Liability and Performance Based Design

[phamENG]

Question out there for the owners/self proprietors/etc. How do you handle performance based design with liability insurance? I don't hold a policy myself (I have a a few years to go before I strike out on my own), but I'm curious about the impacts.

In a recent lunch-and-learn session we discussed professional liability insurance and what it does and doesn't cover. The general lesson I took from it was this: they cover to the standard of care, so don't make any extra promises. Essentially, if you tell your client that you'll give them a building that will be better and stronger than the code requires (read: standard of care), you're on your own if anything goes wrong. Is this true in others experience/knowledge?

There's a growing desire for better and more resilient structures, particularly in the face of growing concerns over natural disasters (think the Sand Palace in Mexico City Beach, Florida). Shortly after that happened, I had a client request that their house be able to survive a category 5 hurricane. I talked her down from that one, but it I have a feeling its something that will be happening more and more. How are people providing the desired level of service while still maintaining a sound level of protection from their insurance carriers?

 

[MrHershey]

So how do you do PBD and not guarantee performance? You're defining the performance that your structure must meet, and then designing it to meet it (as opposed to meeting a checklist of isolated requirements in the code that lead up to some difficult to quantify global 'performance').

In part because performance is dictated by a lot more than design. I didn't build the building. I didn't procure the materials. I didn't independently verify the material strength. I didn't maintain the building. Even with design, I didn't design the architecture, the foundations, the mechanical systems, etc.

Even within the structural realm, I designed for a specific threat, a specific set of time histories that were generated by a (hopefully) expert in the field of geotechnical engineering and ground motions. What if the earthquake that actually hits the building is not similar to the time histories that I designed to?

If I 'guarantee' that a building will perform a certain way, I'm taking responsibility for a lot of things that are outside my control and insurance won't cover that.

And yes, I've been involved in a true PBD. I don't believe it affected our insurance at all.

 

[MrHershey]

Also wonder if this is part of the confusion:

Essentially, if you tell your client that you'll give them a building that will be better and stronger than the code requires (read: standard of care), you're on your own if anything goes wrong.

That is not the 'standard of care'. Designing for higher than the code requires does not elevate the standard of care. If it were then every engineer out there not designing everything to a DCR of 1.0 or assuming loads higher than they actually need to be is elevating the standard of care and in theory invalidating their insurance.

The 'standard of care' varies by jurisdiction but typically is something along the lines of: exercise a similar level of judgement, knowledge, and expertise exercised by engineers with similar experience in similar situations.

If you are asked or required to do a PBD and do so with the same judgement, knowledge, and expertise of other engineers experienced in PBD would use, then you're still meeting the standard of care.

Now if you claim to be the best at PBD and can guarantee that your building will do better in an earthquake because of your expertise, then that's above the standard of care. Most engineers aren't the best, so by claiming you are you're elevating the standard from 'average' to 'best' and insurance won't cover that.

 

[IRstuff]

Seems to me that design "conditions/assumptions" are similarly dealt with in the aerospace world. We design to specifications which detail the environments that the product needs to operate in, and we test to those conditions, albeit, we do not necessarily test to arbitrary combinations of conditions, i.e., EF5 tornado with 1-percentile hottest day while traveling at max speed cross-country.

Likewise, it seems to me that you're designing to some level of disturbance, be it rain, flood, wind, or seismic, which are detailed in your design analyses and reports. Then, that's what your design is supposed to withstand and that's what's sold to your customer, not some nebulous "better" than code XYZ. I would think that guaranteeing something as "better" than code XYZ would almost be unethical, since it is nebulous and you can't adequately define what "better" means. It seems to me that your customer can and may have "care-abouts" such as flooding, or seismic, or fire, for their particular needs that you can design to, and the conditions can be clearly stated in the contract and design documentation.

At the end of the day, I would think that designing to code isn't fundamentally that different than designing to some level of performance; there are cases where code assumes 100-yr flooding conditions, or somesuch, and those conditions occurred 3 yrs in a row, but no one gets to sue the designer for poor design. So, if you design to withstand EF4, and an EF5 lands on your building, there's really no basis for a claim.

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[Settingsun]

My company's solicitors ran a day course to introduce engineering proposal/project managers to certain issues that tend to affect consulting engineers. For standard of care, the issues were essentially around inadvertently raising the standard of care through loose use of 'sales' language. The standard of care is typically 'professional' but, if our proposal says that "our team of experts will complete the design quickly", we've raised it to expert standard of care. More likely to lose in court and a chance of not being covered by insurance. "Industry leading" etc are a similar story; keep it bland. The solicitors weren't too fussed with what we did technically, just how we sold it.

 

[CWB1]

I hadn't really considered it in terms of manufacturing performance. I think the biggest trouble is that in the A/E consulting world - we're typically the SME's for the owner. So we have the responsibility to both provide the design and advise the owner on its acceptability.

The same is true in every segment of engineering. In automotive consulting we have seen quite a lot of growth with electrification and autonomy. As customers (smaller OEMs) started proposing projects with these technologies, we've had to hire SMEs and/or outsource portions of these projects to provide the same standard of care as our competitors. The basis of the standard of care is successfully meeting every detail of the customer's performance spec as any competent competitor would. Anything not explicitly specified is expected to done in a professional manner, so we have to rely heavily on SMEs leveraging experience to define "professional manner." Failure to meet every requirement can result in lawsuits. If there isnt an SME on staff and a lawsuit occurred bc a requirement wasnt met, I'd fully expect the insurance folks to laugh while denying the claim.

Ultimately, we can only charge externally for engineering that which we have experience in. Everything else we must hire out or face the consequences.

 

[Deker]

It's also worth noting that PBD has its own set of guidelines (PEER / LATBSDC) aimed at establishing the standard of care for such designs, and independent peer reviews are required to ensure that engineers meet that standard of care.

 

[phamENG]

Thanks, everyone. I do understand the difference between standard of care of performance based design. My initial wording wasn't clear - thank you to those of you who helped me clear it up in subsequent posts.

I'll keep reading about performance based designs and how the methods for defining performance have been developed and how they are implemented - and what the expectations are for regarding that performance. Thanks, Deker, for the references to PEER and LATBSDC. I'll look them up and see what they have to say.