Comments

Engineer’s obligations to the owner

An engineer on a typical project is wearing several hats. First and foremost the engineer is usually functioning as an independent professional, providing services for a fee. The engineer also functions from time to time as an agent of the owner and as an arbitrator of disputes between the owner and the contractor.

The engineer’s role as agent and arbitrator will be discussed in the claims process section at the end of this chapter. This section of the chapter will focus on the engineer’s professional obligations to his or her client, the project owner.

 

Standard of care

The engineer’s obligation is to exercise the degree of care, skill, and knowledge that is generally expected within the profession. This is true during all three phases of the project. It is the same standard applied to doctors, lawyers, and other providers of professional services.

An engineer’s service or advice need not reflect superlative brilliance in the field, but it must meet a certain minimum level of expertise that is vaguely de­fined as “acceptable” or “average.” When performing design calculations, for instance, the engineer must follow certain procedures that are generally accepted in the profession. The failure to do so will probably be considered negligence or professional malpractice.

It is important to note that an engineer who holds himself or herself out as possessing particular expertise in a field will be held to a standard of care applied to such experts. For instance, if a civil engineer takes it upon himself or herself to evaluate subsurface data or perform structural calculations, the civil engineer will be expected to possess and exercise the same degree of care, skill, and knowledge expected of a geotechnical engineer or a structural engineer. Once an engineer undertakes a particular endeavor, it is no excuse to later argue this was really outside the engineer’s field of expertise. This explains the widespread use of technical consultants and subcontractors.

Over the years, a few court decisions have held that engineers extend an implied warranty that their design documents are complete and accurate and suitable for their intended purpose. Although doctors and lawyers have never been asked to warrant the successful outcome of their services, some courts have reasoned that the design professions are more empirical and more subject to perfection.

These court decisions have been greeted with alarm in the design professions. It must be stressed, however, that these decisions are anomalies. They do not represent the mainstream of judicial thinking regarding the engineer’s standard of care. In the absence of contractually assumed liability, which is discussed below, the engineer is held only to a standard of due care and that standard is measured by the skills and knowledge of the average practitioner.

This is the rule that is applied in virtually every jurisdiction in the United States. Cases imputing an implied warranty have been overruled, discredited, or limited in their effect.

 

case study logo

An owner awarded a contractor a contract for construction of a sewer project.

The contract stated that neither the owner nor the engineer assumed responsibility for the contractor’s ability to meet the specified infiltration limits and if the contractor felt the design was inadequate to meet the limits, the contractor must notify the engineer in writing.

The contractor was unable to meet the infiltration limits and sued the owner for breach of implied warranty of the specifications and sued the engineer for negligent preparation of the specifications. The defendants relied on the disclaimer in the construction contract.

The Appellate Court of Illinois ruled that all owners extend an implied warranty to contractors that the plans and specifications are accurate, complete and suitable for the completion of the project. The engineer in turn assumes a duty to prepare design documents that meet this standard.

These fundamental obligations cannot be disclaimed or shifted to the contractor. The language in the contract was unenforceable.

W.H. Lyman Construction Co. v. Village of Gurnee. 403 N.E.2d 1325 (Jll.App. 1994).

 

Engineer’s contractual obligations

In addition to the engineer’s general obligation to exercise due care, the engineer has a number of specific contractual obligations established in its agreement with the project owner. An architectural or engineering services agreement bears little resemblance to a construction contract.

To begin with, it is always negotiated, not competitively bid. Additionally, there are not the large number of contingencies that need to be addressed in a construction contract. A typical engineer agreement addresses the basic issues of fee, schedule, insurance and use of consultants. The agreement then devotes most of its space to defining the scope of the engineer’s work.

As mentioned earlier, the definition of the scope of work is crucial in defining the engineer’s contractual obligations. Without a detailed, complete and understandable scope of work, it is impossible to determine where the engineer’s responsibilities begin and where they end. It is also impossible to identify and recover payment for extra work items not included in the original scope.

Most engineers use a standard, preprinted form of agreement for their contracts with project owners. This may be a form prepared by their attorney for their use, or it may be one of the forms published by the professional organizations. Both the American Institute of Architects and the Engineers’ Joint Contract Documents Committee publish such forms.

These forms have been officially approved by their respective organizations, and they avoid the serious pitfalls of engineer agreements that are described below. There are two serious pitfalls that should be avoided by engineers when entering into agreements with project owners. They are two forms of contractually assumed liability: warranties and indemnification clauses.

As described earlier, courts have refused to read an implied warranty into an engineer agreement. The engineer has a duty to exercise due care in carrying out his or her professional responsibilities, but the engineer does not impliedly warrant to the owner that the work product is flawless or will accomplish everything the owner wanted.

 

case study logo

An owner retained an engineer to design wastewater treatment plant. The engineer based the design on the use of a cement-bentonite slurry wall and relied on the supplier’s representations regarding the compressive strength of the product. He conducted no independent investigation into the properties of the product.

The wall failed and caused extensive damage to the treatment plant. The owner sued the engineer for professional malpractice.

The U.S. District Court ruled that engineer failed to exercise the skill and judgment expected of a design professional. An engineer does not guarantee the sufficiency of its design nor is an engineer expected to conduct extensive independent testing program on every product specified.

It was negligent, however, for this engineer to blindly rely on the supplier’s representations without checking some independent verification.

City of Columbus v. Clark-Dietz & Associates—Engineers. Inc..550 F.Supp. 610 (N.D.Miss. 1989).

 

Even though courts have refused to find an implied warranty, it is still possible for the engineer to extend an express, or written, warranty to the owner. This is seldom labeled as a warranty in the engineer services agreement, but it occurs nonetheless. For instance, the designer of an industrial facility may be asked to guarantee that the facility as designed will be capable of meeting certain per­formance standards. This would be considered an express warranty.

The problem with warranties is twofold. First of all, an engineer may exercise due care and even professional excellence at all times, and still have a project fall short of expectations because of variables beyond the engineer’s control. With a warranty, the engineer is liable nonetheless, and this greatly expands the engineer’s liability exposure.

The second problem with warranties is insurance coverage. There simply isn’t any. The insurance companies who write ‘errors and omissions” or professional malpractice policies for engineers are alarmed at any contractually as­sumed liability. They are only willing to cover the risk that the engineer will fail to meet the required professional standards. The policies invariably exclude coverage for liability resulting from warranties. It is therefore in the best interest of the owner and engineer that warranties be kept out of the agreement.

The second form of contractually assumed liability is the indemnification clause. Again, the problems are the expansion of liability exposure and the lack of insurance coverage.

An agreement to indemnify another party is an agreement to protect them, pay them, and otherwise make them whole in the event a claim is asserted against them. To the extent the indemnification clause is limited to claims against the owner arising solely out of the engineer’s negligence, this is not a problem, as the engineer would be liable for its negligence anyway.

The problem is that indemnification clauses are frequently written in such a way that an engineer’s liability is contractually expanded to include claims not arising from their own negligence. The most common example is the indemni­fication clause referring to claims arising “in whole or in part” from the engineer’s services. In other words, the engineer may be 10 percent responsible for the problem, but it has agreed to fully compensate the project owner.

As with express warranties, insurance companies are not willing to cover expanded liability resulting from indemnification clauses. There are almost al­ways exclusions in the insurance contracts, although these exclusions can sometimes be removed or reduced through the purchase of indemnification riders.

While on the subject of contractually assumed liability, there is one other topic which should be addressed. This is the engineer’s effort to contractually limit their liability for their own negligence.

These “limitation of liability clauses” typically state that the engineer’s liability to the owner shall not, under any circumstances, exceed a certain stated amount. The use of these clauses, which are legally enforceable, has been pushed by some engineer insurance carriers and professional associations.

Just as engineers and their insurers have been reluctant to agree to a contractual expansion of engineer liability, project owners have been reluctant to agree to the contractual limitation of the engineer’s traditional liability. It is fair to say that the use of limitation of liability clauses is not gaining widespread acceptance in the industry.

 

Sufficiency of the plans and specifications

Probably the single most important obligation the engineer has toward the project owner is the obligation to prepare a complete, accurate, and unambiguous set of plans and specifications.

It was stated earlier that implied warranties are not read into engineer service agreements. It is so well established, however, that an engineer has a professional obligation to produce sufficient plans and specifications that it almost raises to the level of an implied warranty.

The plans and specifications should not omit anything that is necessary or include anything that is redundant. They should be free of conflicts and ambi­guities. They should be accurate regarding existing site conditions. And it should be possible to construct the project as designed using commercially acceptable construction methods in order to end up with a functioning facility.

As will be seen later, the sufficiency of the plans and specifications iscru­cial regarding the engineer’s liability to the owner, the owner’s liability to construction contractors, and the engineer’s liability to construction contractors.

 

Liability for cost estimates

It is common, at the planning stage of a project, for the owner to tell the engineer that there is a certain maximum budget for the project. This is obviously a crucial consideration throughout the design phase of the project. The engineer must estimate the construction cost of the facility he or she is designing. This is difficult, because it involves assessing such intangibles as the local competitive bidding climate.

The question arises, what happens when all the bids or quotations come in and the project, as designed, is over its budget? What are the engineer’s responsibilities in this situation?

To begin with, the engineer is expected to use ordinary professional skill in estimating construction costs but is not expected to predict costs with dead accuracy. It is unusual for a construction cost overrun to be successfully asserted as a malpractice claim against an engineer.

Most engineer service agreements address this issue. Typically, they state that the engineers sole responsibility if bids come in over budget is to provide redesign’ work at no additional charge in order to bring the project within budget. The engineer cannot be held liable for monetary damages.

Sometimes the agreement will state that the engineer’s obligation to provide free redesign services will accrue only if the low responsive, responsible bid exceeds the budget by a certain stated percentage. In any event, the engineer’s obligations in this situation should be expressly established in the engineer service agreement.

 

 

Thanks to Ignacio Manzanera for providing this book

SHARE THIS PAGE
No history has been recorded.

Engineer’s obligations to the owner

Back to top