The Building Enclosure: Legal and Risk Management Issues Patrick J. O’Connor Faegre & Benson,...
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The Building Enclosure: Legal and Risk Management Issues
Patrick J. O’ConnorFaegre & Benson, LLP
Brian C. Kramer, P.E., G.E.Quality Built, LLC and Twining, Inc.
San Diego February 10, 2011
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Faegre & Benson
• International law firm headquartered in Minneapolis, Minnesota• Additional offices located in:
– Boulder– Denver– Des Moines– London– Shanghai
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Twining, Inc.• Founded in 1898• Full-service engineering and
quality control company• Leader in construction materials
testing and inspection for commercial, institutional and infrastructure projects
• Provided QA inspection and testing services on numerous projects utilizing BIM
Quality Built, LLC• Nation’s leading third party quality
assurance firm for residential construction.
• Advanced IT platform and proprietary software enables seamless integration with other systems.
• Quality Built's Quality Management System is ISO 9001:2008 registered
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A few statistics courtesy of CNA insurance:
“Then there is the man who drowned crossing a stream with an average depth of six inches. ~ W.I.E. Gates
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Frequency (All Claims) by Claimant Identification (1995 – 2004)
66.5%
10.9%
9.1%
4.8%
8.7%
Project Owner
General Contractor
Third-Party Property Damage
Bodily Injury/Non-Worker
Other
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Commercial/Retail Buildings: All Claims by Problem Area(1995 – 2004)
15%
12%
9%
6%
3%
0%HVAC Site
PlanningRoofing Electrical Plumbing/
Fire ProtCurbsPaving
BuildingSuperstruc
Frequency = reported claimsSeverity = CNA dollars spent
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Residential Projects: All Claims by Problem Area(1995 – 2004)
12%
10%
8%
4%
2%
0%
6%
SitePlanning
Roofing Foundation Foundation/Substruc
BuildingSuperstruc
Water Runoff
Wall Bearing
Frequency = reported claimsSeverity = CNA dollars spent
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Hospital/Healthcare Facilities: All Claims by Problem Area (1995 – 2004)
30%
25%
20%
15%
10%
5%
0%HVAC Plumbing/
Fire ProtElectrical Roofing Plumbing/
PipingSite
PlanningFloors
Frequency = reported claimsSeverity = CNA dollars spent
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Architects: Claims FrequencyPer 100 Firms
25
20
10
5
0
15
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Num
ber o
f Cla
ims
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Engineers: Claims FrequencyPer 100 Firms
25
20
10
5
0
15
30
35
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Num
ber o
f Cla
ims
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Building Enclosure (BE) Statistics
• BE claims: CNA Premier Program (billing $500,000 to $20 M annually)– Small firms accounted for more claims (frequency) than large firms, but the
severity (sums paid) was greater with large firms– Large firms had an average indemnity payment of $215,000
• Study did not define small firm or large firm
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House
s/Tow
nhou
ses
Schoo
ls/Colle
ges
Condo
s
Office B
ldgs/B
anks
Apartm
ents
Religiou
s Fac
ilities
0%
500%
1000%
1500%
2000%
2500%Frequency = reported claimsSeverity = CNA dollars spent
BE Claims by Project Type (1998 – 2007)
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Ten Worst States for BE Claims
• New York (Frequency, 13%; Severity, 13%)• New Jersey(Frequency, 8%; Severity, 9%)• California (Frequency, 8%; Severity, 8%)• Florida (Frequency, 5%; Severity, 8%)• Texas (Frequency, 5%; Severity, 4%)• Washington (Frequency, 5%; Severity, 6%)• Ohio (Frequency, 4%; Severity, 4%)• Pennsylvania (Frequency, 4%; Severity, 3%)• Minnesota (Frequency, 4%; Severity, 2%)• Illinois (Frequency, 5%; Severity, 1%)
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CNA BE Case Studies
• Study 1 – Condo project completed over ten-year period – Water infiltration problem claim against architect, developer, contractors
($11 M)– Defense: Developer would only pay for minimal design services
• Plans did not include flashing details or a specification for use of vinyl tape• Developer only agreed to pay for site visits once or twice per year
– Architect’s experts concluded it did not meet standard of care – Claim occurred in a state involving joint and several liability where a
judgment against any defendant for even 1% liability could result in that defendant having to pay 100% of the damages
– Settlement: Paid $775,000 ($42,000 in expenses)
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• Study 2 – Architect retained to design television station – Shortly after completion, cast-in-place concrete structure began to crack,
allowing for water intrusion– Correction: Elastomeric coating over entire building - $1.6 M, another $1 M
incurred in mold remediation and loss of income– Defense: Correction was a betterment and the concrete was originally
designed to act as waterproofing, but its thickness was increased as a result of value engineering
– Owner settled with contractor for $150,000– Architect offered $400,000, but owner refused anything less than $1.2 M– Result: Architect prevailed at trial, yet total expenses were $970,000
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• Study 3 – Architect provides design and limited construction phase services on school project – Water infiltration problems
• Delaminating siding allowing water to penetrate• Moisture problems from missing flashing and window leaks • HVAC issues
– Several students and teachers filed bodily injury claims due to mold-related illnesses
– Defense: Problems due to construction error, including failure to use caulking as specified by manufacturer
– Settlement with Owner: Total claim resolved for $2.7 M with $500,000 from architect
– Settlement of Bodily Injury Claims: $150,000 paid by architect, $396,000 in defense costs paid under PL policy; like amount under GL policy
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• Study 4 – Engineer retained to provide services on three-story hotel – Problem: Mold developed causing closure of hotel – Causes: (1) Gaps in windows caused by architect’s failure to coordinate
window installations with changes in wall structure; (2) negative air pressure from bathroom exhaust fans; (3) improper drainage from HVAC units; and (4) defective construction
– Remediation costs: $6 M plus claim for loss of income– Settlement: Mechanical engineer paid $650,000. – Defense costs: $233,000
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• Study 5 – Engineer retained by uninsured architect for structural services on condominium project – Problem: Hurricane results in stucco delaminating and eventually falling
from structure, allowing water to penetrate and damage building– Claims: Contractor sued for $13 M; seeks contribution from design team – Engineering issues:
• Concrete covering of rebar in balconies did not meet code• Alleged improper review of shop drawings of metal stud system for the EIFS
– Settlement: Engineer paid $800,000– Expenses: $94,000
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• Study 6 – Architect designs two apartment towers completed six years apart– Problem: Water infiltration– Causes: (1) Infiltrated through curtain wall because PVC flashing did not
extend through the exterior brick wall; (2) insufficient waterproofing in the CMU back-up wall
– Claim: $13 M against design and construction entities – Architect’s liability: Architect’s experts assessed damages at 70% design-
related and 30% construction-related– Settlement: Architect paid $957,000– Expenses: $329,000
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Curtain Wall Systems• History:
– In the first half of the 20th Century, building façade design underwent a transition from massive load-bearing walls to the relatively lightweight, non-load-bearing curtain wall.
• Design principles: – Structural requirements
• Support own weight (gravity)• Transfer of gravity, wind, and earthquake to structure• Accommodate expansion and other movement
– Management of thermal expansion/contraction (e.g., aluminum moves about 2.5 times more than glass under same temperature change)
– Long-term settlement (deflection) of concrete structural elements» Long-term creep of concrete can triple the initial elastic deflection
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• Thermal performance– Heat flows through wall systems by conduction (heat flow directly through solid
material); convection (movement of air); radiation (transmission of heat from hotter to colder surface through electromagnetic waves); and air leakage
– Design considerations: Proper selection of materials, creation of thermal breaks• Airborne moisture migration
– Relative humidity concerns– Vapor diffusion (through materials at a molecular level)– Mass transport of vapor (through gaps, cracks or other openings in the building
envelope)
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• Condensation– Aluminum and glass have relatively high heat flow characteristics – prone to
condensation on interior surfaces when outside temperature is low» Use of insulating glass units
• Sound attenuation – Thermal expansion and contraction – Sound transmission
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– Common defects:• Water penetration
– If location, location, location is the mantra of real estate, then “water, water, water” is the mantra for building enclosures, including curtain walls
– Problems caused by water» Corrosion of fasteners that hold the wall cladding to the structural back-up wall» Corrosion of light gauge steel studs that brace the veneer against lateral loads
from the wind and earthquake» Rotting of wood members such as plywood sheathing and wall studs» Dissolution of soluble wall components such as gypsum wallboards» Fungus growth on biological “food” within wall systems, such as paper-faced
sheathing boards» Loss of insulating capacity due to wet insulating materials» Electrical shorts at junction boxes
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– Causes leading to water infiltration» Most significant: (1) over-reliance on sealants as waterproofing agents (design
issue); (2) poor or missing through-wall flashings (design and construction defects)
• Loss of attachment– Common causes
» Lack of adequate joints in the cladding to accommodate movement of the cladding relative to the building’s structural frame
» Fatigue of metal anchors» Loss of sealant bond in structural silicone glazing applications
• Glass breakage– Most often result of stress-concentrating flaws in the glass and not loads that
exceed the design loads
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– Common sources of glass problems» Handling damage» In-service damage/glass-to-frame interaction» In-service/surface impact (wind-blown debris or window washing operations)» Impurities in fully-tempered glass
• Uncontrolled air and moisture vapor flow
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Risk Mitigation: Planning and Design
• The following procedures, protocols, and activities may effectively reduce risk exposure due to building envelope performance problems– A well-crafted contract that intelligently allocates risks, creates proper incentives
for collaboration and high performance and clearly defines work scopes and responsibilities
– Sufficient level of contract administration services– Retention of water infiltration consultant– Appropriate pre-project planning process– Peer review of novel or complex designs– Constructability reviews providing for integration of construction input into project
planning, design, and field operations– Retention of knowledgeable and professional consultants
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– Adequate dissemination of clear and thorough installation instructions – paying particular attention to manufacturer recommendations
– Carefully coordinated design documents– Review suitability of various components and systems to insure compatibility with
external environment as well as to each other – Well-designed mock-ups and employment of appropriate water testing
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Physicians Hospital of MurrietaMurrieta, California
Walt Disney Concert HallLos Angeles, California
Mission Hospital Acute Care TowerMission Viejo, California
John Wayne Airport Terminal CSanta Ana, California
Risk Mitigation: Construction
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Risk Mitigation: Construction
• Virtually no extension of the BIM process into construction inspection• No code requirements for BIM, physical mock-ups, or inspection• Quality Built’s experience of liability insurance carriers indirectly
mandating their service on residential projects has no parallel in complex structures
• Building envelope consultants have historically provided tremendous support on design review and failure analysis
• Inspection during construction is occasionally well structured, usually widely spaced, and often not performed
• Does an owner really care why their curtain wall is leaking?
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Risk Transfer
• Contractual risk transfer– How does the contract assign risks of building envelope performance?
• Waiver of consequential damages• Limitation of liability provisions• Indemnity agreements • Waiver of subrogation provisions• Warranties • Exclusive remedy provisions• Liquidated damages provisions
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• Statutory/legal risk transfer– Joint and several liability – Contribution – Indemnity – Statutory warranties– Consumer protection laws– Right to cure laws– Statutes of limitation/statutes of repose
• Improvement to real property statutes• UCC re application to manufacturers
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• Third-party risk transfer– Insurance
• Liability – Professional – limits of retention issues; lack of excess coverage; claims-made form
issues– General – limitations on economic losses unless “property damage” present; is poor
workmanship an “occurrence”?• Property
– Poor design and workmanship exclusion – ensuing loss exception– Bonding
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• Special concerns– Use and reliance upon manufacturer specifications– Practical realities of following manufacturer’s installation recommendations– Economic loss doctrine – Defense of betterment– The Spearin doctrine – how does it apply to complex systems that involve design
activities from multiple parties often working collaboratively– Doctrine of economic waste
• Aesthetic concerns
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– The relationship between two legal systems, one governing manufacturers providing goods and the other construction participants providing professional and non-professional services
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Mitigation of Risk through “BIM” Construction Inspection
• 3D v. 2D Images moving from design to construction inspection
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Mitigation of Risk through “BIM” Construction Inspection
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Mitigation of Risk through “BIM” Construction Inspection
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The Role of BIM in Building Enclosure Liability and Risk Allocation
• From design to construction, is there a critical gap?• How do curtain wall fabricators and other subs view BIM?• Is the client (owner) getting full value out of their investment in BIM if no
quality control testing and/or inspection is required on a project?
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The Role of BIM in Building Enclosure Liability and Risk Allocation
• The BIM process can manage a great deal of information pertinent to the building enclosure, including wind loads, wind tunnel tests, structural live-load movement requirements, material finishes, glass type, interlayer type, allowable deflection on framing systems, thermal information, curtain wall profiles, test criteria, drift and earthquake requirements, sound transmission, sealant types, field data, weather data, and field inspection information.*
*Courtesy of Will Ikerd – “BIM and the Building Envelope,” Journal of Building Information Modeling, Spring 2010, at pp. 25-26
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• BIM analysis models can enable participants to perform constructability analysis through dimensionally-accurate 3D models. These models can help identify: – Scope gap between building envelope trades– Material incompatibility– Construction tolerance issues between materials– Issues relative to material transitions at joints– Coordination of structural supporting steel and imbeds with the building
envelope systems
• BIM model can be an aid to third-party water infiltration reviewers and water testing inspectors
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• BIM models may provide a useful tool for energy performance of building envelope
• BIM models may be useful in daylighting/lighting analyses• BIM can be used to create virtual mock-ups of building envelope at
significantly less cost than physical mock-ups allowing for testing of more conditions
BUT …• How good is BIM at showing very thin building products such as
flashing?• What other limitations or constraints are there that might limit
applicability to building envelope design?
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The Role of BIM in Building Enclosure Liability and Risk Allocation
“Curtain wall companies will have to provide committed competent BIM services to compete and survive on projects of any significance within the next five years. BIM requirements will be ubiquitous on requests for proposals for new work in the near future…The curtain wall industry of 2015 with BIM will look dreamily different than it does today. It is an exciting time for companies to leverage the opportunities while they overcome the challenges of the new BIM process that uses dynamic new BIM tools.”
Glass Magazine, June 2009