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Ten Commandments Of Loss Prevention

The First Commandment: "Define Your Scope of Services"
Draft a detailed scope of services which avoids ambiguity and creates a definite and clearly understood allocation of obligations in order to avoid a dispute. A scope of services that merely attempts to avoid obligations without defining what is to be done is more likely to create a dispute than to avoid it.

The scope of services should be drafted with third-parties in mind. In many cases third-parties (and not the parties to the contract) will review and interpret the contract. Specificity is necessary to minimize the likelihood that third-parties can expand your duties by reference to custom and practice. In particular, address typical problem areas - shop drawings, design/build, cost estimates, hazardous substances, certifications, site visits and ownership of documents.

The following questions should be asked when reviewing the intended scope of services:

  • Are all services that you intend to render clearly set forth in the scope of services and do you intend to render all services set forth in the scope of services?
  • Does the scope of services address areas that are new to you?
  • Has enough time and money been allocated to a particular task? Shop drawing review and site visits are usually undervalued in relation to the potential for liability.
  • Have you defined the circumstances under which you are entitled to additional compensation?
  • Are the terms consistent with the terms of any specifications or product references that are incorporated by reference? Frequently, industry specifications and standards are incorporated by reference without a full understanding of what is contained in the most current edition. Particularly, with regard to an A/E’s obligation to conduct reviews and issue approvals, the incorporation of a third-party standard can dramatically alter the A/E’s obligations. Concern in this area can be addressed with a provision that provides: "Nothing contained in any standard specification, manual or code shall operate to alter, modify or expand the duties and responsibilities of the Owner, Contractor or Engineer or any of their consultants, agents or employees from those set forth in the contract documents."
  • Are the terms consistent with the terms of other documents-construction contract, specifications including general conditions?
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