The Claims-Free Architect

Why It's Risky For An Architect To Ignore Existing Conditions

• Season 3 • Episode 1

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What are the consequences of not adequately examining conditions, before embarking on a major renovation project, and leaving it to inexperienced staff to handle the problems that arise?

In this episode, we find out what happens when architects, who are making extensive renovations to a building with complicated mechanical systems, can’t —or simply don’t—fully examine existing conditions before they start out.


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Like most public hospitals in Ontario, the Lower Superior Geriatric Hospital struggled with its budget. Money was tight, facilities were overcrowded, and staff was overworked. To alleviate some of the problems, they had managed to get funding, through the Ministry of Health and private donations, to improve their facilities. So, they hired a reputable architectural firm to take on the project, and a reliable contractor to construct it.

Unfortunately, one tiny oversight at the very beginning snowballed into a large problem. This story is called “OUT OF SIGHT, OUT OF CONTROL.”

•••••

The Hospital, located in South Bay, Ontario, had engaged the well-known firm MedCare Architects Inc. to design an extension to their acute care wing and to retrofit their operating rooms and specialty areas. They had secured just enough funding to do the necessary work, and not a penny more.

Before starting their work, the Architects needed to get an idea of current conditions, by examining the mechanical and electrical spaces, and making sure that the new systems could be accommodated. This seemed a simple enough task, but it created a new challenge. Not just the building budget, but the operating budget, as well as staff and facilities, were also stretched to the limit. If this exploratory work meant that large areas of the Hospital would have to be shut down, even temporarily, the Hospital’s income stream would suffer. And there was no back-up funding.

It was agreed, then, that certain important rooms would be closed for very brief periods so that ceiling tiles and drywall panels could be removed, and hidden mechanical spaces could be examined. This would minimize the interruption to the Hospital’s activities and would provide the design information that the Mechanical and Electrical Engineers needed . . . assuming that conditions in the examined spaces were typical of concealed spaces throughout the Hospital.

It had earlier been decided that the best way to guarantee a fixed price and a predictable schedule would be to tender the project as a stipulated sum contract - also known as a lump-sum contract. Naturally, because the mechanical and electrical contracts made up such a large part of the work, Contractors bidding on the project were allowed to examine the same representative mechanical spaces that the Architects had seen. Based on the knowledge that this inspection presumably provided, competitive bids were submitted, and the Contract was awarded to Hardcase Construction Company.

Problems became apparent almost as soon as construction began.

In the areas examined, there seemed to be plenty of empty space for new ducts, pipes and wires. But, unfortunately, these areas were atypical. Most of the mechanical spaces—those not examined—were already chock-a-block with mechanical and electrical services. The mechanical work as shown on the contract drawings would simply not fit into the spaces indicated.

Extreme measures would be needed to incorporate any new systems. From that point on, a distressing sequence of costly delays unfolded.

When the project was substantially complete, Hardcase Construction filed a million-dollar claim against the Hospital, which third-partied the Architects MedCare, who in turn fourth-partied Leakey & Schok Mechanical & Electrical Engineers.

The Contractor’s claim was bolstered by a hardcover report, about 10 cm thick, with charts and diagrams predicting imminent financial disaster caused by delays, that were well beyond the Contractor’s control. It was an impressive document that detailed the many alleged faults and failings of the Architects. Chief among these was the failure to acknowledge that the mechanical spaces were a chaotic mess, providing no reasonable hope that new ducts, pipes, medical gas lines and recessed lights could be squeezed in.

The report described places where large square ducts were expected to fit into small flat spaces, and where plumbing pipes were expected to cut through ducts, sometimes several times, as the ducts meandered, and the pipes sailed straight on through. In some areas, the mechanical space was almost entirely closed off by structural beams.

If anything could be found in this heavy document that weighed in our favour, it was this: The very excess of the report strained credibility—especially the harsh descriptions of the alleged faults and failings of the reputable 50-year-old architectural firm. This would help our defence. 

If there was anything in this heavy document that weighed in our favour, it was this: The very excess of the report strained credibility—especially the harsh descriptions of the alleged faults and failings of the reputable 50-year-old architectural firm. This would help our defence. 

Before sitting down to negotiate a settlement, we looked at the defendants’ positions. Each had their own version of events, which included justifications for their behaviour and unassailable proof of their innocence.

As expected, the Hospital maintained that they were medical experts, not construction experts. They had relied upon their Architects, Engineers, Contractors and other knowledgeable persons, and had been let down. As a prime example, the completion of the acute care wing had been delayed by six months, resulting in lost income by the Hospital and unnecessary suffering by patients, who had to be transferred to other institutions. Other examples included harrowing tales of patients being ferried about, in and out of half-finished rooms, some without air conditioning or ventilation—in the middle of summer.

Regarding the limited access to ceiling spaces, the hospital wasn’t trying to be awkward about it. If someone had explained its importance, they would naturally have made the necessary arrangements, however inconvenient they might have been. 

As things now stood, the Ministry of Health grant and the private funds were expended. The Hospital was out of money and was looking to the professionals to make up the shortfall they had caused through their negligence.

The Engineers presented their usual defence. They had no expectation that the Contractors would take their instructions literally. After all, their drawings are meant to be diagrammatic. It’s up to the Contractors and Subcontractors to work out the details. In this case, so-called “interface drawings,” which are intended to explain how the various mechanical and electrical systems fit together, would have been helpful. But no one had insisted on them. Anyway, isn’t it the Contractor’s job to work it all out?

The Architects, for their part, agreed that the Contractor should have been coordinating the work. They had looked over the Engineers’ drawings—electrical on one sheet, ductwork on another sheet, and plumbing and gases on yet another sheet—and assumed that the Engineers had coordinated it all. This was not an unreasonable expectation since all the Engineers—structural, electrical and mechanical—worked for the same firm, in the same office. But this proved to be another critically flawed assumption. 

During construction, as problems mounted, the Architects had no qualms about approving most of the extras, but rejected virtually all of the Contractor’s requests for delay compensation. They had assumed that the markups intended to cover overhead and profit, would also cover the cost of delay. This was yet another flawed assumption: the mark-up on extras is not intended to cover the cost of delays. And the Hospital had no additional funds to contribute.

For Pro-Demnity, the confusion regarding delay and compensation claims was nothing new. We had been down this road so many times that little original thinking was required. So the Claims Specialist’s real task was to persuade the parties to be reasonable.

Our first consideration was that the boilerplate clauses—the ones calling for the builders to examine the site to familiarize themselves with the existing conditions and subsequently assume full liability for having done so, etc., etc.—would be useless in our defence. The bidders had been offered only a tiny glimpse of the existing situation, and they could not possibly have anticipated the problems awaiting them.

The second consideration was that “interface drawings” - like BigFoot, much reported but rarely seen in real life - would have been invaluable. They might have indicated, for example, how a duct with a 1.5 by 2.5m cross-section would fit into a 25cm ceiling space; or how ceiling lights could be recessed into a maze of medical gas pipes. This is basic design coordination, and the Engineers should certainly have tried to sort it out.

Third, to compensate for the shortcomings of the bid documents, the Architects had approved numerous change orders for extra work - furring down ceilings, constructing bulkheads, etc. - but had failed to acknowledge the additional costs involved. On this point, the Courts have affirmed that Contractors have a right to be compensated for delays, over and above the usual mark-ups for extras, and there are established formulas for calculating such “downstream effects.”

To begin the negotiation process, a meeting was held, attended by Pro-Demnity, the Engineers’ insurers, and the Contractors’ “Delay Specialists,” imported from Boston. These Delay Specialists, as their name implies, are professional consultants skilled in explaining and quantifying delays claimed by Contractors. This first meeting led to a succession of further polite and professional meetings, which produced no settlement.

A serious lawsuit was looming.

At the suggestion of the Delay Specialists, a mediation was arranged, with a retired judge of the Ontario Superior Court presiding. The Judge had done his homework. He had read all the submissions and had heard us all out. He then took each party aside for an extremely polished brass-tacks discussion. 

We were certain that the Contractor’s claim was grossly exaggerated, and the Mediator was experienced enough to know this as well. In the end, the Contractor took a reality check regarding “reasonable quantum,” and in a remarkably short time, agreed to assume 25% of the claim. The other parties all pitched in, and the matter settled, then and there.

•••••

It’s embarrassing when Architects and their consultants realize they have designed impossible conditions, but that’s exactly what happened in this case. To avoid such situations in the future, there may be a few lessons to be learned.

Lesson No. 1: Architects, Engineers and Contractors don’t have X-ray vision, so if your design requires you to accommodate existing conditions, make sure you can examine those conditions, visually, and as thoroughly as possible. Well-intentioned assumptions and optimistic extrapolations are a foolproof formula for disaster.

Lesson No. 2: Under the best of circumstances, you can’t examine every square centimetre of an existing building. Contracts must reflect this. The reality is that complex retrofits in unknowable conditions should be cost-plus work: verified expenses plus agreed-upon profit. When a Stipulated Sum Contract is used, expect large extras and large disputes. Communicate with your client and ensure that they understand the potential financial and time implications of unknowns. Obtain their approvals in advance.

Lesson No. 3: There is no substitute for an experienced mediator who has the respect of all parties. In this instance, we avoided costly litigation and arrived at what we suspect a court would have determined, in just two days of mediation, avoiding discovery, pre-trial and the trial itself, which would have lasted at least two weeks. The savings to all parties is obvious.