Prepare for the storm, or change the weather

CE May 2010 » Columns » RISKY BUSINESS
John P. Bachner

Civil engineering is a risky business. Consider a few fundamental facts. First, on any given project, potential net business benefit is far smaller than potential net business cost. Your benefit is your expected profit — say 10 percent (if that) of your fee. As such, a $50,000 fee could net you about $5,000. How much could you be sued for on that project — $1 million, $5 million, or $25 million? How much productive time will you sacrifice to defend the claim? How much is that time worth? What’s the opportunity cost? And what about cash outlays? Does your professional liability insurance (PLI) cover attorneys’ fees? What’s its deductible? Will your PLI even cover the claim? And if it does, will the policy’s proceeds be sufficient to settle the claim before trial or cover damages awarded by the trier of fact? (The extent of your damages is not limited to the extent of your coverage.)

Second, you are personally liable. True, because you are an agent of your firm, your firm is obligated to protect you to the extent it’s able to. But what if yours is a firm of one? Or what if the firm is small and lacks the means to protect you in full or at all? Does that mean your home and savings could be at risk? In a word, yes.

Third, disputes are common, principally because so many people seem to believe that quality is unimportant or that, if it is important, they can get it at a discount. The result: Too many budget, schedule, and performance problems no one is willing to accept blame for, followed by claims and disputes that more often than not have to be resolved through a civil justice system that is frustratingly slow and unnervingly costly. And that’s even if you “win”!

Fourth, you owe a duty of care to any party that foreseeably could be injured or damaged by the services you perform, which means you could be sued by anybody in a position to allege you somehow did something wrong and, as a result, caused harm.

Risk management is like having an umbrella at the ready because you never know when a storm might hit. So what are you doing to manage your risk? You should be partaking liberally of the abundant knowledge and tools available to keep most of your risks under control. I can say unequivocally that ASFE has more stuff for you than any other organization out there, which is why ASFE has such a stellar reputation in the world of risk management.

During the last 40 years, ASFE has brought limitation of liability to the design professions, along with peer review, accommodative alternative dispute resolution, case histories, and more. It is all great stuff designed to protect users from the weather, but ASFE is now trying to change the weather!

Geoprofessional issues are associated with more construction claims than any others, but it doesn’t have to be that way, as indicated by the fact that many ASFE member firms experience few claims. It’s one of the reasons why construction teams should pick a top-flight geoprofessional firm and listen to what its representatives have to say. Folks in the mining industry know this, as do those who own railroads, bridges, dams, tunnels, and landfills. But others regard geoprofessionals as commodities, as marginalized members of the construction team who are content to do as they’re told.

ASFE is bent on achieving a new paradigm that emphasizes the business and professional knowledge possessed by firms that have invested in the business and professional education of their staffs. The goal is to demonstrate how relying on experienced, knowledgeable geoprofessionals — and listening to them — can result in projects that not only experience few geoprofessional issues, but also achieve impressive economies while still holding quality foremost. In that way, we’re better able to enhance geoprofessionals’ value in the marketplace so that, more and more, geoprofessionals are selected based on how much they can contribute to a project rather than a willingness to do what it takes to do it cheap.

It’s always good to have an umbrella at the ready. But realize that you are also in a position to help change the weather. Civil engineering, after all, is a geoprofession, too.

John P. Bachner is the executive vice president of ASFE, a not-for-profit association that provides programs, services, and materials to help geoprofessional, environmental, and civil engineering firms prosper through professionalism. Visit ASFE’s website at www.asfe.org


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