04 November, 2015
In this article, we discuss the key legal issues for parties to consider when negotiating construction contracts that anticipate the use of BIM, in particular, at more sophisticated levels.
Contractual implications of using more advanced levels of BIM
Substance of BIM documents
Key to the use of BIM on a project will be documents, such as the BIM protocol, which set out the rules that govern the manner in which the project parties are to use BIM (e.g. the production, communication, assessment, integration, use and storage of design data).
However, the BIM protocol may not only contain technical requirements, but also legal terms governing the parties' rights, obligations or liabilities vis-à-vis the use of BIM. As with any technical document, the BIM protocol should be carefully reviewed prior to incorporation into a contract to ensure that it does not contain any such legal provisions and, if it does, these should be expressly dealt with in the contract conditions.
Design responsibility and liability
One practical as well as legal issue that may need to be addressed in a contract is the extent to which each contributor to a BIM model can rely on the design and data prepared by others and contained in the model at a given time. One solution for resolving such ambiguity is to specify the "level of development" or "level of design" that the BIM model must achieve at each stage in the design and construction process and which clarifies to the contributors the content and reliability of BIM. If this method is adopted, however, the contract conditions should clearly set out the extent to which each contributor is deemed to rely on the model and the implications of such reliance on its design liability (e.g. whether its design liability is to be limited as a result).
In the context of a "turnkey" project, where the contractor takes full responsibility for the design, engineering, procurement and construction of the project, this issue may not be of great concern to an employer. However, the employer should ensure that the contract does in fact allocate full design responsibility to the turnkey contractor (if that is the intention), including the adoption of any front end engineering design ("FEED"), so as to avoid having to investigate the history of how the BIM model was created and the extent of the parties' liability for the same in the event that any design defects arise in future.
Copyright and intellectual property rights
An employer's standard copyright provision may need to be enhanced to reflect the level of information contained in a BIM model, as well as the duration for which it is intended to be used. For instance, the subject matter of a copyright licence should extend to any data and information (e.g. relating to costs) contained in the BIM model as well as the model itself and the designs comprising the model.
Further, if the BIM model is to be used for the entire lifecycle of the project, an employer may not wish to limit the uses of the BIM model to specific "permitted uses" or, if it needs to, then it should state a wide range of uses that extend to repairs, modifications, demolition and decommissioning.
Ownership of designs and other information can also be unclear in the case of a Level 3 BIM model which is created by multiple contributors whose designs and data are integrated into one model from the outset. It will therefore be important for design appointments to include consistent copyright licences and other related provisions to ensure that the employer obtains the same rights from all designers. This will also be relevant in a turnkey context and the employer should require the contractor to procure licences on the same terms as those contained in the main contract to avoid the risk of claims from sub-contractors.
Project insurance
Working at Level 3 BIM can have a material impact on the insurance strategy of a project. For example, those contributing to a BIM model may be subject to higher insurance premiums to reflect the increased risk of "collective" design which is likely in turn to be passed down to the employer. In the case of a Level 3 BIM project, an employer might therefore wish to take out a single integrated project insurance policy, but this may not be widely available and could be a costly option.
Another consideration with regard to project insurances is the duration for which contracts should require contractors and/or consultants to maintain "claims made" insurances, such as professional indemnity insurance, to reflect the fact that a BIM model is intended for use during the operation and maintenance, and potentially even the decommissioning phases of a project. The longer the requisite period of cover, however, the higher the costs are likely to be which the contractor and/or consultants will seek to download to the employer.
Concluding remarks
As evidenced by the above issues, where BIM is to be used at a more integrated and collaborative level there will be a greater need than ever for the relevant construction contracts to provide a clear delineation of risk and responsibility between contributors in order to avoid creating contractual gaps and ambiguities. BIM users should obtain legal support in identifying the issues and addressing these as appropriate in the contract documents.
For further information, please contact:
Hamish Macpherson, Partner, Herbert Smith Freehills
hamish.macpherson@hsf.com
