Views From The Expert: Top 3 Liabilities Facing Design Professionals

general_liabilityBy William F. Dexter

It’s no secret that engineering and architecture are often considered “high risk, low margin” professions that are riddled with unforeseen consequences surrounding standard design services. Nor should the increasing number of lawsuits being brought against members of our industry surprise us. We no sooner enter the boundaries of a design project then we find ourselves lost in the Bermuda Triangle of Construction Risks.

Rob Vellum was a structural engineer and senior partner in a small A/E firm that specialized in multi-family and commercial condominium projects.  Last year, on the corner across from Rob’s apartment a new residential condominium project was under construction. Rob was curious to watch the progress since another firm had designed it. He would frequently wander through the site with a cup of coffee, observing the progress and talking with the contractors.  The subs would ask his advice on certain details and Rob was glad to throw his opinion in.  His visits continued throughout the entire 12-month course of construction.  Rarely did a week go by that Rob didn’t stroll through the project and check out the work.

Typical of the ultimate destiny of residential condo projects, within two years of completion, a lawsuit was filed against the developer by the homeowners’ association for massive and pervasive construction defects.  The developer also filed a cross-complaint against our friend, Rob Vellum, for failing to exercise the standard of care required of a professional engineer in spite of the fact that Rob and his firm had nothing to do with the design or administration of the project.

Regardless of the carefully crafted contract language, which attempts to limit the engineer’s exposure to unnecessary risks, design professionals are being sued in increasing numbers not only for breach of their design duties, but also for the duties they informally and voluntarily assumed along the way.  Project owners are expecting services during the design and construction phases that are placing the architect/engineer in a position of responsibility for the owner’s and contractor’s duties and performance.  Compounding this increase in exposure is the owner’s reliance on representations made concerning the suitability of the contractors’ work. “Job site communications and field reports” pose substantial risks to the firm for inadvertently volunteering as a certifier for the work performed by contractors and fabricators.

Long after the construction documents have been published and permits issued, the architect or engineer flies into the Bermuda Triangle of construction phase services, which include review of shop drawings, payment certification and construction observation.   Let’s take a look at establishing solid guidelines to reduce the risks of these frequent situations by transferring liability back to the client and others who are always quite eager to let the design professional be responsible.

Although the suit against Rob Vellum was quickly dismissed, it is indicative of the litigious environment within our industry.

Consider the issues that have arisen in another lawsuit where the file records of job site reports, written by the engineer or architect, were the compelling basis for establishing the engineer’s liability for defective installation of structural assemblies.  The developer, in its complaint, asserted that it was entitled to rely upon the representations made within the engineer’s written report of observations.

Here’s what happened:

pic clip image002

The owner asked the engineer to visit the site and comment on the placement and connection of hardware to a structural beam (left photo).  It was quite obvious that the contractor had installed bolts through the steel hanger that were too short to fully engage the threads of the nut.  While he was on site, the engineer also noted that the stucco lath and moisture barrier operations had been completed.  In his follow-up report of the site visit, the engineer cited the bolting deficiency, with a correction, and also wrote: “…the stucco cladding paper and lath is complete, ready for the scratch coat.”  This was a key issue in the case against the designer. The structural design allowed for the stucco cladding to participate in the building’s lateral force resistance system.

Two years later, when cracks in the stucco and other collateral finishes along with leaks to the interior were observed, it was determined by plaintiff’s forensic experts that the attachment of the lath to the wood frame employed staples that were too short and the fastener spacing exceeded the design specifications. Essentially the weight of the stucco exceeded the capacity of the fasteners to secure it to the frame. The engineer’s written report of observation was interpreted by the developer’s attorney as an full endorsement of the adherence to the structural design by the contractor.

The attorneys for the developer cited the field report, indicating that it provided a representation that all of the work observed by the engineer was consistent with industry practices and wisdom.  They argued that the engineer’s comment “…the stucco cladding paper and lath is completeadditionally inferred: “according to building codes and plan specs.” The court agreed and held that no other individual was better-informed and in a position to observe a defect in the application of the lath than the engineer.  The engineer was found by the court to have contributed substantially to the failures of the stucco attachment. How could this have been avoided?

This is all about duty. In this situation the engineer just snatched the Pokies liability away from the contractor and the developer by assuming the duty to voluntarily evaluate the contractor’s work even though he was not asked to do so. Let’s travel back in time to the exact same scenario that begins with the developer’s concern regarding the same structural connection.  The engineer observes the same condition, but the report about the stucco is substantially different. Instead the engineer writes: “Stucco lath and moisture barrier work appears complete.  Since the structural integrity of the building depends on the fastener use and placement for positive attachment to the frame, it is strongly recommended that you verify through the building department or a deputy inspector that the details of the specifications were faithfully adhered to.”  This is an entirely different message.  The engineer has just directed the owner/developer to verify compliance with some other entity pointing out that it is a critical component of the building’s design.  The liability for verifying the contractor’s compliance has been left in the lap of the owner/developer.  The same use of “recommendations” can charge the owner to seek verification from the contractor, thus asserting that the engineer’s observation was NOT an inspection. More importantly, it establishes that inspection of the work is outside of the engineer’s scope.

The key to this area of the practice is to always be mindful of the “duty” you are assuming as a result of a simple conversation or a brief written memo.  Although the case above involved a structural design issue, the same practice should be incorporated into the standard policies of all disciplines of engineering. As designers and specifiers we should maintain strict control over the actual duties we assume and avoid, even the appearance of, approval of the owners’ and contractors’ work.  The players within the construction drama will always be delighted to hand the engineer or architect their responsibilities.

The use of “recommendation” language cannot be overemphasized.  Contractors are delighted to ask and receive the endorsement of the design professional for the work they have just completed.  Our industry has established that the contractor is responsible for the “methods and materials” of constructing the project.  The engineers join right in as soon as they state, even in ambiguous terms, that the work is “complete.”  By simply adding: “The Owner should verify with the equipment manufacturer’s representative that all connections meet with their specifications for this application”, the engineer places responsibility back with the owner (where it belongs).

This advice applies, not only to observation reports of site visits, but also to certificates for payment and written requests for information from the contractors.  By including a recommendation to verify, confirm, validate, or insure that the method or material is appropriate, design professionals place themselves one step further from the inevitable dispute.  This becomes the game of whoever is caught holding the responsibility when the music stops, is behind the eight ball.

A suggested checklist: 

  1. Limit observations and report language to the purpose of the visit.
  2. Limit oral conversations with the contractor to basic items. Follow up substantive questions in writing.
  3. Include “recommendations to verify” in every report or written correspondence dealing with contractor performance.
  4. Follow-up in writing asking the owner/developer if their verification of the work confirmed compliance by the contractor, manufacturer or fabricator.
  5. Limit construction phase services wherever possible.  The project rarely has a sufficient budget to allow for detailed verification of design compliance.   This is where the risk ultimately lies.

Remember that when the “high risk, low margin” aspect of our industry is combined with an aggressive plaintiff’s attorney, designers are likely to be brought into the dispute process as a party for construction defect issues that deal more with methods and materials than design errors.  There is no better defense against surviving litigation than a well-documented pattern of advising your clients to verify that their contractors are performing to the standard of care they are held to.

Finally, a closing tip regarding record keeping of job site reports and correspondence:  Create and maintain records with the foresight that they may become the exhibits in a lawsuit impugning your professional integrity and performance. The golden rule for dispute preparation is, “Never show up with the second best evidence.”  Every letter, memo and report has the possibility of being transformed into an arrow aimed at you.   The risk management mindset demands that we become more careful and cautious about describing and limiting our scope of work to design tasks.

About the Author

Bill Dexter is a 40 year veteran of the construction industry and the former Director of the California Center for Construction Education for the College of Architecture and Environmental Design at California Polytechnic State University, San Luis Obispo. As an internationally recognized risk management-consultant, his industry training company serves construction organizations nationwide and overseas in the areas of liability mitigation.  Bill has participated as an industry spokesman before The American Institute of Architects, The Construction Specifications Institute, Pacific Coast Builders Conference, the California and Nevada Contractors State License Boards and the Association of General Contractors.

Disclaimer: JDi Data’s series of ‘Views from the Expert’ blogs provides information and expanded points of interest for our clients and partners.
These are personal blog posts.  The opinions expressed here are the authors’ and not those of JDi Data or any other person.