Letter from PEPP Chair, Andrea N Martinez-Graves, P.E.
Andrea N Martinez-Graves, P.E.
As we enter into March, PEPP continues to work hard to bring you value. PEPP leadership has been evaluating the organization and trying to come up with the best structure to serve our members. We’re looking at streamlining and restructuring our leadership to be more efficient and nimble. This will hopefully improve the coordination between the national and state PEPP groups and allow us to better serve you, our member.
It appears that PEPP isn’t the only group working to better serve our members. NSPE is doing the same in an attempt to generate efficiencies and better enhance the services to all members. Please join me in congratulating Kim Granados, CAE, in her promotion to head of the new NSPE Membership Services and the Professional Practice department. For those of you who have been active in PEPP, you know that Kim has played a huge role in keeping PEPP a strong and vibrant interest group. This is a well deserved promotion.
Last month, I highlighted our Synergy HR/CFO Roundtable committee. In order to provide more information on how the PEPP organization is working to help you, this month I would like to highlight the Engineers Joint Contract Documents Committee. Everything mentioned here, including the documents and background material, can be found at www.nspe.org/ejcdc, including the recently released Uniform Location of Subject Matter guide that is free to NSPE members.
EJCDC, founded in 1975 by PEPP, is a joint committee that represents a major cross section of the professional design and construction community. The current sponsoring organizations of EJCDC are PEPP, the American Council of Engineering Companies (ACEC), the American Society of Civil Engineers (ASCE), and the Associated General Contractors of America (AGC).
EJCDC’s overall mission is to develop and maintain quality standard engineering contract documents, promote the use of the documents in the construction industry, and continually educate all users of the documents. In support of the stated mission, EJCDC prepares and publishes:
- Standard forms of agreements for professional engineering services.
- Standard contract documents and related forms for construction projects.
- Guidelines, commentaries, and educational programs on the use of EJCDC documents and matters related to the roles and responsibilities of the owner, engineer, contractor, and others involved in a project’s design and construction.
In developing and updating its publications, EJCDC considers:
- Ideas and suggestions from its committee members, additional engineers and practitioners, owners, including USDA/RUS, contractors, attorneys, insurers, insurance experts, and others familiar with customs of practice and developments in the applicable field.
- Recent legislation and court decisions.
- Advice of EJCDC Legal Counsel.
EJCDC’s publications are intended to be objective and fair to all parties; to recognize and respect the separate interests, capabilities, and roles of those parties; and to provide for a professionally and nationally recognized and acceptable level of engineering practice.
EJCDC educates members of the design profession, owners, the construction industry, attorneys and the interested public in the importance of understanding the proper roles and responsibilities of the contracting parties and the wording and coordination of engineering, bidding, and construction documents. EJCDC coordinates its activities with other organizations and government agencies seeking to standardize the concepts and wording of professional society and industry documents when appropriate.
In addition to producing documents with tested and proven language, EJCDC has taken a more focused posture on the external environment of contract language and document needs. There is an increasing emphasis on the total project construction team, including the owner, design team, contractor, suppliers, and users. There is also a recognition of key external considerations, including legislative and regulatory issues, liability exposures, a litigious business climate, and increasingly stringent environmental and design standards.
NSPE members involved in EJCDC include:
- Joseph W. Eberle, P.E., F.NSPE, Reukert & Mielke (NSPE delegate)
- Bruce D. Firkins, P.E., Bolton & Menke (NSPE officer liaison)
- Kent A. Lackey, P.E., Black & Veatch (NSPE delegate)
- William D. Beery, P.E., F.NSPE, Construction Management Services (NSPE delegate)
- Neil Van Dyke, P.E., Foth Companies (NSPE delegate)
- James C. Brown II, P.E., Arcadis/Malcom Pirnie
- Nahom A. Gebre, P.E., Victor O Schinnerer & Co.
- Dale L. Houdeshell, City of Manhattan, Kansas
- Thomas M. Keranen, Clark Hill PLC
- Rajarshi Sarkar, P.E., Washington Metropolitan Area Transit Authority
- Coy Veach, P.E., Freese & Nichols
- Ronald E Zitterkopf, P.E., F.NSPE, Black & Veatch
Professional Liability/Risk Management: Services for Prototype Designs
There are significant risks in providing services to develop prototype designs. The fee for such services is rarely equal to the risks associated with client-generated disputes or third-party claims. In addition, the preparation of prototype designs brings the engineer very close to the line between professional liability and product liability. When a design, or design documentation, is seen as a product produced by the engineer and distributed through commercial channels for repetitive or large-scale use, the engineer is without the protection of professional liability insurance coverage, is subject to more than the common law negligence standard, and may be responsible under a strict liability standard for damage caused by the design.
Contractual Recognition of Reasonable Risk
The methods of protecting a firm from the possibility of a meritless claim or an unanticipated cause of action require the firm and client to understand the limited scope of services and the possibility of third-party claims.
Elements of a contract for prototype services should include the following:
- A limitation of the engineer’s liability (which is only effective between the parties to the contract);
- A disclaimer constituting a warning to future users, which identifies the service as a recommended or prototype design solution for a specific set of design parameters; and
- An indemnity agreement for claims from users or buyers (which can either run from the client or be “passed on” by the client to the ultimate user of the design).
Limiting the Engineer’s Liability
The limitation of liability provision should clearly indicate that the limitation is based on the discrepancy between the risk to the engineer and the engineer’s compensation. The provision should limit the risk to that which is foreseeable and manageable by the engineer. Increased compensation for services is necessary if the risk is not allocated in a way so that the client absorbs the risk to the engineer that is unanticipated or unmanageable.
Disclaimer Language to Avoid Product Liability
The disclaimer should indicate that there is no warranty implied in the service provided and that the calculations or other instruments of service are prepared according to the standard of care for such services. The disclaimer should also indicate that there is no representation or express warranty of merchantability, of fitness for a particular purpose, or of the quality, adequacy, completeness, or sufficiency of the documents with respect to the use of the documents by the client. The disclaimer also serves as a warning to the ultimate user that the design was based on certain parameters and conditions and needs to be examined for specific conditions and code compliance.
Protection Against Meritless Claims
The indemnity provision should recognize that the engineer, in providing service for a prototype, may be subject to numerous meritless claims from future users or buyers. It is reasonable and equitable that any use of the information without the engineer’s verification and adaptation to changes in codes, standards, site conditions, or other factors should be at the client’s sole risk. Further, it is realistic and practical that the client should defend and indemnify the engineer for all claims, costs, losses, or damages to the engineer resulting from the use of the information.
These issues should be discussed with a client that is offering only a limited fee for a design solution that will be reused in situations beyond the control of, and without input by, the engineer. Unless the client is willing to compensate the engineer for confirming the information for each installation, it is only fair that the risk of claims from the client be limited and the engineer be protected from third-party claims.
© 2011, 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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Happenings on the Hill
Small Business Administration Increases Engineering Size Standard
The Small Business Administration has issued a final rule that would allow engineering firms with average annual revenues of $14 million over three years to qualify as small businesses when competing for government work. (The previous size standard for engineering firms was $4.5 million in average annual revenues over three years.) The rule will take effect on March 12, 2012. NSPE has supported increasing the size standard, which would allow more engineering firms to enter the federal contracting marketplace. Read the final rule here: http://www.gpo.gov/fdsys/pkg/FR-2012-02-10/pdf/2012-2659.pdf.
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Educate Yourself with NSPE Online Web Seminars
NSPE has an exciting line up of Web seminars this spring. Visit the Web site for the full listing!
Engineering Ethics: A Conversation About Conflicts of Interest Issues
Join NSPE Deputy Executive Director and General Counsel Arthur Schwartz and a panel of engineering ethics experts for a discussion covering payments of engineers’ travel expenses by vendors, serving as a manufacturing expert, design and construction of a house in a flood area, and reviewing work of another engineer and thereafter performing engineering services for that client. Polling questions and a Q&A will allow opportunities for audience interaction. 1 PDH
March 14, 12:30–1:30 p.m. (E.S.T.)
Engineering Ethics: A Conversation About Expert Witness and Engineering Review Issues
Join NSPE Deputy Executive Director and General Counsel Arthur Schwartz and a panel of engineering ethics experts for a discussion on the obligation to reimburse a payment advance, limiting the scope of an engineering review, working for a law firm client involved in litigation with a former law firm client, and a forensic study dependent upon work of an engineer in dispute with a client. Polling questions and a Q&A will allow opportunities for audience interaction. 1 PDH
April 18, 12:30–1:30 p.m. (E.S.T.)
Engineering Ethics: A Conversation About Business, Employment, and Licensure Issues
Join NSPE Deputy Executive Director and General Counsel Arthur Schwartz and a panel of engineering ethics experts for a discussion on the signing and sealing of a subcontractor’s calculations, a Canadian firm’s noncompliance with engineering licensure laws, obtaining professional references, and an employee’s awareness of his employer’s financial improprieties. Polling questions and a Q&A will allow opportunities for audience interaction. 1 PDH
May 16, 12:30–1:30 p.m. (E.S.T.)
Visit the NSPE Web site to register today.
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Nominate Fellow Engineers for NSPE Awards
NSPE offers several awards that have upcoming deadlines in 2012. 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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HR Roundtable Registration is Open!
Register for the joint roundtable in a way that is easy for you.
Register online through Shop NSPE or download a PDF registration form and return the form with your payment to NSPE, 1420 King St., Alexandria, VA 22314 or fax to NSPE at 703-836-4875.
When: May 2–4, 2012
Where: Alexandria, Virginia
Early bird registration is February 10–March 31: $495.
Register from April 1–May 1: $595.
During Synergy, the two groups participate in joint sessions sharing their unique views on topics of importance to both. Topics for this year include:
- Continuing Education Requirement for Engineers, presented by Red Vector;
- Career Development and Training Practices;
- Legislative Update;
- Effective Organizational Change Management;
- M&A: Due Diligence and Integration; and
- Organizational Ownership Strategies.
For additional information or to answer any questions, please e-mail firstname.lastname@example.org.
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