Approved as Noted-A Destiny in Construction Industry

it is very common in construction industry, like rule of thumbs kind of things to discover a contractual constraint that the contractor, prior to physical execution of the works, should submit samples, shop drawings or other “submittals” to the Engineer for approval if there is an Engineer as Employer’s expert representative in the construction project. The submittal process is first and foremost vehicle through which the contractor expresses his understanding of the design intent to the Engineer and Employer. However, due to the complex nature of building construction, and the division of responsibilities the contract documents do not include direction on means and methods of construction which results the requirement of Contractor’s submittal. The contract documents allow the contractor to use their best skill and judgement in their approach to the project. Otherwise, contract documents would appear more like the assembly manual for a bicycle or automobile transmission, rather than objet d'art of finished building project.

In the submittal review process, the Engineer’ actions on the submittal usually include the followings:

A) Approved;

B) Approved as Noted;

C) Revise and Re-Submit;

D) Incomplete submittal, complete and re-submit; and

E) Not approved.

The main problem arises herein with the terminology “Approved as noted”. Many times, the contractors are surprised to learn later when they are told to tear items out and put different items in that the designer wasn’t exactly “approving” anything as they put “approved as noted”. Usually, there is no definite definition for “approved as noted” in the Contract which opens the flood gate for difference in understanding, in some cases, manipulation. Such ambiguity in the process of project data and communication causes many sorts of harm to the project but not limited to cost, quality, customers satisfaction and time. According to the research, 52% of construction rework is caused by poor project data and miscommunication and rework is responsible for 11% of construction cost. According to James B. Atkins, FAIA, and Grant A. Simpson, FAIA, Project success is dependent on the checks and balances inherent in submittal process, and for it to run smoothly and efficiently, there should be a set of rules and procedures. Like Edmund Hoyle, the author of A Short Treatise on the Game of Whist, set out the rules for the game of whist in England in Seventeenth century, and forever coined the phrase, “According to Hoyle,” which became a metaphor for the highest authority in all fields for following rules for efficacy. 

FIDIC’s Reference

Majority of the standard form contracts put the liability of the approval on the Contractor’s shoulder to the Engineer in unbound comfort. Let’s start by looking at the words of standard form contracts, FIDIC which states “any approval, check certificate, consent, examination, inspection, instruction, notice, proposal, request, test or similar act by the Engineer (including absence of disapproval) shall not relieve the Contractor from any responsibility he has under the Contract, including responsibility for errors, omissions, discrepancies and non-compliances;” as per the Sub-Clause 3.1[Engineer’s Duties and Authority]. It is a draconian provision if taken literally. It is common for the Engineer to turn a blind eye to minor compliance issues or to agree to a method of achieving some particular objective which is not quite in compliance with the strict terms of the contract.

Sub-Clause 3.2 [Delegation by the Engineer] states “any failure to disapprove any work, Plant or Materials shall not constitute approval, and shall therefore not prejudice the right of the Engineer to reject the work, Plant or Materials”.

Also Sub-Clause 4.1[ Contractor’s General Obligations] states “The Contractor shall be responsible for the adequacy, stability and safety of all Site operations and of all methods of construction.”

From the above, it can be explained, FIDIC have many provisions as comfort cushion for the Engineer which will allow them to make some mishap (even unintentional) in the submittal approval and not to take any liability for the mishap that may become uncomforting for the Contractor and paved the way for disorder and dispute putting the Contractor in distress.  

Risk of Engineer

Without such impression in the Contract, “approval” of a submittal by an Employer or Engineer could be found by a court to be an acceptance of what was on the submittal, letting the contractor and supplier off the hook if the Employer/Engineer later didn’t like it. To protect themselves from legal exposure, many Engineers have become very, very careful about what words they use on their submittal reviews. Some still use the words “approved,” “approved as noted,” “revise and resubmit” and the like, but many now say instead “reviewed,” “reviewed with comments,” or take the inverse approach: “no exceptions taken” or “exceptions as noted.” They and their lawyers and/or insurers must feel that the use of such terms makes them less vulnerable to such claims.

Risk of Contractor

A risk that general contractor may be inadvertently creating for themselves comes where they pass such reviewed submittals back to their subcontractors or suppliers and, in the process, tell them that the submittal was “approved” or “accepted” when, in fact, that isn’t exactly true. In such cases, the subcontractor or supplier might be able to come back later and say that, even if the employer/architect didn’t accept the deviating submittal, the general contractor did by leading the subcontractor to believe that it was acceptable to the general. In fact, a widely used “transmittal” form has on it boxes to check to tell the recipient if the enclosed document has been “approved,” “approved as noted” or similar words.

Case study of Engineer’s Mishap in Approval Process

The backdrop of 1981 Hyatt Regency walkway collapse in Kansas City, Missouri is a piece of pathetic example of mishap in the approval process by the Engineer. In this case, the steel works subcontractor Havens Steel Company made a design modification to the walkway suspension system in the shop drawings that was not explicitly noted as a change and, therefore was not readily identifiable as a modification to the design. The general contractor approved the submittal and then forwarded it to the architect, who in turn approved it and sent it to the consulting structural engineer. The Architect failed to verify the integrity of the proposed detail and approved the submittal. The structural framing was constructed as depicted in the steel fabricators shop drawings and the building completed. The design modification failed causing and resulting in the death of 114 people. 

Conclusion

To avoid such risk, it is required:

1) The Contract should have clear definitions of terms in order to break down the complexity and to establish clarity. Definition of terms can be compared to the trade of feeding a new born baby by a mother. A nursing mother uses her teeth to munch solid food into less hard state before putting the food in the mouth of her toothless baby to ease eating process. It does not mean that the baby in question cannot swallow during his/her eating process, rather it makes eating, digestion and swallow easy and convenient since the child has not developed strong teeth or enamels of its own.

2) To make sure that all suppliers know that any deviation from the plans and specs has to be specifically noted and specifically agreed to by the owner/designer,

3) Never to represent to a supplier that something was approved or accepted. Instead, just pass on the actual marked up or stamped document and let it speak for itself.

4) The dynamic industry factors must be accounted for in the building design and construction process. Product manufacturers routinely discontinue products, make modifications to products, or create new and improved products that may be more suitable to the project conditions than those originally specified.

5) The contract documents should be produced to allow variation in the products and materials available for use by the contractor with the implicit requirement that the furnished products and materials comply with the design intent.