Challenges and practices of design professional liability policies in design-build projects

Abstract

This study identifies emerging issues regarding design liabilities and explores the state-of-the-art practices in design professional liability insurance (DPLI) policy for design–build (DB) highway construction projects. The main objective of the research undertaken is to study the significant issues and challenges regarding design liability in the DB environment and state of the practices in DPLI across various state departments of transportation (DOTs). The research aims to identify important trends, best practices, and recommendations. The research assignment began with an in-depth analysis of the current literature in terms of published academic papers, federal and state reports, and conference presentations associated with professional associations. These resources include federal and state reports published by various organizations such as the National Cooperative Highway Research Program (NCHRP) and General Accounting Office (GAO); numerous state DOTs’ design–build agreement, master contracts, and requests for proposals (RFPs); and presentations and other published records from professional associations such as the Design–Build Institute of America (DBIA). Following the literature review stage, the research methodology continued with a survey and interviews with question-and-answer sessions with subject-matter experts across the country. This stage included a questionnaire survey, email interviews, telephonic conversations and meetings, and presentations during relevant conferences, such as the Transportation Research Board (TRB) and DBIA conferences. The first half of the research was performed to identify design liability. The major findings of the first step of the research were (1) key issues of design claims in DB environment; and (2) use of design professional liability insurance in the DB environment. In light of these developments, several challenges were identified: volume of design claims in DB and design–bid–build (DBB); project phases when design claims occur and insurance company’s involvement; gaps of DPLI coverage as to heightened standard of care; types of DPLI in DB; and influence of DB on changes in DPLI policy. The second half of the research effort was to examine emerging trends of state DOT practice of DPLI and identify best practices in consideration of DPLI that influence the selection of DPLI policy requirements in the DB environment. The results of the email interview process and review of state DOTs’ design–build agreements and RFPs helped identify several important areas that can be considered for enhancing the state of the practice for DPLI in DB as follows: different types of DPLI; significant elements under DPLI; considerations in selection of DPLI types; and considerations in determining coverage amount requirements.