My husband often travels the back roads between Chapel Hill and Fuquay Varina to visit friends. En route (a circuitous route that goes past Sharon Harris Nuclear Power Plant, among other places), he passes by the “Friendly Grocery”. For those who haven’t had the pleasure, here is a photo of the side of the building in all its glory.
In case you cannot read the list of forbidden activities, I’m re-printed them here (complete with spelling error):
I’m not sure which is the “friendly” part of that sign. In fact, the sign seems to be the antithesis of friendly.
What does this have to do with your construction contracts? Sometimes, in an effort to please the client and/or secure the project, architects and engineers have the habit of being too friendly in their contract language. That is, you make promises or proposals that may promise too much of a good thing for the client. This can cause big problems. Bigger than being towed away from a rural grocery store in the middle of nowhere. You could be putting your insurance coverage at risk.
Have you ever promised to use “best efforts” in your design or plans? Promised to design to a specific LEED standard? Guaranteed 100% satisfaction? You might be putting your errors & omission coverage at issue. By warrantying or guaranteeing something, you are assuming a level of liability well beyond the standard of care required by law. By law, you only need to conform to the standard of care, and your insurance will only provide coverage up to that standard of care. In other words, if you make guarantees or promise “best efforts,” you are contracting to something that will *not* be insured. If something goes wrong, you will be without the benefit of your professional liability coverage.
Instead, make sure that your contracts, and proposals, are not too friendly to the client. Sure, agree to work in accordance with the standard of care of professional architects/engineers. But don’t make guarantees, or promise “best” efforts. In fact, you might want to educate your client on why you cannot make such guarantees, and why anyone who does (i.e., your competition) is putting their insurance coverage at risk. Owners want and need you to stay within the bounds of your coverage. You need to, also. Maybe the owner of the Friendly Grocery was on to something there.
Your turn. Have you ever used language that jeopardized your insurance protection? Uncertain if you have? Drop me a line and we can talk.
Engineers who design in earthquake-prone areas know that they need to design the seismic loads of their bridges to account for potential massive shifts during a quake. (This is what is legally known as the professional standard of care, which takes into account what similar engineers, in the same conditions and community, would consider acceptable design)**. The Dumbarton Bridge, the farthest south bridge across the San Francisco Bay, is no exception to this rule.
Currently, the Dumbarton Bridge is being renovated as part of the San Francisco Bay Area Toll Bridge Seismic Retrofit Program. When the bridge is finished (expected in early 2013), the bridge will increase its ability to move from 20 inches of lateral movement to as much as 42 inches of lateral movement.
The retrofit includes friction pendulum bearings designed by Earthquake Protection Systems, Inc., which will isolate the superstructure from two pier structures where the main span of the bridge meets the approach structures. A concrete taper will be used from the joints to the main span to ease the transition, as the approach span is 5 inches lower than the main span.
According to Earthquake Protection Systems president Victor Zayas, in a statement to Roads & Bridges magazine, the most critical part of the bearing is the bottom lining, which is a self-sacrificing, solid-lubricant polymer composite that was developed based on earlier research done by NASA in the 1960s.
Click here to read more on the Dumbarton Bridge retrofit.
** If you missed my post on the jury instruction on standard of care, be sure to check it out here.
Photo (c) Jill Clardy via CC.
By now, I hope you know me well enough to know that I’d never, ever say you should make a guaranty of performance, period, let alone guaranty the green performance for a new building. However, sometimes caution has to be thrown to the wind to get the job– at least in the case of a recent GSA design-build project in Seattle.
There, the design-build team agreed that the GSA could withhold 0.5% of the original contract amount, or $330,000, pending the achievement of energy goals. As writer Suzanne H. Harness, J.D., AIA, noted recently:
The GSA’s approach is diametrically opposed to the recommendations of the American Institute of Architects, which advises both architects and contractors not to guarantee or warrant the achievement of a sustainability goal. The AIA’s 2011 Sustainability Guide explains the obvious: contractors and architects can design and construct a building, but the owner operates it, and the owner’s actions are beyond the control of the design and construction team. If the owner operates the building differently from the assumptions used during design, performance goals will likely not be met, even if the building is perfectly constructed. [Emphasis added].
Ms. Harness also correctly noted that professional liability insurance would not cover such a guarantee of performance. So beware to the design team who takes such a project on: they can be held contractually liable, but there will not be insurance to cushion the fall out from any lawsuit.
Just DON’T do it!
As I mentioned, I was one of three amigos who spoke on a Construction Contract webinar last week. We had a good turn out and lots of very astute questions during the Q&A portion. While you will miss all of my
witty insightful helpful commentary, you can check out the slides for my portion, on understanding and modifying key terms, here:
I’ve previously talked about the standard of care for design professionals on construction projects.
As you should be aware, the standard is reasonableness, not perfection. To illustrate the point, consider a standard North Carolina jury instruction on the standard of care for engineers:
“Under our law, a professional engineer is required to exercise that degree of care which a professional engineer of ordinary skill and prudence would exercise under the same or similar circumstances, and if the engineer fails to exercise such degree of ordinary skill and prudence under the same or similar circumstances, the engineer’s conduct would be negligence.”