Engineer novation is common on design-and-construct projects and can change who the engineer is contractually responsible to.
An engineer may initially be engaged by the project owner and later have their contract transferred to the builder or head contractor.
This can change the commercial relationship and sometimes the engineer’s contractual exposure.
Engineers should consider:
- whether the scope of services changes
- responsibility for work completed before novation
- new contractual indemnities
- liability caps
- fitness-for-purpose obligations
- responsibility for other consultants
- required PI limits and run-off periods
The novated engineer may also be expected to continue developing a design while working directly for the contractor responsible for delivering the project.
The Professional Indemnity insurer may want to understand the contractual structure and the engineer’s responsibilities before and after novation.
For broader industry guidance on novation and consultant contracting risk, see Consult Australia’s Centre for Contracting & Risk.
