JCT Mini-Series: Design Risk Management: Ensuring Your Contracts Work for You, Not Against You

In episode 126 of The Subcontractors Blueprint podcast, host Jacob Austin continues his JCT Subcontract mini-series providing construction business leaders with a comprehensive overview of design liabilities under JCT 2024 subcontracts. He explains key legal standards, the impact of contract amendments, and the risks of fitness-for-purpose obligations. Jacob highlights the importance of careful contract review, maintaining professional indemnity insurance, and understanding BIM protocols. He shares practical tips for managing design approvals, submission procedures, and liability caps, emphasising how minor contract changes can significantly increase risk. The episode empowers subcontractors to protect their businesses by staying informed and negotiating fair, insurable terms. KEY TAKEAWAYS: The JCT 2024 subcontracts clarify that subcontractor design liability is limited to reasonable skill and care, not fitness for purpose, unless expressly stated otherwise. Approval of design by contractors or clients does not transfer liability; subcontractors remain responsible for their own design adequacy. Professional indemnity insurance typically only covers negligence, not absolute performance guarantees or fitness for purpose obligations. Subcontractors must carefully follow design submission and approval procedures, maintain records, and understand BIM protocol requirements if applicable. Contract amendments can significantly increase risk by introducing fitness for purpose clauses, uncapped liabilities, or indemnities—so vigilance and negotiation are essential. Always align contractual obligations with insurance coverage, and scrutinise amendments to avoid taking on unintended or uninsured liabilities. BEST MOMENTS: "Skill and care is about how you do the work—doing it professionally—whereas fitness for purpose is about the result." "If you accidentally or otherwise accept a fitness for purpose obligation, your insurer can decline your coverage." "Approval in a contract is about consent to move forward, not transferring design risk." "Many SMEs understandably focus on price, scope and program and gloss over the legal terms, but design liability is one area where a few little sentences can completely change the game." "High risk should command a higher price, and it may even mean higher insurance coverage." "Managing design and the risk associated with it is not about avoiding design work, it's about doing it on fair terms, with awareness of where your responsibility ends."   HOST BIO: Meet Jacob Austin, a Chartered Quantity Surveyor with a rich background at construction industry giants Balfour Beatty, Kier, and Vistry Group. With extensive involvement in education, health, and residential projects spanning various scales, from £1000s to over £100M in concurrent developments, Jacob brings a unique perspective. Having collaborated with numerous small businesses, he's now committed to sharing his expertise to drive their success. Join Jacob on his podcast, where he blends his profound insights and personable approach to offer guidance, industry secrets, and inspirational stories. LinkedIn - www.linkedin.com/in/jacob-austin/ Instagram - www.instagram.com/qs.zone/ www.qs.zone/all-links