NSPE's Gateway to Private Practice March 2009 

Professional Liability/Risk Management Brief: Schedules, Budgets, and Estimates or Opinions of Cost


Schedules, Budgets, and Estimates or Opinions of Cost

While the client may have specific schedule and budget objectives and a concept for the project at the time the professional service agreement is signed, much of the balancing of program aspirations against program, budget, and schedule realities will probably be done after the agreement is signed. Because the design professional’s design will be based upon his understanding of these requirements, the program, schedule, and budget should be memorialized in writing. In that regard, the program should be spelled out in sufficient detail to afford effective decision support throughout the planning and design process. If circumstances change or refinements are made, the program should be revised accordingly, again with the client’s written approval.

The client’s budget for the cost of the work is a particularly important parameter for the client, who hopes that the lowest bona fide bid or negotiated proposal will be lower than the budget. In some cases, a construction cost limit is established in the professional services agreement, obligating the design professional to design to that budget. If the established construction cost limit is exceeded by the lowest bona fide bid or negotiated proposal, and if required by the client, the design professional is obligated to modify the documents to bring the cost of the work within the client’s budget. For example, under EJCDC E-500, 2008 Edition, Exhibit F, if a construction cost limit has been established and is then exceeded, the engineer is obligated to modify the documents to bring the construction cost within the agreed-to limits. The engineer, however, is compensated at cost without profit for the redesign work. Under the EJCDC E-500, the engineer’s modification of the documents, under the terms provided, is the client’s sole remedy against the engineer.

As a practical matter, it is important for the client to understand that cost estimates are only as accurate as the information on which they are based, and the design professional should make clear to the client the limitations of his estimates  (see, e.g., EJCDC E-500, 2008 Edition, Paragraph 5.01). The “opinions of probable cost” prepared by design professionals under the EJCDC agreement forms are generally predicated on conceptual estimating techniques, not detailed quantitative techniques. If detailed estimates are desired, the design professional can be engaged to provide them, with the assistance of a cost consultant if the design professional is not otherwise qualified. Alternatively, the client can engage an independent cost consultant directly (see, e.g., EJCDC E-500, 2008 Edition, Exhibit B, Paragraph B2.01.K.).

The bottom line is that schedules, budgets, and estimates or opinions of probable cost reflect the design professional’s professional judgment, based on available information. They should not be construed as warranties or guarantees. The following sample provision reflects this reality:

Sample provision: Any schedules or completion dates, budgets, or estimates of cost prepared by Consultant represent Consultant’s professional judgment based on its experience and available information. Since neither Consultant nor Client has control over the cost of labor, materials, or equipment, or contractor’s methods of determining prices, or over competitive bidding or market conditions, Consultant cannot and does not warrant or represent that actual schedules, budgets or completion dates or actual costs will not vary from schedules or completion dates, budgets, or estimates of cost prepared by Consultant or proposed, established, or approved by Client.

We strongly recommend that appropriate legal advice be obtained before incorporating sample provisions in a binding agreement.

© 2009, 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.

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New NSPE Member Benefits: Four Free PDHs and Engineer Salary Data

Last week, NSPE launched a new approach to an old member benefit: The comprehensive results of the NSPE Engineering Income and Salary Survey are now available for free to members who participate in the survey — a value of up to $600. Needless to say, this new benefit has been very well received by the members. In February alone, over 1,000 people completed the survey.

This week, NSPE is introducing another member benefit: Four Free PDHs. We’ve chosen to launch this program with four current and very popular ethics courses. At the usual retail price, these four PDHs are worth about $600.

Now, all members can earn four free professional development hours by taking four online seminars on ethics topics. These courses, which are $149 each for nonmembers, provide members with a significant savings and easy access to continuing education credit.

The courses are

  • Engineering Ethics and the Law: Contract Documents and Procurement of Engineering Services (ONL-009)
  • Engineering Ethics and the Law: Contract Documents, Intellectual Property & Professional Liability (ONL-012)
  • Engineering Ethics and the Law: The PE as an Expert Witness (ONL-013)
  • Ethical Engineering and Fair Trade: Conflicting Interests (ONL-018)

At the end of each seminar, a quiz will be available for those who need it to meet their state’s continuing education requirements. The seminars have also been approved for continuing education credit in New York.

To access the courses, visit www.nspe.org/Education/WebSeminars/index.html.

Just like the new salary survey benefit, the free PDHs are available simply when you pay your national dues. It’s a use-it-or-lose-it arrangement, with no carryovers for unused services. Each year, the clock starts when you pay your dues, and you get another year’s access and a new package of benefits.

New benefits worth $1,200 for $125 —  a good deal in these difficult economic times.

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Victor O. Schinnerer & Co. Offer New Credit for NSPE Members

Qualifying architect and engineer firms with up to $5 million in billings and an acceptable loss ratio are eligible for a premium credit of up to five percent. Filing of this credit is underway and will be applicable once approved in each state.

For more information on the program for architects and engineers visit www.PlanetAEC.comor www.Schinnerer.com.

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Website of the Month: Bentley Launches "Be Employable"

Bentley’s new “Be Employable” program provides outplaced infrastructure professionals with free access to Bentley software and related software training tools. The program’s objective is to help outplaced architectural, engineering, construction, and geospatial professionals update and upgrade their technology skill sets, giving them a significant competitive edge in today’s challenging job market. It provides free access to Bentley’s comprehensive software portfolio and training as well as the ability to earn learning units from the Bentley Institute, Bentley’s training organization.

Be Employable includes:

  • Access to Bentley’s V8i professional software portfolio for noncommercial use
  • Instructor-led online distance learning as well as OnDemand eLearning for self-paced learning
  • Comprehensive learning transcripts to help maintain professional accreditation


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Nominations Due April 30 for PEPP Awards

2009 Annual PEPP Awards

Has an engineering firm you know or work for faithfully stepped up to the plate, taking on positive initiatives to serve the public? Are you privy to an individual contributing significant energy, time, and hours, working hard to advance the engineering profession? If so, recognition for such heroic efforts is monumental, and it's not too late!

2009 PEPP Professional Development Award

Since 1960, NSPE has used this award to recognize engineering employers who have made significant contributions to the advancement and improvement of engineering practices. If you feel your firm, or a firm you are familiar with, is worthy of such recognition, please visit our Web site for an application and important information. SELF-NOMINATIONS ARE ENCOURAGED. Please consider this opportunity to recognize your firm's professional development. The deadline to submit nominations is April 30.

2008 PEPP Award

The PEPP Award is given annually to an individual who has made an outstanding contribution to the advancement and recognition of the role of private practice in serving the public interest. Any individual, other than a current PEPP officer or PEPP Awards Committee member, is eligible. Nominations for the PEPP Award may be made yourself or through your PEPP regional vice chair, state chair, or national staff. The deadline for nomination is April 30. Nomination forms can be downloaded here.

2009 PEPP Merit Award

The PEPP Merit Award is presented to PEPP committee members or chairs, PEPP members serving in liaison functions or on joint activities or to any other PEPP member who has made significant contributions to the interest group. In addition, the employer of a PEPP Merit Award recipient is recognized for the support the consulting engineering firm has given to the profession through the activities of the PEPP Merit Award recipient. The PEPP Awards Committee, with the concurrence of the PEPP chair, may name as many PEPP Merit Award recipients as it feels are deserving of the honor. Nominations for the PEPP Merit Award may be made yourself or through your PEPP regional vice chair, state chair, or national staff. The deadline for nomination is April 30. Nomination forms can be downloaded here


The ACEC-NSPE QBS Award Program was established by NSPE to recognize public agencies that make exemplary use of the QBS selection process at the state and local level. Since its inception, the program has expanded to include submissions from private sector entities. ACEC has partnered with NSPE in this program, and the two associations alternate in hosting the annual event. This year it will be given at ACEC's fall conference. The deadline for nomination is March 27.

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PEPP Creates Synergy and Launches HR & Finance Roundtable

A new dynamic partnership between NSPE/PEPP's HR and CFO roundtables, presents SYNERGY 2009 —The Super Roundtable: The HR & Finance Partnership.

April 29–May 2

Participants include human resource professionals and CFOs in the engineering industry who come together for continuing education, the opportunity to network with peers, and sharing best practices. Also attending are principals of architecture, engineering, and construction firms to further their HR & financial knowledge, to benchmark current activities, and to discuss emerging trends and issues.

The Conference Center at the Maritime Institute
692 Maritime Boulevard
Linthicum Heights, MD 21090-1952
Phone: Toll Free (866)-629-3196 | Fax: 410/859-2893

Click here for registration information.

See the 10 reasons to attend.  As an added benefit, those who register and complete the Information/Networking Exchange Survey by March 31 will receive the survey results for free!

For more information, contact Marcia Prichard at mprichard@nspe.org or 703-684-2885.[ return to top ]

NSPE Education for You and Your Firm

Download registration information.

Tips and Strategies to Pass the FE/PE Exam
April 21
Noon – 1:00 p.m. (Eastern)
Dennis Dahlquist, P.E.
Description: Whether you’re preparing for the FE exam or the PE exam, you’ll need a game plan for success. Participants will discover strategies that many people have found useful in preparing for and taking these exams.

Business Management Series
Download registration information.

Controlling Project Design Costs (1.0 PDH)
March 26, 1:00 p.m. – 2:00 p.m. (Eastern) *note date change*
Howard Birnberg, Executive Director, Association for Project Managers
Description: This “nuts and bolts” program teaches the concepts and tools of effective project management for architects, engineers, owners’ representatives, facilities managers, and government agency executives. Participants will leave with a general understanding of how project managers can help to market projects, control design costs, and effectively manage the project team.

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Career Development Series
Download registration information.

Succession Planning—Planning for Success in Your Organization (1.0 PDH)
April 2,
12:30 p.m. – 1:30 p.m. (Eastern)
Speaker: Michael Lindblom, Partner, The Rainmaker Group
Description: “People are the most important asset of an organization.” This is something we hear all the time. Yet, many organizations have more comprehensive succession plans for their computers and office equipment than they do for their people!

Overcoming Your Strengths (1.0 PDH)
April 14,
12:30 p.m. – 1:30 p.m. (Eastern)
Speaker: Dan Ryan, Senior Consultant, The Human Capital Group
Description: Self-awareness is the first step in becoming a better leader. This awareness leads each of us to learn our strengths and developmental opportunities. Most of our effort is typically spent in leveraging our strengths as well as improving our developmental needs, but we sometimes need to restrain our strengths to keep them from becoming overused. This Web seminar will help you learn more about how to identify strengths as well as developmental needs and will then focus upon how to regulate our strengths to keep them from becoming overused.

Recruitment and Selection During Uncertain Times—Developing a Successful Strategy as an Employer (1.0 PDH)
May 20, Noon – 1:00 p.m. (Eastern)
Barbara Irwin, Principal, HR Advisors Group LLC
Description: Participants attending this Web seminar will understand how to develop a successful strategy in determining the need to hire. Sourcing and screening, as well as the interviewing and selection process, will be discussed during this lively session.

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 Green Issues/Sustainability Series
Download registration information.

Shaping the Future of Engineering: Challenges and Opportunities in a Time of Rapid Change (1.0 PDH)
March 31, 1:00 p.m. – 2:00 p.m. (Eastern)

Michael Simpson, P.E., Senior Engineer, City of Los Angeles, and Paul Horton, Director of Sustainability, David Evans and Associates
Description: Learn how the “green movement” is influencing the engineering world. We are delving into new territory and entering a carbon-constrained world. The guiding principles shaping engineering through 2020 and trends leading to the tipping point towards a low-carbon economy will be discussed. Participants will also learn how Los Angeles is leading the charge toward a prosperous, low-carbon economy. Quiz provided at the end.

Don't Let Green Design Cause Red Ink (1.0 PDH)
April 28,
12:30 p.m. – 1:30 p.m. (Eastern)
Speaker: Nahom Gebre, P.E., Risk Management Attorney, Victor O. Schinnerer & Co.
Description: Engineers must respond to society’s need for projects that meet present needs without compromising the ability of future generations to meet their own needs. But with increasing public emphasis on green design, engineers face significant exposures that challenge their professionalism and profitability. This session focuses on a realistic appraisal of emerging risks and discusses skills to manage them. Quiz provided at the end.

A Sustainable Approach to Planning and Design (1.0 PDH)
May 13, 1:00 p.m. – 2:00 p.m. (Eastern)
Michael Simpson, P.E., Senior Engineer, City of Los Angeles Department of Public Works; Paul Horton, Director of Sustainability, David Evans and Associates Inc.
Description: Have you been wondering how to make your projects more sustainable? Have your clients been asking for more sustainable planning and design? Paul Horton will provide an overview of the critical elements necessary to achieve a higher level of sustainability in projects. While we won't be able to make every project super green, we should nonetheless have a clear strategy (or approach) and a set of tools to allow us to make meaningful sustainable advances or improvements based on the specific situation and the current client conditions. Michael Simpson will discuss how the Los Angeles Unified School District practices integrating sustainability into new school construction. This presentation outlines a logical, sequential “approach” to integrating sustainability into projects. Quiz provided at the end.

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Ethics Forum
Speakers: Arthur E. Schwartz, Esq., NSPE Deputy Executive Director and General Counsel; William Lhota, President and CEO, Central Ohio Transit Authority and Director for the National Institute of Engineering Ethics
Description: This three-part series will cover engineering ethics topics as they relate to economic, professional, and competitive challenges. Quizzes will be provided at the end of each session for those who need them to meet continuing education requirements.

Download registration information.

Ethics Forum (Part 1)
Meeting Ethical Challenges in Difficult Times—Staying True to Client Expectations and the Public Interest (1.0 PDH)
March 18, 12:30 p.m. – 1:30 p.m. (Eastern)

Ethics Forum (Part 2)
Meeting Ethical Challenges in Difficult Times—Promoting an Ethical Workplace in an Economic Storm (1.0 PDH)
April 22, Noon – 1:00 p.m. (Eastern)

Ethics Forum (Part 3)
Meeting Ethical Challenges in Difficult Times—Keeping Financing and Marketing on Course in a Downturn (1.0 PDH)
May 6, Noon – 1:00 p.m. (Eastern)

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NSPE has put together an impressive series of Web seminars that will help professional engineers to expand their knowledge base and fulfill state registration board PDH requirements for PE license renewal.

Pricing is per site — the more individuals at a site, the lower your per person cost.

Individual session pricing is available for all Web seminars; series pricing is available for
Ethics Forum and Green Issues/Sustainability. Contact education@nspe.org for special series pricing for the Career Development, Business Management, or Licensure series or for multiple locations.

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Sustaining Firms

KS Associates Inc
Intertech Associates Inc
Hull & Associates, Inc
Nortech Inc.
Enrique Ruiz & Associates PSC
Storm Technologies, Inc.
Solis & Engineering Services, Inc
Brite Engineering Consultants, Inc
RS Scott Assoc Inc
Boyce Consultancy Group, LLC








PEPP 2008-09 Executive Board

Randy Rakoczynski, P.E., F.NSPE 
Buffalo, NY

Bill Clarke, P.E., F.NSPE
St. Louis, MO

Andrea Martinez-Graves, P.E.
Tampa, FL

Immediate Past Chair
Kevin Skibiski, P.E., P.L.S., F.NSPE
Brookline, MO

Vice Chair, Northeast Region
Randy Petersen, P.E., F.NSPE
Washington, DC

Vice Chair, Southeast Region
Dan Dawson, P.E., P.L.S. 
Wilmington, NC

Vice Chair, Central Region
Mark Davy, P.E.
La Crosse, WI

Vice Chair, North Central Region 
Karen Stelling, P.E.
Kansas City, MO

Vice Chair, Southwest Region
Eric West, P.E.
Midland, TX

Vice Chair, Western and Pacific Region
Michael Hardy, P.E.
Salem, OR

Young Engineer Representative
Richard Delp, P.E.
Gilbertsville, PA

SSEC Representative
Pat Christians
Birmingham, AL

PEPP Staff
Kim Granados, CAE
1420 King Street
Alexandria, VA 22314
tel: 703-684-2857
fax: 703-836-4875


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