NSPE's Gateway to Private Practice June 2012 

Letter from PEPP Chair, Andrea N Martinez-Graves, P.E.

As I am sitting here writing this article, I cannot believe that it will be the final PEPP Talk before I turn over my chair position. This year has flown by, and I can only hope that I’ve made a significant contribution to both NSPE and PEPP in my role as chair. In an economy where budgets are tight and society membership is down, my goal was to try to help set PEPP on a track to reduce costs and really focus on our members. To do so required changes to the PEPP governance. These changes were evaluated in great depth and made official in May through the approval of new PEPP bylaws and operating procedures. One of the most significant changes was the elimination of the regional positions and the creation of the new State PEPP Representative position. With these changes, I hope to improve the communication between the various state PEPP groups as well as the communication between state and national PEPP. PEPP feels that the best way to not only survive but to thrive is to focus on the wants and needs of our members. And what better way to do this than to improve communication with the states?

Before I finish up this final PEPP Talk article, I want to complete the promise I made to you at the start of my term as chair of PEPP. That was the promise to highlight the key PEPP committees that work hard through the year to serve our members. My goal was to not only inform you of what PEPP is doing, but also to give you an overview of the key committees that you may want to become active in. I hope by giving you this overview, I’ve helped to bridge the disconnect that I’ve always felt existed between the PEPP Executive Board/Committee and our PEPP members.

The final committee to be highlighted is the PEPP Young Engineers Advisory Council (YEAC). The PEPP YEAC was established in 2001 and is made up of PEPP members 35 years of age or younger. Each year, the members are tasked with selecting a project which is designed to help young engineers develop their leadership skills and become better engineers and/or help seasoned engineers learn how to mentor and motivate young engineers. Over the years, some of the products developed by this group include:

  • Mentoring Guide for Small, Medium and Large Firms;
  • Strategies for Member Retention and Attraction;
  • How-To Manual for Seminars, Socials and Ceremonies: A Practical, Step-by-Step Guide to Organizing and Hosting Events for Local and State Chapters;
  • A Guide to Enhancing Professional Development: From College Student to Company Principal;
  • Engineers in Elected Office presentation; and
  • Motivation Factors of Young Engineers: Motivating the Next Generation.

Another key objective of the PEPP YEAC was to groom the future leadership of NSPE. To help foster mentoring relationships between the young engineers and PEPP, two senior PEPP members sit on the PEPP YEAC as advisors. These young engineers are then invited to the NSPE Annual Meeting to meet with the entire PEPP Executive Board to help further develop mentoring relationships and to expose these young engineers to the operations of PEPP and of NSPE. It is the hope of PEPP that through this involvement, PEPP will play a key role in helping to develop the future leadership of NSPE. A goal I personally feel has already been extremely successful, as my involvement in the PEPP YEAC is the reason I am currently sitting in the role of PEPP chair and have sat on the NSPE Board of Directors as the Young Engineer representative. I would highly encourage any young members to consider getting involved in this committee. Those interested should contact PEPP YEAC Chair Amy Barrett at ABarrett@haferassociates.com.

Before I close this final article, I’d like to thank all of the PEPP Executive Board and Committee members who have worked so hard over the past year. I would also like to thank PEPP Chair-Elect Dawn Edgell, who has played many key roles throughout NSPE and has helped me achieve the goals I set at the start of my term as chair. PEPP will be in great hands under her leadership this coming year. And last, but certainly not least, I’d like to thank NSPE staff member Kim Granados. Kim is the glue that keeps PEPP together. She is an invaluable resource that has supported me not only in the role as chair but in my other committee and executive board positions.

It has truly been an honor to serve as the 2011–12 PEPP Chair. I have enjoyed the position and hope that I fulfilled all of your expectations. I look forward to seeing you all in San Diego next month!
[ return to top ]

Professional Liability/Risk Management: Joint Ventures Should Anticipate Professional Liability Claims

A joint venture is essentially a partnership, but only for a specific, and usually limited, purpose. Both partnership agreements and joint venture agreements usually allocate responsibility and compensation between or among the parties. Comprehensive joint venture agreements also address issues such as determining fault for performance that is deficient and establishing obligations for rectifying harm through reciprocal indemnification obligations. But that allocation is internal only.

How a joint venture is organized to provide services and how it assigns tasks and measures performance is a business management process. To the rest of the world, the partners or joint venturers are, in essence, co-promisers and usually under the law are “jointly and severally” liable for any contractual breach or professional liability. That means an injured party—whether the project client or a third party—may recover the full scope of damages awarded by a trier of fact such as a court or arbitration panel from either party or from both parties in any combination.

Although a carefully drafted joint venture agreement may set up a framework for the distribution of liability between the joint venturers, that framework cannot insulate each of the joint venture firms from all risks caused by others; nothing in a joint venture agreement limits the separate liability of joint venturers to a client or a third party. The perception is that the joint venture is truly a single point of responsibility for a project, and that perception is usually reasonable and recognized in any litigation against the joint venture.

Many engineers approach joint venturing on a far too casual basis. In most states, if a contract is signed by more than one entity or by a joint venture representing more than one entity, the firms assume the business risks inherent in the contractual agreement and, more importantly from a professional liability perspective, they assume responsibility for the negligence of the other joint venturers as well as their own. Some firms do little to anticipate the problems a joint venture might create by ignoring the fact that when they hold themselves out as a “team” and sign a contract together, they have created a joint venture. Whether firms attempt to use language such as “in association with” or “as part of the design team consisting of,” the result in almost every case is the same—responsibility for the other party without any real authority or ability to control the other party’s actions.

In any joint venture, both business and professional exposures should be addressed. Concern should be given to the exposure of each firm for the negligent professional services of the other. But, as with a general partnership, each party is also fully liable for the business risks of the joint venture and the other’s acts and omissions that do not constitute negligence in the performance of professional services.

Planning for Professional Liability Exposure

In any teaming arrangement, joint venture, partnership, or project-specific limited liability company, the participants must be concerned that their exposure to claims from their client and from third parties can be properly addressed. Each of these is a progression along a spectrum of shared risk. At the teaming stage, a common or joint exposure to client claims is rarely addressed. In a formalized relationship concern has to be given to: the level of coverage and deductibles of each party; how the parties will internally fund deductible obligations; and to what extent the parties will attempt to participate in a common defense against professional liability claims that would be applicable on a joint and several liability basis.

While each firm’s professional liability insurance usually covers the specific firm for its exposure to professional liability claims caused by its negligence in the performance of professional services, comprehensive policies also cover the firm’s risk as a joint venturer. Because of the shared liability, the negligence of another joint venturer might cause a firm to be concerned that its policy would be eroded by negligence that is essentially out of its control. 

Often, unrelated design professional firms who wish to form a partnership to perform services on a particular project through a joint venture attempt not only to state a requirement for similar professional liability insurance coverages and deductibles (on similar policy forms), but also to establish a fund for deductible obligations, often equal to the deductible of both parties combined, so that the separate policies can respond as efficiently as possible. Obviously, if members of a joint venture are insured by the same carrier, the resolution of any professional liability claim is easier. Defending a joint venture works best when the firms clearly assign duties and recognize their proportionate share of risk when those duties are carried out in a negligent manner.
Firms entering into a joint effort should understand the legal status of joint venturers under the applicable law and the insurance coverage ramifications of sharing risk. It is prudent for firms to organize their common endeavors properly. This includes recognition that there might have to be a defense of the joint venture based on each party’s participation. A specific distribution of effort within the joint venture facilitates a defense based on responsibility. Examining the language of professional liability insurance policies, determining when and how a joint defense could be advantageous, and determining how defense costs and controls will be shared are essential business-planning decisions.

© 2011, Victor O. Schinnerer & Co. 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 & Co. Inc. is managing underwriter for the Schinnerer and CNA Professional Liability Insurance Program, commended by NSPE/PEPP since 1957.
[ return to top ]

NSPE 2012 Leader Conference & Annual Meeting

NSPE leaders will participate Thursday and Friday (July 12 and 13) in a two-day "Leader Conference." The conference will focus on building strong volunteer leaders. Day one will begin with a facilitated general session, on understanding your leader style and learning how your style can add to the association volunteer leader team. Afternoon of day one will provide licensure and advocacy updates to enhance your engineering knowledge. Day two will begin with another facilitated general session, "Association 101." Enjoy this morning session as you learn skills that will elevate you as a volunteer leader. The afternoon session will focus on "The Race for Relevance."

Saturday, the NSPE House of Delegates Assembly will meet in the morning. NSPE 2012–13 President Dan Wittliff, P.E., F.NSPE, and his Board of Directors and House of Delegates will be installed during a luncheon ceremony, followed by keynote speaker Bob Kelleher on "Leader Engagement." During the afternoon, the NSPE 2011–12 and 2012–13 boards will hold a joint session.

While you're here, take advantage of the beautiful resort and relax with family and friends by exploring attractions aplenty; be sure to enjoy all that San Diego has to offer while you…

  •     Learn about your leader style, about association management;
  •     Engage with engineering leaders from across the country during networking lunches and receptions;
  •     Strengthen the skills that will elevate you as a volunteer leader; and
  •     Discover much more! 
[ return to top ]

Happenings on the Hill

  • The Council on Federal Procurement of Architectural and Engineering Services sponsored a forum for federal agency representatives and design professionals regarding A/E procurement issues. Rep. Bill Huizenga (R-MI-2) discussed the Federal Prisons Accountability Act of 2012 (H.R. 3634), which would require the Federal Prison Industries to compete with the private sector for government contracts.

    Small Business Administration Office of Size Standards Director Khem Sharma spoke about the recent increase in the A/E size standard for small businesses, noting that SBA has not received negative feedback following the increase. U.S. Census Bureau Geographic Program Management Assistant Division Chief Leslie Godwin discussed the Geography Division's funding needs and use of mapping technology.

  • General Services Administration Multiple Awards Schedule Program Director Robin Bourne sparked a lengthy debate with his presentation on GSA's Multiple Awards Schedules. NSPE and COFPAES have long objected to GSA's inclusion of a Professional Engineering Services Schedule in its program. Services contracted through GSA's Multiple Awards Schedules are based on price, while federal agencies are required to procure A/E services using qualifications-based selection. While GSA claims it does not allow design services to be listed on its Multiple Awards Schedules, A/E services are regularly found on the Schedules in violation of the law. NSPE and COFPAES will continue to work with GSA to resolve the issue.

    NSPE is a founding member of COFPAES, an organization dedicated to protecting and promoting the Brooks Act (PL 92-582) and the use of qualifications-based selection.

  • NSPE joined an international group of engineering societies in endorsing the U.N.'s "Sustainable Energy for All" initiative. The program seeks to ensure universal access to modern energy services, double energy efficiency rates worldwide, and double the share of renewable energy in the global energy mix by 2030.

  • NSPE joined a small group of engineering, architecture, construction, and planning organizations in meeting with Department of Commerce Deputy Assistant Secretary for Asia Craig Allen to discuss improving the business environment for firms that perform A/E services in China.

 [ return to top ]

NSPE Education On Demand

Learn how to communicate more clearly, both verbally and in writing. Find out how to cut costs and take better control of your bottom line. Learn more about how to approach decision making in an ethical manner, and how the history of these decisions can give you perspective on your own challenges. Finally, get your ethics requirements covered by the authority on the subject.

Each of our archived Web seminars is $69 for nonmembers and $35 for members.

Visit our Web site to see a full list of our archived Web seminars.
[ return to top ]

Significant Legal and Legislative Activities

No Calls for PE Oversight in Final Deepwater Report
The National Academy of Engineering has released its final report on the 2010 Deepwater Horizon disaster and its recommendations for preventing future disasters.

While the report calls for the overhaul and reestablishment of a strong safety culture in the offshore drilling industry, as well as independent oversight in the design of wells and well equipment, it does not specifically recommend oversight by PEs as a safeguard against future catastrophes. Three PEs served on the National Academy panel.

NSPE believes that licensed professional engineers should have direct supervision over all engineering design, operations, and maintenance of offshore oil rigs. In December 2010 testimony to the Chemical Safety Board, NSPE Deputy Executive Director and General Counsel Arthur Schwartz explained that safety can be compromised when employees feel compelled to put loyalty to their employer before ethics. PEs, however, are unique. "First, professional engineers are accountable to the state that licensed them, ensuring that a professional engineer's loyalty is to the public, not an employer. Like doctors and attorneys, professional engineers depend on their license to practice; and losing that license would ruin a professional engineer's reputation and end his or her career. Continued licensure carries more weight than continued employment at one company," Schwartz said.

Aging Water Infrastructure Needs Costly Upgrades, Report Says
Is any engineering feat taken more for granted than the delivery of clean, safe drinking water? It cost households fractions of a penny per gallon, the infrastructure that delivers it to the public is mostly out of view, and water, unlike electricity, almost never stops flowing to our homes.

This engineering success story, however, faces a monumental challenge. According to a report from the American Water Works Association, it will cost at least $1 trillion over the next 25 years to maintain current levels of water service. That money will be needed to restore aging pipes and expand water systems to accommodate population growth.

AWWA says the report is "the most thorough and comprehensive analysis ever undertaken of the nation's drinking water infrastructure renewal needs." It expands on an AWWA report published more than 10 years ago that examined 20 cities. The new report covers the entire United States.

The report has six key findings:
1. The Needs Are Large
$1 trillion over the next 25 years. Looking farther down the road, over the coming 40-year period, these needs exceed $1.7 trillion. Replacement needs account for about 54% of the national total, according to the report, with about 46% attributable to population growth and migration over that period.

2. Household Water Bills Will Go Up
Most Americans pay less than $3.75 for every 1,000 gallons of water they use. That may change. While there are many variables in how infrastructure costs are spread among customers, AWWA says that the total cost borne by the community will increase. Infrastructure costs alone could triple the size of a typical family's water bill.

3. There Are Important Regional Differences

The South and West face the biggest investment challenges mainly due to population growth. Growth is not as much of a challenge in the Northeast and Midwest, but population shifts in these regions could leave fewer local customers supporting the cost of infrastructure renewal.

4. There Are Important Differences Based on System Size
Small communities face the biggest challenge simply because there are fewer people to absorb the costs, and they typically require more pipe miles per customer. A three-person household in such a community could see its water bill increase by as much as $550 per year.

5. The Costs Keep Coming
Investment must be sustained for many years to maintain current levels of service. Once pipes laid between the late 1800s and 1960 are replaced, it will be time to begin replacing pipes laid after 1960.

6. Postponing Investment Only Makes the Problem Worse
Not all of the $1 trillion investment needed through 2035 must be made right now, but postponing the investment steepens the slope of the investment curve. "As large as the cost of reinvestment may be," the report says, "not undertaking it will be worse in the long run by almost any standard."

 To read more about federal and state legislative activities, click here.  [ return to top ]


PEPP Home Page
Archived Newsletters
Contact PEPP
Printer Friendly
Forward to a Friend


ADCOMM Engineering Company
Almost Home Inc
ARIS Engineering, Inc.
Bain Medina Bain
Baird, Hampton & Brown, Inc. Engineering & Surveying
Barr Engineering Company
Bartel & Associates
BBFM Engineers Inc
Beardsley Design Associates
Becht Engineering BT Inc
Bernard R Berson PE LS PP, Consulting, Forensics, Seminars
BMJ Engineers & Surveyors, Inc.
Brite Engineering Consultants, Inc
C Allan Bamforth Jr., Engineer-Surveyor, LTD
Commonwealth Associates Inc
CRW Engineering Group LLC
CT Consultants Inc
Davy Engineering Company
Design Alaska, Inc
Engineering Tech PA
Exponential Engineering Co
Foth Production Solutions, LLC
Fugro Consultants, Inc.
Gannett Fleming
HF Lenz
Horner & Shifrin, Inc.
Hull & Associates, Inc
J & Y Engineering Services Inc
Jahnke & Jahnke Associates
JK Consulting
Kellard Sessions Consulting, P.C.
Klingner & Associates PC
Kuhlmann Design Group Inc
McMahon Associates, Inc
MEP Engineering Inc
Michael Baker Corporation
Michael Ernst PE PA
Norris Kuske & Tunstall Consulting Engineers, Inc.
Nortech Inc.
Nussbaumer & Clarke Inc
O'Malley Engineers LLP
Ostergaard Acoustical Associates
Palmerton & Parrish Inc
POWER Engineers Inc
Providence Engineering Corp
Rentech Boiler Systems, Inc
Richard W Rauseo PE Consulting Engineers
Ridge & Associates Inc
RSA Engineering Inc
Schkeeper Inc
Strickland Engineering LC
Suberroc Systems SUBSYST
Sundquist Engineering PC
Traffic Planning and Design Inc
Traffic Planning and Design Inc
Tri State Engineering Inc.
TVG Environmental, Inc
University of Houston
Van Note Harvey Associates PC

Join your colleagues and competitors.
List your firm on the NSPE Web site
and link more business
to your future.   


PEPP 2011-12
Executive Board

Andrea Martinez-Graves
Tampa, FL

Dawn Edgell
Chair Elect
Aurora, IL

Mark Davy
Past Chair
La Crosse, WI

Eric West
Midland, TX

Aaron Thrush
Maumee, OH

Charlotte Anne Maddox
Vice Chair
Tampa, FL

Chris Richard
Vice Chair
Lafayette, LA

Karen Stelling
Vice Chair
Kansas City, MO



For more information or to contact us directly, please visit www.nspe.org.
TO UPDATE YOUR EMAIL ADDRESS, please reply to this e-mail (pepp@nspe.org) with your full name and nine-digits.
To unsubscribe to future editions of PEPP Talk, please click