Risk Management Library[site/headers/risk-management-top.htm]

Ten Commandments Of Loss Prevention

The Third Commandment: Foresee the Foreseeable - Identify those Areas of the Contract that Traditionally have been a Source of Liability for A/E’s and Address them in the Negotiations and/or the Language of the Contract.

Shop drawing review:
  • The purpose of your review should be clearly stated. Generally, it is limited to a review for general conformance with design concept and with the information contained in the contract documents. You are not reviewing for: means and methods of construction, safety, dimensions, methods of installation, etc. Your shop drawing stamp should clearly set forth the purpose of, and limitations on, your review as contained in your Agreement. The shop drawing stamp cannot modify your contractual obligations.
  • You should specify which shop drawings are to be submitted and immediately return shop drawings that do not require your review immediately.
  • Require the contractor to review and approve shop drawings first and do not review shop drawings which have not been reviewed by him first.
  • Maintain a log of when shop drawings were received, what action was taken and when they were returned.
  • Document all of your shop drawing comments.
  • Require that the contractor notify you of changes.
  • Your contract should state that you will not review a manufacturer’s shop drawings prepared in response to a performance specification for a determination that the system will perform properly.

Ownership of documents:

  • You should retain ownership.
  • Do not permit your documents to be used for completion of the project, for additions thereto or for other projects without permission of the A/E and with additional compensation.
  • The alternative is to require that your seal and title block be removed and the documents redrawn and reviewed by a design professional.

Construction cost:

  • Detailed cost estimates vs. preliminary estimate of construction cost.
  • Preliminary cost estimates should allow for contingencies and escalating labor and material costs.
  • If detailed cost estimates are required, the owner should retain the cost estimator.

"As-built" or record drawings:

  • You should be entitled to rely on data supplied by contractors without independent verification subject only to your obligation to note obvious discrepancies of which you have actual knowledge and, possibly, your obligation to detect errors which a reasonably prudent (architect or engineer) exercising usual and customary professional skill and care would have detected.

Structural details:

  • If the structural details (in particular connections) raise questions of means and methods, the contract should limit your responsibility for means and methods to that aspect.

Geotechnical consultants:

  • Should be retained by the owner.
  • You should be entitled to rely on their conclusions without independent verification.
  • They should be required to make specific design recommendations, not merely present raw data.

Owner and vendor supplied data:

  • You should be entitled to rely on such data without independent verification subject to the same limitations as in "as-built" drawings.

Design/build consultants:

  • You should not be responsible for code compliance of design/build work.
  • You should not be responsible for the adequacy of the design/build systems.
  • Your obligation to coordinate should be limited to providing the design/build contractor with the design criteria to be used by you that impacts on his aspect of the project, i.e. the architect can provide a space layout and wall section to the HVAC contractor; in turn, you should receive HVAC criteria that impacts on your aspect of the project, i.e. architect receives size and location of ducts from HVAC contractor.
  • You should not be responsible for delays caused by the design/build contractor.

Indemnification Agreements:

  • Determine that your insurance provides coverage for indemnification agreements.
  • Only agree to indemnify against losses TO THE EXTENT THAT THEY ARISE DIRECTLY AS THE RESULT OF YOUR PROFESSIONAL NEGLIGENCE IN THE PERFORMANCE OF SERVICES UNDER THIS AGREEMENT.
  • Specifically define who is to be indemnified - limit it to Owner, employees and agents.
  • Get a mutual indemnification where possible.
  • Under certain circumstances, anti-indemnification statues preclude them.

Limitation of liability clauses:

  • Limit liability to your fee, to available insurance, to a fixed amount or exclude damages resulting from loss of profits and loss of use.
  • The limitation must be rationally related to the services rendered.
  • There should be a preamble that sets forth a basis for the clause such as.
  • "Insurance is not available for the risk"
  • "The fee is small in relation to the risk."
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