Professional Liability/Risk Management Brief: Using Owner-Supplied Documents
By Richard B. Garber, Vice President A/E/C Risk Management Services, Victor O. Schinnerer & Company Inc.
Using Owner-Supplied Documents
Design professionals often seek assistance in situations when they are asked to reuse instruments of service prepared by another design professional. There are many issues involved in such reuse, including whether the subsequent design professional meets the registration law requirements of being “in responsible charge” of the design, whether the client owns the instruments of service, and the copyrights on the instruments of service and the design, and whether the subsequent design professional is protected from any claims—regardless of the merit of such claims—caused by the use of the original instruments of service.
One method of obtaining protection from the possibility of a copyright infringement claim is the following language, which allocates the risk to the client of any claim that the use of the documents might be a violation of a valid copyright:
To the fullest extent permitted by law, Owner shall indemnify and hold harmless Design Professional from and against any and all costs, losses and damages (including but not limited to all attorneys' fees and charges, all court or arbitration or other dispute resolution costs, and any time spent by Design Professional in defense of any such claims) resulting from any claims brought against Design Professional alleging copyright, trademark, or patent infringement or any other cause of action or regulatory decision resulting from the Design Professional's use of, or reliance on, the design, plans and specifications provided by the Owner for the Project. This provision shall survive the completion of the services provided under this Agreement.
Whenever a design professional provides services based on the professional or nonprofessional services of another, there are many areas of risk. Some of these, the likelihood of an infringement of copyright and the occasion for a violation of state registration laws, are not professional liability risks. They are, however, very real risks to a successor on a project.
From a professional liability and insurance perspective, performing such services without adequate protection can mean that the fee earned for the services provided is disproportionately low for the risk assumed. In those instances where a design is based on previously provided services, but not necessarily on copyrighted documents, it would be prudent to have a provision such as the following:
Design Professional shall have no responsibility for the components of the Project design created by Design-Professional-of-Record and shall not be required to review or verify the design for compliance with applicable laws, statutes, ordinances, building codes, and rules and regulations. The Owner shall indemnify and hold harmless Design Professional from and against claims, damages, losses and expenses arising out of the services performed by Design-Professional-of-Record as designer or as advisor to the Owner.
Although few professional liability claims involve the reuse of documents or designs, the dangers of copyright infringement claims and other legal actions based on regulatory enforcement, the defense of property rights, and interference with the contract all should be addressed with the client when the client wants to use existing design and construction information.
© 2008, Victor O. Schinnerer & Company, Inc. Statements concerning legal matters should be understood to be general observations based solely on our experience as risk consultants and may not be relied upon as legal advice, which we are not authorized to provide. All such matters should be reviewed with a qualified advisor. Victor O. Schinnerer & Company Inc. is managing underwriter for the CNA/Schinnerer Professional Liability Insurance Program, commended by NSPE/PEPP since 1957.
NSPE Education for You and Your Firm
July 24–27, Portland, OR
2008 NSPE Annual Conference
It´s not too late to sign up. Participants can earn up to 19 professional development hours at this year’s conference education sessions. Education session topics cover PEs in the LEED world, global energy issues, emerging technologies, sustainable design, risk management, profitability, best practices, stress management, and other current professional topics.
A free PEPP Council of Principals session on July 26 will focus on conducting a leadership inventory and the motivation of young engineers.
July 25, Portland Oregon
NSPE Young Engineers' Forum
Free to the first 40 registrants.
Green Building Best Practices 2008
Maximizing Value While Reducing Risk
NSPE Members have the opportunity to participate in these Web seminars at reduced rates. Click here for more information and to register.
|July 9, 2008
||Design Considerations —It’s More Than Just About LEED Certification
What is it, who benefits, where’s the ROI for the Designer? Contractor? Occupant? Building owner? Learn design best practices to find the most economical alternatives to achieve the highest possible certifications.
|July 23, 2008
||The Construction Phase — Tips, Techniques, and Concerns
CMs, contractors and subcontractors play a crucial role in executing the green design intent. Learn how to plan and manage construction to maintain or improve certification ratings. Josh R. Greenfield, PE, LEED® AP, of Primera Engineers, Ltd. and Jim Day, LEED-AP, VP Clark Construction Group, LLC, discuss lessons learned including preconstruction issues, management tools, documentation methods, subcontractor training and contract close-out.
|August 6, 2008
||Commissioning — Where the Rubber Meets the Road
Long before green building hit the radar, savvy owners insisted on formal commissioning programs to assure design goals are met. Now LEED for New Construction (LEED-NC) requires it. Commissioning planning should start during the design process; find out how to implement commissioning best practices, how it's done, who should perform it and why it often improves the opportunity to achieve on-time and on-schedule project delivery. Hear experienced experts including commissioning expert Amir Yazdi, PE, LEED-AP, of CTG Energetics, provide insight gained on 35 projects of all sizes and types.
|August 20, 2008
||Legal and Risk Considerations
Construction attorneys Bryan Jackson and Mike Cathcart from Allen Matkins Leck Gamble Mallory & Natsis LLP along with William Broz, PE of CTG Forensics, LLP., discuss the major risks associated with green building -- capital (design/build cost & schedule), operational(operation costs) and reputational (failure to achieve certification) -- as well as emerging risks such as ownership, regulatory and casualty. Much is at stake, including loss of financial incentives, occupancy delays, future marketability and reputation, for starters. Risks affect all parties - owner, designer, contractor and CM - and are best dealt with at contract formation.
|| Date & Time
| Complete Green Building Best Practices Series
(Includes all four events and CDs,
giving you flexibility to listen at your convenience)
| 07/09/08 at 1:00 PM
| Session 1 Attendence Only
|| 07/09/08 at 1:00 PM
| Session 1 Attendence and CD
|| 07/09/08 at 1:00 PM
| Session 1 CD Only (Pre-event discounted price)
Questions: Contact Kim Granados, NSPE Director, Professional Practice 703-684-2857
Click to download the Brochure.
NSPE Education That Fits Your Schedule
Online, prerecorded sessions are available at a low member price of $89.00, including:
If you need to catch up on your PDH credits before the end of the year, visit the new NSPE Education Partners page and check out the deals that are available to NSPE members from an exceptional group of continuing education providers. These providers have been especially selected for the NSPE membership because they have user friendly online systems and a wide selection of engineering topics for you and your firm to choose from; many of the courses are approved in states that have the most stringent criteria.
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Top 10 Symptoms of a Sick Company
Herbert M. Cannon, President of AEC Management Solutions Inc.
10. Being Cut Off by Your Vendors for NonPayment
If you are being cut off by your vendors, either trade or consultants, for nonpayment you have a problem. The problem is not that you are being cut off, the problem is that you are not managing your business properly.
9. Having Little or No Cash Reserve Even in Good Times
Some firms are constantly working from a position of weakness. They scrape by living like a financially overextended household living paycheck to paycheck. They eagerly await the mailman hoping there is a large enough check to cover payroll. If they are fortunate enough to build up a cash surplus, the owner pulls the money out of the company to buy his latest toy. The staff struggles on with outdated computers and software because there is no money to invest in the company. The owner is invariably offended when people leave the company to work for a firm that is committed to reinvesting in the company.
8. Everyone is Working 60 Hours a Week
While we generally need to work more than 40 hours a week in this business, I have seen too many firms take it to an extreme. A constant diet of 60-hour weeks will take its toll on everyone. Over the long run, it results in low productivity, poor quality, high turnover, and personal problems. To solve the problem, hire more people. If you can´t find the quality people you need, raise your prices. The resulting price increase will either lower your volume of work or give you more profit to attract high-quality people.
7. No Strategic Planning for Where You Want to Be in Five Years
If you don't know where you are going you will wind up somewhere else. If handled properly, a three-day strategic planning retreat can produce tremendous results. Without it, your chances of professional and financial success are greatly diminished.
6. Too Many Meetings
Meetings are certainly necessary, but some firms over do it. These firms usually have a micromanaging leader who insists upon countless meetings even if there is nothing to talk about. If you don´t have an agenda prepared and distributed in advance, a time limit, and expected outcome, cancel the meeting until you are prepared.
5. Too Few Meetings
Yes, we do need to communicate face-to-face with each other on a regular basis. You need to meet face-to-face with your partners or other key employees at least one to two hours a week. If you are in different locations, this can be done via videoconference or telephone. Be sure to be well prepared and have a standing agenda to speed things along.
4. Financing Your Company With the Consultant´s Money
As tempting as it might be to use a subconsultant´s money to finance payroll, rent, office improvements, bonuses, etc.,it is a path you don´t want to go down. Consultants´ money is a drug that masks the real cash flow problems in your firm. By using their money, you avoid making the tough decisions on a timely basis. Make it a policy to pay your consultants within two days of being paid by your client. The result will be more cooperative consultants and a cash flow that is closer to your actual profit and loss.
3. Meetings That Never Start on Time
Meetings that start late are one of the prime symptoms of a dysfunctional company. In my experience, companies that hold meetings and consistently have partners/employees showing up 15 + minutes late are invariably unprofitable. This is a particular hot button with me. If it is important enough to have the meeting, it is important enough to show up on time.
2. Finalizing the Current Year´s Budget in April
I have seen far too many companies start the calendar year budget in February and finalize it in April. If this is the case you have a problem. The time to finalize next year´s budget is no later than November 30.
1. Holding Your Christmas Party In February
Yes, the first A/E firm I ever worked for held their Christmas party in February. Not because they thought it was a good idea, but because they couldn't get it together and make the decisions that were necessary to have the party in December. Unfortunately, this is how they ran their company. Is it any surprise that they aren't in business anymore?
Herbert M. Cannon, president of AEC Management Solutions Inc. and publisher of AEC Managing Partner Newsletter, is a management consultant, seminar provider and speaker exclusive to the A/E industry. He is available to speak at company meetings and conferences. For more information, contact Herb via e-mail or visit his Web site.
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NeXt Generation of Leaders
Some baby boomers will retire (not all, we hear!), leaving a leadership shortage. PEPP is talking with the future generation of leaders and listening for ways to attract younger generations to the profession — and retain them. Each month PEPP Talk plans to profile a young engineer who exemplifies what is in the pipeline for leadership — that is when these young engineers aren’t too busy!
Title: Project Manager, Water Resource Engineer
Been There: 8.5 years
Number of employees: 4,000
How did you first get into engineering? I´ve always loved math and science and decided to give engineering a try.
If you weren’t an engineer you’d be…. a veterinarian.
What’s your peak experience as an engineer so far? Getting my PE. I am finally able to take credit, as well as responsibility, for my own work.
What do you value in the people you work with? Diversity. Engineers are an extremely diverse group of people with various backgrounds and experience. This diversity leads to some great creativity and innovative ways to approach projects.
What do you think engineering firms need to do to attract younger generations into the engineering industry? Get to the students as soon as possible. There are still a large amount of people who don't know what an engineer does. It´s hard to get someone to become an engineer when they don´t really know what it means.
What does leadership mean to you? Leadership is the chance to make a difference. A chance to inspire change, stand up for what you believe, and help to encourage others.
Football or baseball? Football (Go Colts!! Oops, I live in Tampa. Go Bucs!)
Sneakers or flip flops? Sneakers
Favorite cereal? Lucky Charms
Something readers would be suprised to learn about you? I played volleyball in college.
How do you strike a work/life balance? I think this is difficult for people at any level. I think the important thing for me is to try to keep my personal life at home and work at work. Mixing the two, while sometimes unavoidable, can lead to problems. I also try not to over commit. I try to balance what I do with the time a certain committment requires, so it doesn't have too big of an impact on the other aspects of my life.
Are you a young engineer interested in getting more involved in NSPE? Interested in being profiled? Know of a young engineer we should profile? Contact Kim Granados.
Are you a baby boomer trying to understand the Generation X and then the Millenials? View the free two-part PEPP Council of Principals video on Leadership and the Emerging Generations. Or purchase the Future Leader Focus report.
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Partnership with Construction Specifications Institute Adds Value
CSIWiki is a free Web-based construction and design industry encyclopedia — a living document to which any construction professional can contribute. The goal of CSIWiki is to provide common definitions of terms related to construction documentation. With few exceptions, CSIWiki’s articles can be edited by anyone with access to the Internet, simply by clicking the “edit this page” link. Construction professionals are invited to add information, cross-references, and citations. Through active participation, the CSIWiki community can create a manual that combines their collective knowledge and experience.
More than 100,000 CSI AudioCast episodes have been downloaded since its launch at audio.csinet.org. CSI’s audiocast focuses on news, education, interviews, and best practices for the construction and design industries. This spring, CSI will add two new series to the AudioCast line up – bimWITS (focused on BIM and offered in collaboration with the buildingSMART Alliance) and the Week in Green (focused on innovations in sustainable construction).
Got a Question? Ask it in the CSI Forums. CSI’s forums give you access to CSI’s expert members! Right now, people are talking about specs, construction practices, products and systems, certification, MasterFormat 2004 Edition, SectionFormat, UniFormat, and membership and leadership issues.
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Overhead in HR: Payroll Accounting or HR Function?
An age-old question recently arose among HR executives who have taken part in PEPP’s HR Roundtable: Which department should handle payroll, HR or Accounting? The majority of the HR respondents indicated that the function was an accounting task. The overwhelming sense from those who did handle payroll was “Don´t go after it. Better yet, if you´ve got it, try to give it back!” although it sounded difficult to give away this responsibility.
At PEPP´s recent CFO Roundtable, the same question was posed to this group of professionals. Although a couple of participants saw the value of having payroll in HR, one CFO clearly stated, “It will never be in HR. You need an accountant to handle math and dollars.”
While this discussion was not put to rest, the consensus of both groups was that payroll should report to Accounting and that a close working relationship between HR and Accounting must be maintained.
Running payroll involves accounting functions, tasks, and knowledge, such as posting to the general ledger and having a detailed knowledge of tax laws. This expertise, along with the need to provide checks and balances as part of standard accounting procedures, suggests that the accounting department is the best home for payroll.
Although a very small minority thought it might be easier for Payroll staff to report to the HR department, the majority thought such an arrangement would make it more difficult to ensure the work is done properly and legally.
While HR staff may have limited understanding of accounting and Accounting staff may have limited understanding of human resources, one thing is clear: HR, Payroll, and Accounting need to work together as efficiently as possible. Many firms split aspects of payroll between HR and Accounting. A common approach is that HR handles the employee-information segment. Once the HR information is correctly fed into the process, then Payroll takes over and does the processing part.
Accounting carries out recordkeeping of employee hours as well as payroll reconciliation and submission; however, HR is responsible for maintaining records related to hiring, benefit election, and termination.
In most cases, employees tasked with payroll tended to report to the Accounting group dedicated to payroll and related reporting. HR enters all employee information, such as benefits and rate changes, and has full reporting capabilities without being able to actually print checks. Accounting handles all the W-2 and year-end processing. This provides a good system of checks and balances. The best of both worlds is having a system that can handle all of these functions plus payroll and can be accessed by both HR and Accounting. This is immediate and Payroll/Accounting has the information it needs to keep track. So does HR.
The actual processing of payroll, however, remains in the Accounting department so they can make sure that all the t´s are crossed and all the i´s are dotted when it comes to the actual posting and money amounts.
Everyone involved in payroll must have a sense of urgency about handling issues related to payroll and getting the information to the employee charged with payroll on time. Each department does its part and sends it to the next department to finish.
A final consideration on how best to handle payroll is confidentiality. One concern about payroll in Accounting is the confidential nature of information processed. Anyone involved must treat payroll with the appropriate sensitivity to compliance and in a timely manner. Executive compensation (actually all compensation) cannot be scrutinized outside of your compensation group, final checks must be up to speed with wage-and-hour laws and regulations, and mistakes must be handled promptly.[ return to top ]