Project owners must work within a budget based on available funding. The project design must accommodate that budget. Yet, construction cost cannot be determined until binding responsive bids are received from responsible bidders. And, those bid prices are the product of ever-changing market conditions. When the low bid exceeds the available funding, what is the responsibility of the design professional?

The federal contract documents include a clause entitled “Design within Funding Limitations.” It states that if the low bid exceeds the stipulated funding limitation, the architect must perform redesign with no additional compensation. The clause is silent regarding any additional responsibilities or liabilities of the architect. A recent ruling determined that the clause did not necessarily limit the government’s remedy against the architect to free redesign. The government could pursue a claim for the excess construction cost.

It should be noted that not all contract documents leave the design professional with this liability exposure. Not surprisingly, the American Institute of Architects agreement does a better job of protecting the architect in this situation. The AIA document expressly states that redesign at no additional charge is the limit of the architect’s responsibility. In the federal arena, however, this is an open question.

Other cases this week involved a pay-if-paid clause in a subcontract and bid protest filing rules in Florida. An otherwise enforceable pay-if-paid clause was rendered ambiguous and unenforceable by the incorporation of payment terms from the prime contract. And, the bid protest rules recognized constructive receipt of a timely protest by an agency.