employer is requiring”. In contrast, Workman relied upon the first sentence of the paragraph whereby it stated that the Contractor would be “fully responsible for the complete design…”.

Perhaps surprisingly, the Adjudicator agreed with Adi. Adi then commenced a second adjudication relating to quantum and extensions of time. The second adjudicator, being bound by the first adjudication, awarded significant sums – c.£3m – to Adi flowing from the fact the design was not to RIBA Stage 4.

Workman did not agree and issued a Part 8 Claim seeking a decision on the contractual interpretation of the contract. The court found against Adi and in effect said the outcome of the first adjudication was incorrect (and therefore the second adjudication was unreliable as being based on the first).

The court set out that the amendments to the contract were extensive and the overall effect of these amendments was that Adi had taken on full design responsibility, including any pre-contract design and was therefore responsible for resolving any issues within the Employer’s Requirements. It stated that apart from the second sentence mentioned above, “all of the relevant contract terms point firmly towards the claimant’s case” and that “the words used in that second section are nowhere near sufficient to require the other unequivocal contract provisions to be read as so heavily qualified”. In effect, Adi had signed to up a contract where it had accepted full design risk and seeking to rely on a strained interpretation of one part of the Employer’s Requirements was wholly insufficient.

How to amend the JCT D&B for full design risk

In fairness to Workman, the schedule of amendments contained all the normal changes to pass full design risk, so if Workman had not been successful there would have been a lot of contracts out there that had not adequately passed full design risk!

So how do you amend a JCT D&B contract to ensure the contractor takes on full design risk? The amendments typically fall into the following five categories.

Category 1 – The Recitals

The Third Recital of the unamended JCT D&B states “the Employer has examined the Contractor’s Proposals and, subject to the Conditions, is satisfied that they appear to meet the Employer’s Requirements”.

A properly amended JCT D&B looking to pass full design risk reverses this obligation (as was the case with Workman), placing the obligation on the Contractor rather than Employer: “the Contractor has examined the Employer’s Requirements and has agreed to accept full responsibility for any design contained in them and acknowledges that the Employer’s Requirements form part of the Contractor’s Design Documents”.

Category 2 – Completing the Design

The unamended JCT D&B clause 2.1.1 states that “The Contractor shall…complete the design for the Works”. If looking to pass full design risk, the contract needs to make sure the obligation to complete also covers carrying out the design and typically states “The Contractor shall…carry out and complete the design for the Works…”.

Category 3 – Responsibility for the contents of the Employer’s Requirements

Clause 2.11 of the standard form JCT D&B states that “Subject to clause 2.15, the Contractor shall not be responsible for the contents of the Employer’s Requirements or for verifying the adequacy of any design contained with them”.

This is either deleted, or in Workman’s case was changed so that Adi had to give notice of any design inadequacy and would not be entitled to a Change (leading to a potential for payment/EOT) for any resultant issues.

Category 4 – Discrepancies / Divergences

Clauses 2.12 to 2.14 of the standard JCT D&B relate to discrepancies within and between contract documents, particularly the Employer’s Requirements and Contractor’s Proposals. The unamended form places any discrepancies or errors in the Employer’s Requirements on the Employer. As is to be expected, these clauses are either deleted or more often amended when looking to place full design risk on the Contractor.

Category 5 – The Overall Design Obligation

Clause 2.17 of the unamended JCT D&B is typically heavily amended to make clear that the Contractor takes on full design responsibility including any design carried out pre-contract and whether or not carried out by the Contractor.

Conclusion

The above ‘package’ of amendments is the typical way to shift entire design risk to the Contractor. This is exactly what Workman had done – hence why the adjudicator’s original decision might be thought surprising. There are nuances to this, but it is important to amend all relevant clauses to ensure a full design risk transfer takes place. The lesson to be learnt from Workman, is to ensure any Employer’s Requirements make clear that there is no contractual warranty given by an employer relating to the state and stage of any pre-contract design.

Whether you are an Employer or a Contractor it is imperative that you are aware of the clauses which deal with design responsibility. Our experience of working for employers and contractors means that we understand what is important to each party and our knowledge of the market allows us to do this. We specialise in providing advice on many forms of contract such as the JCT and NEC, and we find that the best way to mitigate against future disputes is to get your contract reviewed at the start.

We offer fixed fees for customised contract reviews, which will amount to a very small percentage of the overall contract sum – well worth it given the potential costs of a dispute (the Workman case had costs of £227,182 – not including what will have been the considerable costs of the two adjudications). Please get in touch, and we’d be happy to send you our menu of contract review options.