When asked to pay for construction omissions 4

[Electic]

Is it generally ethical to ask the design engineer to pay for an omission from his design?

I can understand the idea that a customer needs to be made whole if the design left out some cost, that was not planned for; however, this also would seem to open up controversy, including
1) that the engineer is no longer teamed with the project owner. Such liability will cancel transparency to find solutions.
2) would seem to imply incentive based consulting, that would similarly include compensation for the engineer if the design saves money.
3) could make problem solving or trouble shooting projects not worth the risk involved, if the problems were not all identified.
4) such mechanism could be used by an unscrupulous developer to recover project costs.

Can such liability be reduced by proposing work be completed "under the supervision" of a customer?

 

[JedClampett]

As I've said in other threads, "Don't do condominium projects!!!" If a huge firm like SOM can't keep clean on a project when they did the right thing, who can? You're putting together hundreds or thousands people with time on their hands, just waiting for a grievance to go to war over.
In my utopian view, if no one will design these litigation monsters, maybe the developers will figure out a bullet proof way to protect the designers.

 

[glass99]

Jed: agreed that we should all refuse condos. Reality here on the ground in NYC: there is a frenzy of condo construction, and the designers are falling over themselves to take them on. Rafael Vinoly just finished designing a high profile condo on Park Avenue for free so he could "break into the market". Kill me now!

 

[urgross]

Electric,

Your posting was hilarious. I bet you would react differently if you, your colleagues, or your customers were exposed to anthrax, various forms of encepahilits, yellow feveer, etc. As you have obvious limited experience or capacity, I'll leave it at that.

 

[glass99]

What happens if a bolt manufacturer supplies $1000 worth of defective bolts to a $1MM building which then falls down. Are they liable for the whole building?

 

[Ron]

glass99....we had a 100-year old, family-founded, reputable commercial construction company in the area decide about 10 years ago to "break into the condo market" after being sold to a couple of local entrepreneurs. Banking on the name and reputation, they did just that. The condo market "broke into them" and now they are out of business with more litigation than one can generally imagine!

 

[Electic]

URGROSS,

If an Engineer might react emotionally, as you suggest, because family or colleagues were involved, such personal attachment would be a good reason to NOT be involved in a project. As a professional it is one's job description to remain analytical, and also to remain outside of laying blame until the full context of what has happened is considered. That is one of the distinctions between professional and tradesman, but unfortunately our customers sometimes rise from the tradesman rank, and some never grow the perspective that would best serve their own projects long term.

I have been involved in many very expensive problem solving assignments, including causes that shut down a million dollar per outage refinery (which also constitutes a substantial life safety hazard) and industrial accidents that sent two workers to the hospital. I have personally completed over 50 of such problem solving cases. In all of these cases there is a team of experts assembled, from as many as six different agencies. Anyone who spouts off with accusatory statements such as "he did it" will be invited to leave the project: these are sincere owners more interested in resolving the problem and preventing recurrence, than some Perry Mason courtroom drama. Even when I find what appears to be a very easy cause of the accident, all wording and statements are carefully conditioned because truly, I was not there to hear what the designer was told at the time this was laid out> Many times what seems like an obvious omission on the surface, may have a complicated history behind it. I point this out because that seems to NOT be in your experience.

I have been blessed to work for such broad minded businesses for most of my career, independently consulting for the past 15 years out of a total of 30 years. It is only recently that the prospect of paying for change order from fees was encountered, ironically by a government agency that our firm first saved about a quarter million dollars for with novel engineering, but due to an interpretation later endured a couple of hundred dollar change order. Not ironically, the fellow who started suggesting this payback used much the same vocabulary and accusatory posture you demonstrate in this thread; all consultants in his mind are overpaid slackers and it is time to seek revenge.

It is ironic that that within a thread started about how to manage a threat to good sustainable engineering practice, that you entered, exclaiming how you beat the H#!! out of those engineers, causing such threat. That was a nice demonstration of how that other side thinks, and I thank you for your contribution.

And to the other posters, thank you for your insights; I think I will avoid Condo projects in the future!

 

[glass99]

Electic: I think either the most disgusting or the most enlightening thing is when attorneys talk about litigation like its just another day in the office. It disgusts me because it shows a lack of respect for the fact that the litigants lives are being turned upside down , but its enlightening because at some level we all have a statistical chance of getting into a dispute, and it really is just part of business.

 

[Electic]

Glass99,

it seems attorneys are rewarded for turning complex situations into simplified arguments to convince a jury, whether or not that is appropriate. Twice I have encountered prominent lawyers that were great at winning cases but had little appreciation for professional duty or what is even the law governing professional engineering practice (one I was a professional witness for and his attack on the other party made me very nervous). It seems the marketplace desires lawyers that function more as a tradesman than a professional, complete with quick, blue-collar assessment for profit.

I like profit too, but not excessive profit if it will wipe out our future.

 

[glass99]

Electic: the legal process is deeply flawed, especially as it pertains to resolving consulting engineers' issues. Its hard to make an argument that a jury trial is any fairer than simply arm wrestling it out. Lawyers are terrible intellectual snobs and would be mortified at the suggestion that they were anything like tradesmen.

 

[hokie66]

glass99,
I think that is a bit far-reaching, as I have experienced a number of lawyers with sound ethics. But I understand your feelings about the ones you have dealt with.

 

[glass99]

Individual lawyers are just people and are as likely to be decent folks as anyone else. The emergent behavior of the pack is the problem.

 

[moltenmetal]

glass99: you asked a good question. This is what is meant by fundamental breach:

Quoted from

https://ece.uwaterloo.ca/~dwharder/PPE/Significant_cases/

Harbutt's Plasticine Ltd. v. Wayne Tank and Pump Co. Ltd., 1970, Court of Appeals

The plaintiff entered into a contract with the defendant to perform an installation in a factory. The contract limited the liability of the defendant to £2300; however, during the installation, the defendant installed a pipe which was "thoroughly" and "wholly" unsuited for its intended purpose which resulted in a fire costing the plaintiff £170,000. Lord Denning found that the defendant had fundamentally breached the terms of the contract and therefore could not rely on the limitation clause within the contract.

This case introduced the concept of fundamental breach.

References: Marston, pp.155-156.

The way I remember this case being presented in my Professional Ethics and Law course was that it was heat tracing that the defendant installed- on a plastic pipe, and did so incompetently, i.e. with nothing thermally conductive between the trace circuit and the thermostat such that the heat trace was uncontrolled.

Fundamental breach should give most engineers some sleepless nights!

 

[JedClampett]

"Fundamental breach should give most engineers some sleepless nights!"
I would say it should give their E & O insurance carriers some sleepless nights.

 

[Electic]

Moltenmetal,

great information and though the liability might be thousands of times higher, somehow that situation is less bothersome to me on a principles basis, than a customer simply trying to divert construction costs to a design professional. (in that regard I should be more sympathetic to the examples URGROSS presented) That kind of disaster is the reason we carry high insurance, and if a mistake is made of such consequence, it might be time to reconsider the terms of employment or what our long term career plans are. For the most part, I sleep well at night because also, I limit my work to matters I am familiar with, but perhaps I should not.

 

[glass99]

moltenmetal: What's the threshold for a "fundametal breach"? If you acted in good faith with a reasonable degree of care but something important was missed, is that a fundamental breach? I think its quite outrageous to have a boogyman out there of that level of destructiveness without it being a well defined concept.

My conspiracy theory is that these lawyers and judges void contract provisions like liability limitations occasionally just to make the process more mysterious and thus drive up legal fees. If you could write in simple common sense things into contracts like "my liability is capped at my 100% of my fee" and have it be enforceable, who needs lawyers? At a minimum there is a conflict of interest for the legal profession.

 

[Ron]

glass99...there are reasons for keeping limitations of liability in contracts and there are reasons for not having them. That's what legal arguments are made of!

Some states in the US are starting to not recognize limitations of liability clauses for a variety of reasons, most prominently for the example you gave. Sometimes one's actions cause much greater harm than either their scope of services or fee would indicate. In short, there's generally no relationship between fee and liability. I have such a provision in my contracts, and fortunately it has never been tested. I would hope that it would hold; however, I'm involved in forensic work and routinely deal with contract provisions that are contested, so I know it can go either way depending on circumstances.

The fundamental breach "test" is concomitant with a breach of the standard of care. Usually one does not occur without the other.

 

[glass99]

Ron: Right, "standard of care" is probably correct, though "standard of care" is a vague term. The vagueness is probably my key complaint because it makes business planning so much more difficult. If I was able to definitively transfer a particular risk to say an owner or a subcontractor without it being second guessed by the courts, we could price the risk properly.

 

[moltenmetal]

Fundamental breach is a judgment call in the most literal sense, as are all cases where liability limits are set aside. That UW article I posted gives lots of interesting case law around contracts and their terms, and the brief synopses given are worth a read.

For fundamental breach, you are judged against a standard of care which is assessed around the average practitioner, but that standard of care is argued in court by experts in the field...

Even if your E&O insurance covers a case of fundamental breach adequately, it should still give you some sleepless nights. Having to make a major E&O claim is going to have a long list of very unpleasant consequences for you personally as well as for your business.

 

[glass99]

I am all for negotiating things in a human way rather than with black and white rules, but not for contracts. As a consulting engineer, it is for practical purposes impossible to participate in the conversation about what constitutes proper "standard of care" in the courtroom because the legal costs are so prohibitive. You literally spend your whole fee on a project just to pay your lawyers to show up in court. If you are a developer spending $500k out of a $100MM project to work through a dispute is not a huge deal, but if your whole fee on the project was $500k, its impossible.

 

[Electic]

"Fundamental breach" seems to include the major disasters that cause buildings to fall, and terrible life safety risk. That is more than sufficient cause to carry heavy insurance.

However, when talking to an attorney, I have been unable to clearly convey he difference between such a catastrophic failure, and a much smaller "difference of opinion" type of omission (which might not be an omission at all). On these smaller difference of opinion matters I have seen the developers try to recover partial construction cost, not the cost of a third party damage, from the consultant's fees. Typical additions include to add an additional power disconnect switch, additional lights to augment the output, a higher volume exhaust fan, additional heating coils etc. I have witnessed consultants paying for these kind of additions out of their own pockets to keep a customer happy. These items were not a LOSS to the developer, but merely more content to the project that rightfully should have been born by the project if communicated at an earlier time.

To recover these costs from an engineer, almost gives incentive to developers to delay information. For example I am presently involved in a project where the developer has game-fully "forgotten" to tell me there will be a fire pump. In court he could insist as a professional engineer I should have anticipated the fire pump in my electrical design. If I had finished design and the project bid from drawings that did not include a fire pump, proceeded with construction without sufficient funding; should I then be responsible to purchase this pump and controls for the project, because it was an omission from my design?

The less the customer communicates, the greater the consultant is liable.