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 C A T I O N U N I T S 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. Today’s Presenter John M. Lowe, Jr. P.E. Lowe Consulting, LLC 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.” 1
6/5/2019 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 2
6/5/2019 FAILURE ANALYSIS Failure Analysis Identify Compare Understand Determine and Document Failure “As Designed” with “As Site Conditions During Cause of Failure Constructed” Construction CASE HISTORIES and LESSONS LEARNED 3
6/5/2019 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 4
6/5/2019 Gabions for Erosion Control Wire Compacted Filter Rocks Subgrade Baskets Fabric 5
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6/5/2019 Analysis Determine what Compare “designed” was constructed with “constructed” 7
6/5/2019 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 Further Investigation Client Authorizes Below‐Ground Design of Repair Investigation Authorized 8
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6/5/2019 Conclusions Gabion System Failure Caused by: • Inadequate or improper clearing and grubbing • Inadequate or improper compaction of soil beneath gabions • Failure to construct to lines and grades required by contact documents 12
6/5/2019 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 13
6/5/2019 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 14
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6/5/2019 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 16
6/5/2019 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 17
6/5/2019 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 18
6/5/2019 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 or 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” 19
6/5/2019 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 20
6/5/2019 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. 21
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