DBIA Risk Management and Allocation Questions and Answers 2

Question 1

What is DBIA's recommended approach to risk allocation in design-build contracts?

Accepted Answer

Allocate each risk to the party best able to manage, mitigate, or absorb that risk

Answer

DBIA advocates that risks should be allocated to the party best positioned to manage them, producing lower overall project costs.

Question 2

Which risks are typically retained by the owner in a design-build contract?

Accepted Answer

Risks related to differing site conditions beyond what was indicated, owner-directed changes, regulatory changes, and force majeure events

Answer

Owners typically retain risks they are better positioned to manage or that are beyond the design-builder's ability to anticipate.

Question 3

How should professional liability insurance be addressed in a design-build contract?

Accepted Answer

The design-build entity should carry professional liability (E&O) insurance with coverage limits appropriate to the project's complexity and value

Answer

Professional liability insurance specifically covers design professional negligence and is essential in design-build.

Question 4

What is a 'limitation of liability' clause, and how does it function in design-build?

Accepted Answer

It caps the design-builder's maximum financial exposure for certain types of damages, negotiated based on project value and available insurance

Answer

A limitation of liability clause establishes a maximum amount the design-builder can be required to pay.

Question 5

How should design-build contracts address warranty obligations?

Accepted Answer

Contracts should distinguish between construction warranties (typically 1-year correction period) and the designer's ongoing professional standard of care obligation

Answer

Design-build warranty structures must address both the construction correction period and the professional standard of care for design services.

DBIA - Design-Build Institute of America Certification Practice Test

DBIA - Design-Build Institute of America Certification Practice Test

DBIA Risk Management and Allocation Questions and Answers 2