10:00 AM Pacific June 6, 2019 C O N T I N U I N G E D U C A T I O - - PDF document

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6/5/2019 Failure Analysis and the Professional Liability Claim Process Understanding construction failures and managing resulting professional liability claims Presentation will begin: 10:00 AM Pacific June 6, 2019 C O N T I N U I N G E D U

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Presentation will begin:

10:00 AM Pacific

June 6, 2019

Failure Analysis and the Professional Liability Claim Process

Understanding construction failures and managing resulting professional liability claims

Hall & Company is a Registered Provider with the American Institute of Architects Continuing Education Systems. Credit earned based on the completion of this program will be reported to AIA/CES for AIA Members. Please send your AIA member number to LLedbetter@HallAndCompany.com after the presentation for reporting. Today’s course is registered with AIA CES for continuing professional education. As such, it does not include content that may be deemed or construed to be an approval or endorsement by the AIA of any material of construction or any method or manner of handling, using, distributing, or dealing in any material or product. Questions related to specific materials, methods, and services can be addressed at the conclusion of this presentation.

C O N T I N U I N G E D U C A T I O N U N I T S

Today’s Presenter

John is a 1961 Civil Engineering graduate from the University of Florida. Following three years of military service as an Army pilot, he enjoyed forty‐six years as a consulting engineer involved in both private and public projects as project manager, principal‐in‐charge, or office manager. He has been registered and practiced in FL, GA, SC CA, and OR. In 2010, he retired from full time employment and formed Lowe Consulting, LLC and began giving back to the profession by sharing what he had learned about contracting for professional services by teaching on this subject. To facilitate getting this information to a wider audience, he wrote and self‐published a book entitled “A Guide to Managing Engineering and Architectural Design Services Contracts – What Every Project Manager Needs to Know.”

John M. Lowe, Jr. P.E.

Lowe Consulting, LLC

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6/5/2019 2 Failure Analysis and the Professional Liability Claim Process

Understanding construction failures and managing resulting professional liability claims

Objectives

  • Understand the basics of failure analysis
  • Understand the basis for a professional liability claim
  • Learn ways to avoid a professional liability claim
  • Learn how to navigate the professional liability claims process

Overview

  • Failure Analysis
  • Case Histories and Lessons Learned
  • Professional Liability 101
  • Minimizing Professional Liability Claims
  • Managing Professional Liability Claims
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FAILURE ANALYSIS

Failure Analysis

Determine

Cause of Failure

Identify

and Document Failure

Compare

“As Designed” with “As Constructed”

Understand

Site Conditions During Construction

CASE HISTORIES and LESSONS LEARNED

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The Galloping Gabions

Client/Project

  • Governmental Agency
  • Location – Coastal SE Georgia
  • Drainage for large (10,000 Ac.) site
  • Engineer responsible for design only
  • Engineer available for support during construction

Project Overview

  • 10,000 Ac. facility with complex drainage
  • Major outfall channels, bridges, and water control structures required

erosion control

  • Gabions Selected
  • Wire baskets filled with rocks
  • Excellent performance elsewhere
  • Competitive cost
  • Client stated preference
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Gabions for Erosion Control

Compacted Subgrade Filter Fabric Rocks Wire Baskets

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Analysis

Determine what was constructed Compare “designed” with “constructed”

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Analysis (Cont’d)

  • Report prepared documenting

construction variance from design

  • Report supported sufficiency of

design and improper construction

  • Client rejects report findings– Files A/E

liability claim September 1985 December 1987

Client Authorizes Design of Repair Below‐Ground Investigation Authorized

Further Investigation

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Conclusions

Gabion System Failure Caused by:

  • Inadequate or improper clearing

and grubbing

  • Inadequate or improper compaction
  • f soil beneath gabions
  • Failure to construct to lines and

grades required by contact documents

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Conclusions (Cont’d)

  • Use of reinforcing geotextile instead of filter fabric as required

in the contract specifications

  • Use of second layer of earth reinforcing geotextile
  • Inadequate construction monitoring
  • Failure to involve design engineer during construction

Claim Resolution (Cont’d)

  • Submitted report providing

incontrovertible evidence of construction deficiency

  • Client drops A/E claim

Lessons Learned

  • Include a Post Contract Award Services provision in designer’s contract
  • Emphasize the importance of involving the designer when contractor wants

to make a change

  • Accept that it may be necessary to expose previously completed work
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Lessons Learned (Cont’d)

  • Specify filter fabric carefully
  • Remind Client to verify filter fabric
  • Divert stormwater away from structures
  • Develop report exhibits “As you go”
  • Document, Document, Document

The Floating Pipe Trick

Project Overview

  • Pipe Designed in Concrete (43”x68”)
  • Contractor Installs CMP (59”x81”)
  • Pipe Floats out of ground
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Failure Analysis & Fix

  • Pipe Floats
  • Contractor Claims Ground Water Came Up and Floated the Pipe
  • Engineer Analyzed Flotation Potential
  • Concrete Anchors Designed

Failure Analysis & Fix (Cont’d)

  • Client/Contractor Negotiate CO without Designer Involvement
  • Pipe Reinstalled with Anchors
  • Client Files Professional Liability Claim
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Contractor’s Claim

  • Specifications Allowed CMP
  • Contractor Used CMP
  • Ground Water Came Up
  • Pipe Floated
  • Engineer Failed to Mention that CMP would Require Weighting
  • Liability Claim ‐ $64,026

Engineer’s Defense

  • CMP OK “unless otherwise indicated”
  • Equivalent Pipe Table is for Hydraulics Only
  • Substitution Requires Judgment of Contracting Officer that Substitute Product is “

Equal”

  • Engineer not Asked About Substitution
  • Pipe Floated due to Trench Flooding During a Storm
  • Other “Prudent People” Missed Flotation Potential

Engineer’s Defense (Cont’d)

  • No Dewatering in Contractor’s Costs
  • Concrete Saddle is “Betterment”
  • Engineer not Included in Negotiations
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Client’s Response

  • Rebutted Some Engineer’s Responses
  • Agreed with Some Engineer’s Responses
  • Quantified Legitimate Damages
  • Demanded Payment from Engineer of $4,746
  • Engineer Paid Claim
  • Relationship Preserved

Lessons Learned

  • Include a Post Contract Award Services provision in designer’s contract
  • Emphasize the importance of involving the designer when contractor wants to

make a change in material

  • Consider potential construction situations, not only the final configuration
  • Offer to assist Client negotiating change orders

PROFESSIONAL LIABILITY 101

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Professional Liability Explanation

Professional Liability occurs when the negligent acts of a design professional result in damage or injury. Essential elements necessary for liability to exist are:

  • 1. Duty owed
  • 2. Duty Breached
  • 3. Damages
  • 4. Negligence

Damages

  • Definition ‐ Damages are the additional costs, diminished value, or loss of use
  • r function that has incurred, or will incur in the future, due to an design

professional’s negligent design errors.

  • Can include construction cost, ancillary costs, time delays, and investigation and

recovery costs.

Negligence

  • Definition ‐ “Negligence is the failure to meet the standard of reasonable

care, skill, and diligence that someone in the design profession would ordinarily exercise at the same time and in the same location.”

  • Also known as “Standard of Care” or “The Prudent Man Rule”
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MINIMIZING PROFESSIONAL LIABILITY CLAIMS

Minimizing Professional Liability Claims

  • Have a formal written QA/QC Plan customized

for every project

  • Perform a constructability review of the design
  • Be involved in negotiating change orders and

claims settlement

  • Document, Document, Document

“The faintest of ink is more powerful than the strongest memory” – Old Chinese Proverb

Minimizing Professional Liability Claims (cont’d)

  • Understand the terms of the professional

liability policy, especially the exclusions

  • Create a culture of professional liability

issue awareness

  • Keep lines of communication open
  • Identify and resolve problems quickly
  • Develop a solid professional/personal

relationship with client based on mutual trust and respect

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MANAGING PROFESSIONAL LIABILITY CLAIMS

Managing A‐E Liability Claims Managing Professional Liability Claims

  • Notify your professional liability broker, and

corporate management at the first hint of a pending claim

  • Understand the Client’s professional liability

claim procedure

  • If Client does not have a published professional

liability claim procedure, suggest an acceptable public agency’s procedure.

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Professional Liability Claims Process

  • US Army Corps of Engineers
  • https://www.publications.usace.army.mil/portals/76/publications/engineerpamphlets/ep_715‐1‐7.pdf
  • Oregon Department of Transportation
  • https://www.oregon.gov/ODOT/Business/Procurement/DocsPSK/xbti.pdf

Typical Process

Objective – Work together to minimize time, energy, and cost of all involved. Consultant provides Client‐requested do cuments Client provides oral and written notice of basis of claim and requests that Consultant provides specific documentation Client Contract Administrator (CA) and Consultant meet to discuss how to mitigate the problem

Typical Process (cont’d)

If unable to resolve the problem, CA requests that individual identified in the contract that determines whether a Consultant’s performance is within the Standard of Care (usually the Client’s Chief Engineer) initiates an internal review If Consultant believes that the Standard of Care was met, dispute resolution provisions of the contract are applied. Chief Engineer determines whether the Standard of Care has been met If the Chief Engineer determines that the Standard of Care was not met, Client pursues Cost Evaluation and Recovery

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Managing Professional Liability Claims (Cont’d)

  • Investigate the cause of the claim
  • Ask for information that you need to support a response
  • Be thorough ‐ “dig‐it‐up”
  • Be proactive – let the client know that solving the problem is your top priority
  • Be fair minded – willing to compromise
  • Pursue settlement rather than litigation

?

QUESTIONS

CONTACT INFORMATION

Lowe Consulting, LLC

John M. Lowe, Jr., P.E.

jmlowejr@gmail.com | www.loweconsultingllc.com

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70

FOR ATTENDING!

THANK YOU

Questions?

Help with Certificate

  • f Completion?

Laura Ledbetter:

LLebetter@HallAndCompany.com