Prepared January 1990
By:
Roger A.H. Brett
Acknowledgement and help in the preparation of this material is made to:
The ENCON Group Inc. of Ottawa, Ontario
Shapiro Hankinson & Knutson of Vancouver, B.C.
ACEC Document 31
The contract you sign, should include the following provisions:
D.1 The client agrees that any claim which he/she has or hereafter may have against the Consultant, his/her servants, employees and representatives, in respect of the Services, howsoever arising, whether in contract or in tort, shall be absolutely limited to:
(a) Claims brought within a period of six years from the date of Substantial Performance of the Project; and
(b) The amount of the Consultant's (project) professional liability insurance in effect at the date of the execution of this agreement, including the deductible portion therein. If for any reason such insurance shall not be available or shall not apply to any claim made by the client against the Consultant in respect of the Services, then the liability of the Consultant to the client under this agreement shall be absolutely limited to the sum of $ .
D.2 The Consultant's (Project) professional liability insurance policy (shall apply exclusively to the Project and to no other project and) shall be available for inspection by the Client at all times upon request. Prior to the date of the execution of this Agreement, if the Client wishes, because of his particular circumstances or otherwise, to increase the amount of the coverage of such policy, or to obtain other special insurance coverage, then the Consultant shall co-operate with the Client to obtain such increased or special insurance coverage at the Client's expense.
D.3 The Consultant's (Project) professional liability insurance policy shall remain in force from the date of the execution of the Agreement and, subject to availability at reasonable cost, for years after the date of Substantial Performance of the Project, and shall contain a cancellation clause requiring the insurer to give the Client 60 days prior written notice of any cancellation of such policy.
In consideration of the agreement by the Architect/Engineer to render its services to the Client under this Agreement, the Client agrees that any claim which he has or hereafter may have against the Architect/Engineer in respect of the Services, howsoever arising, whether in contract or in tort, shall be absolutely limited to the amount and extent of the Architect/Engineer's Professional Liability Insurance in effect at the date of the execution of this Agreement, including the deductible portion therein, and in any event, the liability of the Architect/Engineer shall not exceed the cost of reinstatement of the Work. The Architect/Engineer shall have no professional design responsibility for any part of the Work not designed by him.
In consideration of the agreement by the Architect/Engineer to render its services to the Client under this Agreement, the Client agrees that any claim which he has or hereafter may have against the Architect/Engineer in respect of the Services, howsoever arising, whether in contract or in tort, shall be absolutely limited to $.......... In any event, the liability of the Engineer shall not exceed the cost of reinstatement of the work. The Architect/Engineer shall have no professional design responsibility for any part of the Work not designed by him.
In consideration of the agreement by the Architect/Engineer to render its services to the Client under this Agreement, the Client agrees that any claim which he has or hereafter may have against the Architect/Engineer in respect of the Services, howsoever arising, whether in contract or in tort, shall be absolutely limited to such claims arising out of or in connection with the Project against the Architect/Engineer which are initiated within ...... months from the date of Substantial Performance of the Project. In any event, the liability of the Architect/Engineer shall not exceed the cost of reinstatement of the Work. The Architect/Engineer shall have no professional design responsibility for any part of the Work not designed by him.
In consideration of the agreement by the Architect/Engineer to render its services to the Client under this Agreement, the Client agrees that any claim which he has or hereafter may have against the Architect/Engineer in respect to the Services, howsoever arising, whether in contract or in tort, shall be absolutely limited to such claims arising out of or in connection with the Project against the Architect/Engineer which are initiated within ..... months from the date of Substantial Performance of the Project and which do not exceed $........ In any event, the liability of the Architect/Engineer shall not exceed the cost of reinstatement of the Work. The Architect/Engineer shall have no professional design responsibility for any part of the Work not designed by him.
Here are loss prevention suggestions that design professionals should follow during the preparation of working drawings.
Listed below are loss prevention techniques that design professionals should employ in specification writing.
Listed below are loss prevention measures that should prove useful for design professionals to utilize during construction cost estimating:
Scheduling problems usually have the same genesis as cost overruns. The design professional, in order to meet his client's expectation, may be overly optimistic as to the time frame in which he will be able to deliver the design documents. IF you fail to deliver these documents within the agreed upon time (assuming the delays were within your purview of control), you have breached your contract. Most Insurers refuse to cover the late delivery of drawings and specifications.
FIELD SERVICES - shall mean applying such selective sampling procedures at the Project site as the Engineer, in his sole professional discretion, considers necessary to enable him to ascertain whether the Contractor is carrying out the Work in general conformity with the design concept for the Project.
Article A.6.6 of Schedule A
A.6.6.1 *Providing Field Services as defined in Article 1.8 to all phases** of the Project and to the Contractor's Work, with the Contractor to be solely responsible for any defects or deficiencies in the Work;
A.6.6.2 If requested by the Client in writing, providing Field Services as defined in Article 1.8 to specified phases** of the Project as set forth in Schedule C annexed hereto, with the Contractor to be solely responsible for any defects or deficiencies in the Work;
A.6.6.3 Field Services are NOT to be provided under this Agreement, but should the Client request the Engineer to attend at the Project site for any reason, then the Engineer may do so, but his Services shall not include those described in Article 1.8. In such event, the Contractor shall remain solely responsible for any defects or deficiencies in Work, and the Engineer's responsibilities shall only be those set forth in the Engineer's written response to the Client's request, whether in the form of a suitably qualified letter or certificate.
SUBSTANTIAL PERFORMANCE - shall mean that the Work is ready to be used or is being used for the purpose intended, and is so Certified by the Engineer.
* Bay law, in some jurisdictions, only A.6.6.1 may be rendered.
** The word <phases> refers only to physically separate parts of the Projects.
The area of Field Services is one of the most important Articles in the new Professional Agreement. The definition in Article 1.8 requires those selective sampling procedures that the professional, in his sole discretion, considers to be necessary to ascertain that the Work as executed by the Contractor, is in general conformity with the design concept for the Project. The words <general conformity> are used because an Engineer cannot warrant the Contractor's work, nor should he. His responsibility is to provide a level of site presence which will enable him to observe such conformity with his design. This is as much protection as the Client can get from poor workmanship and materials being incorporated into the Work. The reference to selective sampling has been inserted because as everyone knows, even attending the site 100% of the time can be no absolute assurance that all errors of the Contractor will be observed.
The effect of the new definition of <Field Services> is to take the determination of the extent of such Services out of the hands of the Client who may not appreciate the necessity or importance of particular levels of such Services in Projects of a complex nature.
The definition of what extent of site sampling is required will be solely within the Professional's discretion. This is precisely where it should be, with the extent of such Services to be governed only by their necessity, and not by their cost. Autopsies on past claims invariably illustrate that the <savings> to the Client in an abridged Field Service mandate for professional site representation is directly translated into significant Project delays and cost over-runs.
It will be necessary for the Professional to explain to his Client the Field Services which he contemplates as necessary, given the type of Project and the Client's requirements. He should also explain to his Client what is involved in providing those Services, and the consequences of a reduced site presence. In formulating his discretionary determination of the extent of inspection Services required, the Professional must seek input from his Sub-Consultants concerned with specific aspects of the professional design. Of course, specialised areas of the professional design and Field Service terms of the Prime Consultant's Contract with his client may be delegated to Sub-Consultants. The Client should be advised that the Engineer's performance of Certification Services as contained in Paragraph 6.8 in Schedule A, is directly related to his Field Service mandate. Where the Field Services to be provided are other than as defined in Article 1.8, then such Services will be restricted. This will directly affect the Engineer's ability to prepare Certificates to bonding companies and mortgage lenders.
It should also be noted that the Ontario Building Code and the recent amendments to the British Columbia Municipal Act make it mandatory that in at least those two jurisdictions only Field Services as defined in Article 1.8 may be rendered on Projects. Notwithstanding the Article 1.8 phraseology, however, it is clear that no matter what his contractual mandate may be, an Engineer quite simply cannot be expected to see everything going on site, or to pick up all the Contractor's deviations from the Contract Documents. The best the Engineer can do to protect his Client's interest is to carry out selective sampling from which he can project an acceptability for various aspects of the Project.
It has been noted that a dangerous practice has arisen whereby Contractors have been allowed to take over crucial testing functions either themselves or through one of the Sub-Contractors. This constitutes a severe prejudice to the Clients interest. The Contractor, as the party executing the Work in this situation, also has effective control over the testing services which assess the adequacy of that Work, and it conformance to the Contract Documents. The design professional who is charged with the contractual responsibility of ... <ascertaining whether the Contractor is carrying out the Work in general conformity with the design concept for the Project> ... is left out of this important assessment process. The testing services are for the protection of the Client and responsibility for advising as to their adequacy should therefore rest with the Contractor who is in an obvious conflict of interest situation. However, this should not be confused with the Contractor's requirement to have adequate quality control of his work generally. The Engineer is never a guarantor or warrantor of the Contractor's Work, and only the latter can be responsible for its adequacy and compliance with the Contract Documents.
It is suggested that in order to minimize the degree of reliance placed by the Contractor on the <review> of his shop drawings by the Prime Consultant, as well as to more equitably demonstrate where the risk should lie, that the professional have a rubber stamp prepared which should be placed upon each reviewed shop drawing as follows:
REVIEWED
( )
REVIEWED AS MODIFIED ( )
REVISE AND RE-SUBMIT ( )
NOT REVIEWED
( )
The following should also appear on the stamp:
<<Reviewed only as to general conformity with the design concept. The Engineer does not warrant or represent that the information contained on this drawing is either accurate or complete. Sole responsibility for correct design, details and dimensions shall remain with the party submitting the drawings.>>
Prime Consultant's Firm Name
By:
Date:
____day of ____ 200_
Dear Client:
Re: (insert Project description and location)
We are writing to confirm our recent meeting of the ____ day of
____ 200_ to discuss your above referenced project, and the Professional Services which we have recommended in connection therewith.
As we stated at our meeting, the Field Services which we recommend for your Project consist of such selective sampling procedures that we, in our professional discretion consider necessary to enable us to ascertain whether the Contractor is carrying out the Work in general conformity with the design concept for the Project. Our experience in the construction industry indicates that anything less than this level of site presence is likely to significantly lessen the prospect for a successful Project. Indeed, we strongly recommend providing the standard of Field Services indicated above to all aspects of the Contractor's work. As we indicated at our meeting, we are prepared to provide this standard of Field Service to your entire Project, or if requested by you in writing, to specified phases of the Project only.
We understand now that you require us to render a standard of Field Services other than as indicated above, and as we have advised you, we will agree to provide consideration of our providing Field Services to you other than to the standard which we have recommended above, you agree that we will not be liable to you for our subsequent inability to observe defects or deviations in the Contractor's work from the Contract Documents. Please understand that our inability to observe these defects or deviations will result from your requirement of a level of Field Services which we do not feel to be appropriate to properly ascertaining such things as Contractor's detective workmanship and materials.
In our opinion, the provision of the level of Field Services which we recommend above is the most important aspect of any of our Services rendered on your behalf. This is our only method of properly checking the Contractor's work as complying with the general design concept for the Project. The cost of this service is small when compared to the benefits which you gain therefrom.
Our Certifications as to the Cost of the Work, the Contractor's Substantial and Total Performance of same, as well as of the Contractor's payment applications are subject to our providing the recommended standard of Field Services described above. That is, as design professionals we cannot property Certify the aforementioned items where the level of our Field Services is less than we know from past experience to be necessary to determine that the Contractor's work is in general conformity with our design concept. We shall therefore issue unqualified Certifications only to those portions of your Project where the level of our Field Services has been left to our professional discretion. Where it is otherwise, our Certifications shall be suitably qualified to reflect the fact that our Certificate is not based upon our knowledge of the Contractor's work. In this regard, you should also understand that an abridged site presence will also significantly affect our ability to co-ordinate the activities of other Consultants on the Project, keep you informed as to the progress of the work, conduct substantial and Total Performance inspections, prepare record drawings, as well as to appear in litigation or other proceedings on your behalf which may rise in connection with the Project.
If you are in agreement with the terms of this letter, kindly sign and seal the enclosed copy and return same to our attention. On receipt of the letter, we will enter into a written Contract with you as previously discussed and begin rendering our professional services.
Yours truly,
ENGINEER
By:
_______________(Seal)
By:
Acceptance Date
In situations where the Client chooses the Paragraph 6.6.3 alternative of no Field Services despite the Professional's advice to the contrary, then the Professional must diarize exactly what he in fact observes on site during the course of the Project should the Client request his site presence in writing. This diary will be invaluable should a claim be subsequently advanced alleging negligence in the performance of Field Services. Since his contractual mandate has been reduced to less than he considers appropriate in the circumstances of a particular Project, the only way in which a Professional can protect himself is to have a documented record evidencing exactly what he saw and what he did on the job site, which, taken together with Paragraph 6.6.3 with its relief from liability provision, should have the effect of shielding him from most Field Service claims.
Because some Clients will inevitably choose no Field Services (in Provinces where this is still allowed), or Services other than as defined in Article 1.8, it was necessary to include an Article relating to Certifications in such situations. In this situation the Engineer shall only issue <<Qualified>> Certifications in respect of such Field Services. In any situation where the Professional does not have an opportunity to properly sample the work of the Contractor, or where he is relying upon information provided to him by others with no opportunity to sample the work himself, then he must qualify his Certificate accordingly. This applies where the Professional takes over a Project from a previous Engineer part way through construction. In such situations, it is virtually impossible to see Work which has previously been executed and covered up. In such a situation, the Engineer is relying upon the advice of the previous Prime Consultant and the Contractor. This is not a proper way to protect the Client's interest, nor is it safe for a second Professional to start making certifications on the Project as he will incur and inherit all of the problems which are latent in the job and which may subsequently manifest themselves in the form of damages either to the Client or to Third Parties.
Such Certificates should only be given if accompanied by a suitable disclaimer indicating the basis for the Certifications, and the limited reliance to be placed thereon.
A recommended wording for a <<Qualified>> Certificate is provided for Professionals' use in the situations referred to above. The wording is as follows:
This Certificate is based solely upon information provided by (insert sources of Project information, whether contractor, other professionals, etc.), as the Certifier has not had reasonable opportunity to see the subject matter hereof. Therefore, (insert Certifying firm's name) neither warrants nor represents the accuracy or completeness of the information contained herein with respect to (insert as appropriate the subject matter of the Certification - i.e., Cost of the Work, Substantial Performance; Contractor's payments applications; quality of workmanship, percentage of Work completed: conformity of Work to Project design concept, etc.)
(Certifying Firm Name)
By:
Date:
At the commencement of their relationship, a wise Professional will explain to his Client the extent to which he will be able to give assurances that the Project has been completed by the Contractor in general conformity with the design concept for the Project, and that compliance by the Contractor with the design concept is directly proportional to the extent of Field Services authorized by the Client. However, it must be explained to the Client that even with the protection of Field Services as defined by Article 1.8 the Prime Consultant is not, and cannot be, a guarantor, warrantor or insurer of the Contractor's work, and that in every case, the Client's greatest protection lies in the integrity of the Contractor and in his reputation for quality workmanship, as well as in the scope of Field Services authorized by the Client. In some instances this may mean warning the Client that the Contractor that submits the lowest tender on a particular Project is not necessarily the Contractor that should be awarded the Contract to execute the Work.
It should also be explained to the Client that the Prime Consultant and the Client's Clerk of Works (if one exists) ought not to become involved in aspects of the construction process which are properly the responsibility of the Contractor. The Prime Consultant should not direct, supervise or assume control over the means, methods, techniques, sequences or procedures of construction, rather he should exercise his authority on behalf of the Client so that the resulting construction will create a Project substantially in accordance with the Project design concept.
The information contained herein is believed to be accurate, but individual circumstances, local business and insurance practice and the Law can vary extensively and Jardine Lloyd Thompson and its associated and subsidiary companies are not responsible for any errors and omissions or any loss or damage arising from the use of this information. In the event of situations such as are described in this bulletin, the reader should seek legal counsel and specific advice from Jardine Lloyd Thompson or your Insurance Broker.
© 1999 Jardine Lloyd Thompson Canada