Professional Liability/Risk Management Brief; Project Documentation during the Planning and Design Phase
In suits alleging negligence in the performance of professional services, well-drafted documents and well-kept, comprehensive project records are the strongest defensive weapons available to professionals. The following practices and procedures can be vital to a firm’s continued profitability in the face of costly litigation.
Planning and Design Phase
1. Put all agreements for the performance of services in writing, and state with particularity the scope of services, fees to be charged, each party’s responsibility to the other, and any responsibilities assumed by either party toward any person not a party to the contract for services; this includes creating written contractual arrangements with subconsultants. It is surprising how often design professionals enter into loose oral arrangements with professional consultants and subcontractors. The architect, engineer, or other prime professional is still responsible to the client for the services provided by these consultants, but the professional’s responsibilities to each other are unclear and probably unenforceable.
2. Avoid any statement that can imply that you have responsibility for the work of any entity that contracts directly with the client, and whose data and reports the client is obliged to supply to you. Do not accept or pay for reports which should be addressed to and paid for by the client. Write nothing indicating that such a person is your agent in the performance of their services, i.e., that you have any control or supervision over the client’s other consultants.
3. Write nothing that implies that you have the right to hire, supervise, or discharge an on-site representative whom the client pays, unless you are obligated by contract to employ such a person at your own expense.
4. Recognize that the courts treat all specifications emanating from your office to have been written by you, just as if you had written them all from “scratch.” Therefore, when issuing specifications, do not assemble under one cover the appropriate specifications with large masses of inappropriate forms. Careless use of form specifications may someday put you in the embarrassing position of explaining to a jury why the contractor should have adhered to the letter of certain specifications while no one expected the contractor to pay any attention to certain others. Be sure to issue only appropriate, self-explanatory specifications. Remember that, as the “author” of these documents, any ambiguity will be construed against you in court.
5. Do not casually specify untested materials and methods. Request in writing the representations, guarantees, and warranties of any manufacturer or vendor, and otherwise document your investigation and exercise of judgment in using such information.
6. Provide the client with necessary information to allow a decision indicating informed consent. Present to the client in writing the advantages and disadvantages and estimated costs of each alternative, and obtain the client’s decision in writing.
7. Document the client’s decision on bonds and insurance. If the client elects, for reasons of its own, not to require surety, to require only specific insurance coverages, or not to avail itself of any other safeguard, affirm the client’s election in writing.
8. Document the transmittal of plans, revised plans, and project information to consultants.
9. Notify the client in writing of any recognized increases in cost estimates and the reasons behind them, and obtain the client’s written agreement to proceed.
Benefits of Documentation
To have to “put it in writing” will cause you to stop and think. Thus, there will be tangible evidence of your thought and work in the event of any claim or controversy. By law, you are held to the only reasonable standard of care—the exercise of professional judgment in conformance with the standards of an ordinarily careful and capable practitioner facing similar situations. As long as this standard is met, you are not negligent, even if hindsight reveals that you made a mistake. In the event you are drawn into a lawsuit, those writings are likely to be admissible evidence as proof of what was said and done, even when those who participated either cannot remember, seek to misrepresent the facts, cannot be found, or have died.
© 2010, 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.
Nominate Fellow Engineers for NSPE Awards
NSPE offers several awards that have upcoming deadlines in 2010. Below are just a few of the award programs NSPE will be conducting this year.
For details, visit the NSPE Awards Web page.
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.
PEPP QBS Award:
The ACEC-NSPE QBS Awards Program was established by NSPE to recognize public agencies that make exemplary use of the QBS selection process at the state and local level.
PEPP Professional Development Award:
The PEPP Professional Development Award is presented to employers who exhibit exceptional career development initiatives and employment practices that advance the engineering profession.
Mentor of the Year Award:
The Mentor of the Year Award is given each year to the one member of NSPE who best exemplifies the ideal image of a mentor. The award may be given to an individual who has established a record of consistent outreach toward individuals in the engineering field, including engineering professionals and students, over a number of years.
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Synergy: The Super Roundtable HR and Finance Partnership
Synergy: The Super Roundtable HR and Finance Partnership
Sponsored by the Professional Engineers in Private Practice, the NSPE Human Resource Directors' Roundtable and the National CFO Roundtable bring together a unique community of human resource professionals and CFOs of architecture, engineering, and construction firms to benchmark current activities, discuss emerging trends and issues, participate in continuing education network with peers, and to share best practices.
During Synergy, the two groups will participate in joint sessions designed to generate discussion on issues of importance to both finance and HR. In addition, there will also be separate sessions and discussion on topics of specific interest to each individual group.
Topics for this year include:
- Update on Healthcare Reform;
- Mergers & Acquisitions Panel (HR & CFO impacts);
- Crafting Compensation Competitively in the Engineering Industry;
- HR Legal Issue Update—what's new for 2010 and what's coming;
- SHRM Advocacy Program;
- Developing Leaders in your Firm—Leadership Development Training Programs;
ESOP Issues; and
- Keeping on Track: Adapting to Changes in the Marketplace and Banking Industry.
Synergy will meet May 5–7, 2010. The event will kick off on Wednesday, May 5 with a joint dinner and presentation and runs through 12:30 p.m. (E.D.T.) on Friday, May 7.
A block of rooms has been reserved at the Lorien Hotel for a room rate of $209 single/double. This new hotel is conveniently located at 1600 King St., Alexandria, VA. The cutoff date for the group rate is April 2, 2010. To register, call 877-956-7436. Ask for the “National Society of Professional Engineers function” to get the group rate.
Early Bird Registration: January 11–March 15, $495
Regular Registration: March 16–April 30, $595
Register today. Attendance is limited.
Contact: For additional information or to answer any questions, please e-mail firstname.lastname@example.org.[ return to top ]
NSPE is committed to bringing you Web seminars and workshops that incorporate the ABC's of continuing education by being affordable, beneficial, and convenient. We continue that commitment with our spring education series beginning on January 21. Online registration is now available through Shop NSPE at www.nspe.org. Register today to take advantage of these excellent education opportunities!
Part II - Engineering Ethics at Work: Balancing the Interests of Employers and Clients
March 17, 12:30–1:30 p.m. (E.D.T.)
This session will explore issues such as procurement of engineering services by clients, observing improper actions by employers or clients, misrepresentation of engineering data, and restrictive employment agreements.
Product Code: WS-100317
Part III - Engineering Ethics at Work: Balancing the Interests of the Public
April 7, 12:30–1:30 p.m. (E.D.T.)
This session will explore issues such as confidentiality of information potentially damaging to the public, duty to report unsafe conditions, the influence of gifts and other compensation, and publicly criticizing another engineer.
Product Code: WS-100407
Project Management: How to Do it Right
February 23, 12:30–1:30 p.m. (E.S.T.)
This seminar is designed to help you better understand the steps you can take to improve your effectiveness as a competent leader of project teams.
Product Code: WS-100223
Presentation Skills for Engineers
February 25, 12:30–1:30 p.m. (E.S.T.)
In this Web seminar, we will highlight some proven strategies for successful presentations, drawn from the experience of one who has helped hundreds of engineers prepare for presentations where there was much at stake.
Product Code: WS-100225
How to Start Your Own Firm
April 20, 12:30–1:30 p.m. (E.D.T.)
Have you considered starting your own firm? During this Web seminar, you will hear the experiences of others who have gone through the process and been successful. Learn some tips for success and what potential pitfalls you may encounter.
Product Code: WS-100420
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Liability of Employed Engineers
The following questions and answers are intended to address some of these issues prepared by NSPE Deputy Executive Director and General Counsel Arthur Schwartz:
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- Can an employed engineer be sued separate and apart from the engineer's employer being sued?
As a general rule, when an engineer negligently performs services on behalf of his firm or employer, the individual allegedly suffering damage from the engineer's negligent performance may sue the company and/or the individual engineer. Typically, in the case of an engineering firm in private practice, the firm's professional liability insurance carrier will respond to claims against any past or present principal, partner, director, officer, or employee acting within the scope of their duties. In some cases, the firm or company may choose to self insure and agree to indemnify its employees for negligent acts, errors, or omissions performed within the scope of their duties. In all cases, the issue of who signs or seals the drawings, plans, or specifications is not necessarily relevant to whether the engineer and/or the firm will be found negligent. Instead, the courts generally look to whether the engineer(s) owed a duty to the individual(s) suffering damages and whether the engineer(s) breached the duty, causing all or a portion of the damages.
- Will there by sufficient insurance coverage to protect the individual employed engineer?
Assuming the firm or company maintains a manageable professional liability insurance policy deductible and reasonably high limits of coverage, the firm's professional liability insurance policy should provide adequate professional liability protection for the firm, principals, employees, etc. In the event the firm anticipates a potentially greater professional liability exposure due to the nature of its work and other risk management considerations, the firm should consider increasing its maximum limits of coverage. As pointed out earlier, individual engineers employed by a firm or company in private practice are generally covered under standard professional liability insurance policy language.
- Is it a good idea for an employed engineer to purchase his or her own professional liability insurance policy?
Individual professional liability insurance policies for employees have not been the custom or practice within the engineering profession. Individual employees who believe their unique services (e.g., "cutting edge" environmental remediation services) increase their firm's liability exposure may want to discuss these issues with their employer; if warranted, the employer may want to explore these issues with its insurance broker and carrier.
- What is the likelihood that an individual will be sued apart from the employer?
It is possible, but extremely improbable, that an individual employee would be "sued outside of the corporate liability insurance umbrella," which would mean that the individual employee would be sued but his employer would not, assuming the individual engineer was acting within the scope of his employment. As a practical matter, a plaintiff's attorney will name (in fact, the attorney has a professional obligation to name) each and every party that is potentially liable to the plaintiff. Under those conditions, it is hard to imagine a plaintiff naming the employee and not also naming the employer—the party that is legally responsible for managing that employee. Assuming both are named in the suit, the professional liability insurance carrier would provide coverage for both the firm and the individual employed engineer.
- What happens if an employer goes out of business, discontinues professional liability insurance, or a former employee continues to practice elsewhere?
Where a firm terminates its practice, discontinues liability insurance coverage, or one of its former employee establishes his/her own firm and is later named in a suit relating to professional services rendered through the former firm, many professional liability insurance carriers offer retroactive insurance coverage that would provide protection for the former employee for those claims.
- What about individuals employed in government, industry, or education?
As a general rule, engineers employed by federal, state, or local agencies (including engineers teaching at state colleges or universities) and performing engineering services within the scope of their employment are generally immune from suit under the common law legal doctrine of "sovereign immunity" (i.e., "the king can do no wrong"). Few engineers employed in large industry have perceived a significant professional liability risk exposure. Many large industrial employers either self-insure, have professional and products liability insurance coverage with very high (or layered) limits, or as a matter of corporate policy, agree to indemnify and hold harmless their employees for negligent actions that arise within the scope of their employment. However, the climate may be changing largely due to corporate restructuring which, for example, recently occurred in the power generation field. In this regard, there has been a growing interest in professional liability insurance among some electrical engineers who have been terminated from employment and afterwards brought back by their former employers as "independent contractors."
- Any final advice?
As the practice of engineering evolves and the role of the employed engineer changes, professional engineers and their employers must continue to be aware of their liability exposure as employed engineers.
Mentoring: What and Why?
Bernard Berson, P.E.
Mentoring is a term generally used to describe a relationship between a less experienced individual, called a mentee or protégé, and a more experienced individual known as a mentor.
I stumbled into the engineering profession by sheer luck. A civil engineer and land surveyor at a state employment agency hired me the summer after my freshman year in college. I was enrolled, at the time, in the school of business administration. My field crew chief of party showed me some basic skills, and I spent about three months learning more and more from him. Without specific coaching, he quietly taught me about duty to an employer and about excellence in what you do. He, to this day, stands out as the reason I changed majors and became an engineer and land surveyor. I not only loved the work, but I wanted to be like him. What I most admired about him, and have tried to emulate, was his ability to teach me, a surveyor’s novice helper, the right way to do things without making me feel like a dummy. He corrected my mistakes with respect, although he could also become stern if I consistently repeated the error. But he never did it in a demeaning way. He was also able to commend me for a good job. These are great leadership characteristics. He was an unwitting mentor to me.
Whether you are a college student or have recently entered the engineering profession or a seasoned practitioner, you need to be aware of mentoring, what it is and what it can do for you. You need to be not only aware, but you need to take a proactive role in seeking a mentoring relationship. A mentor can be defined as a trusted counselor or teacher, especially in occupational settings. A protégé can be defined as one whose welfare, training, or career is promoted by an influential person.
Mentors have probably already influenced your life. You may have had one or more teachers in elementary school or high school whose guidance is still a driving force in your life. There may have been clergymen, sports coaches, dance teachers, scout leaders, relatives, job supervisors, and more, who have mentored you about life, morality, ethics, diligence to work, belief in yourself, self-reliance, and so much more. Perhaps neither of you thought of it as mentoring, because it was simply a natural relationship between two people who respected and cared for each other. I can recall several very significant persons who served as my mentors and whose influences have guided me for decades.
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Top Ten Reasons Your Firm is Underachieving, Part 1
Herbert M. Cannon, President of AEC Management Solutions Inc.
10. Lack of Accountability
Lack of accountability can and does occur at levels of an underachieving company. Whether it is partner to partner, partner to project manager, or project manager to staff—seldom are people held accountable for missing deadlines, sloppy work, or over-budget projects.
9. Accepting Mediocrity
If mediocrity is your goal, you will probably succeed. This goes hand in hand with number 10. Expectations of employee performance are often set far too low—and employees do their best to barely achieve it.
8. Lack of Employee Recognition and Employee Rewards
When hard-working, overachieving employees are not recognized by their supervisors, it can be demoralizing. Instead of their performance raising expectations for all employees, it has the opposite effect. The overachievers become demoralized and they sink to the level of the underachievers. Public recognition of their hard work and meaningful financial incentives will go a long way in keeping their performance at a high level and inspiring many of the others to do the same.
7. Majoring in Minor Things
Far too many employees fall into the trap of spending too much time in a reactive state of busy work. They read and respond to unimportant e-mails, return non-urgent phone calls, attend far too many unproductive meetings, spend time with uninvited drop-in visitors, and so on. This leaves little time to work on the most important items, such as producing the work product or closing the deal on a new project
6. Making the Loss-Leader a Way of Life
All too often in my career, I have seen severely under-priced projects justified as a loss-leader. The theory behind the loss-leader is that once the client sees how wonderful we are at producing high quality work and servicing their needs, they will then become a long term client at full pricing. There are so many things wrong with this theory that one hardly knows where to start (I will go into more detail in a future article). The reality is that once you set the price, they will expect it all the time. Another problem is that you won the project on price. Won't they also be willing to leave you in the future if one of your competitors offers them a lower price?
To be continued…
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 mailto:email@example.com. Or visit his Web site at www.aecmanagementsolutions.com.
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