There’s a pervasive urban legend about alligators in the New York City sewer system. The story goes that in the 1930s, baby gators were marketed and sold as children’s pets but were flushed down toilets or dumped in street drains when they grew too large for parents’ comfort. The sewer-bound saurians thrived, breeding and forming extensive colonies in the bowels of New York; some even say that they became blind and colorless due to the lack of sunlight. Recently, New York celebrated this cherished myth with a bronze sculpture titled N.Y.C Legend depicting an alligator curled around a manhole cover. It’s currently on display in Union Square.
Urban myths can be fun, but risk management myths can cause headaches, problems, and claims. Let’s debunk a few of the most persistent and pernicious.
The idea that “small project” means “small risk” is as enduring as it is incorrect. The fact that the scope of a project and/or its associated fee is modest is no guarantee of an insignificant quantum of risk. In fact, small projects frequently have real potential to generate outsize claims. A surveying project may earn a relatively small fee but result in enormous damages if construction commences in the wrong location and must be ripped out and removed. The peer review services on the Florida International University pedestrian bridge garnered a $61,000 fee, but the damages associated with the collapse were in the millions.
Have you ever heard someone say, “It would take me longer to put together a contract than it will to do the entire project”? While this may be true, professional services agreements are an important tool for balancing the risks and rewards of projects, and this is especially important with small projects, where the reward may be tiny (or, in the case of pro bono projects, nonexistent) in comparison with the risk. A carefully drafted scope is a must, and protective provisions like limitation of liability clauses and the right to rely on client-provided information are key tactics for bringing risk and reward into tolerance.
Small projects are real projects with real risks. Manage them by following the appropriate client selection and contracting protocols, quality processes, and documentation procedures.
One enduring risk management myth involves documenting client communications. Sometimes engineers feel that this is just CYA—the slightly vulgar acronym for “covering your ass(ets)”—in other words, a defensive, slightly weaselly strategy for deflecting blame and liability if something goes wrong.
But if you’re doing it right, documenting client decisions can be CYA of a different kind: “confirming your assignment.” Let’s say your client makes a decision about the project that you consider unwise or shortsighted. It doesn’t violate code or life safety requirements, but it still is likely to generate problems in the future. You explain this to the client; they smile, nod, and tell you to do it their way anyhow.
You email the client confirming this conversation but also reviewing the concerns you have about the client’s proposed course of action. The primary goal of this communication is to enable the client to make an informed decision. Sometimes, when engineers talk, clients are thinking of other matters or do not understand what the engineer is saying but would rather walk on their lips than say so. (This happens to lawyers, too, by the way.) Putting the communication in writing may prompt the client to heed your advice.
It is true that the secondary objective of this communication is to help you defend your design if the client persists in pursuing an ill-advised course of action and is damaged thereby. Being able to defeat the argument that you did not warn the client, or did not do so clearly or loudly enough, is a worthy goal, and there is nothing weaselly about it. This kind of CYA is A-OK.
OK, I cheated a little here; no engineer would seriously argue that quality can be overlooked when firms are busy. And yet when the construction economy is bullish, and engineering firms are at or over capacity, there seems to be an uptick in claims involving simple errors—mistakes that should have been caught by quality processes but were not. A construction lawyer friend calls this the “very busy office syndrome” (VBOS), and we also see it when the construction market is bearish. When there are too few hands to do the work—whether because of layoffs in a cold economy or a massive influx of projects in a hot one—quality can suffer.
Your firm’s two-part strategy for avoiding the heartbreak of VBOS involves being mindful of capacity when taking on new projects and strict adherence to quality processes. As a wise engineer once told me, “It’s only an error when it leaves the office.”
Karen Erger is senior vice president and director of practice risk management at Lockton Companies. She also is a member of the ACEC Risk Management Committee and can be reached at kerger@lockton.com.
The material in this article is provided for informational purposes only and is not to be regarded as a substitute for technical, legal, or other professional advice. The reader seeking such advice is encouraged to confer with an appropriate professional consultant or attorney. ACEC and its officers, directors, agents, volunteers, and employees are not responsible for, and expressly disclaim liability for, any and all losses, damages, claims, and causes of action of any sort, whether direct, indirect, or consequential, arising out of or resulting from any use, reference to, or reliance on information contained in this article.