|
Primary Causes of A/E Claims
Design Professionals (DP) can be found liable for claims and damages in various situations. The claims and types of damages depends on who files the claim against the design firm. For example, an owner could file a claim based on a breach of contract, or a contractor alleging negligence, errors, or omission of design causing out of sequence work, causing additional construction costs.
The following are four (4) prime causes for liability claims against design firms.
1. Contracts: Contract claims against design firms typically include – negligence and failure to comply with the standard of care, compliance with the project schedule, and breach of contract requirements. In a negligence-based claim, it must be shown that the design firm failed to perform in accordance with the standard of professional care usually exercised by other professionals in similar circumstances. Design firms have also increased their liability and standard of care by accepting terms such as “best” and “first in class” contract terms.
2. Warranty: Design firms find themselves in a difficult position when through the contract terms they specify specific results will be obtained resulting as a guarantee of their services, and for the project. Examples: particular concerns relate to green, sustainable projects where firms are guaranteeing certain energy, water savings, reduced lifecycle costs, and increased building performance.
3. Design Liability: Design firms should be judged based on the standard of care exercised by other professionals for services and project type in like situations. The more complex and unusual a design, some latitude should be allowed based on the unique design features. However, design firms have been found liable because designs have caused increased maintenance and repair costs for owners. Courts have also held design firms liable for damages incurred as a result of approving other firms’ drawings that caused damages to the owner.
4. Site Inspection: When a design firms assumes responsibility for performing site inspections, they are bound in the performance of those duties. The inspection requirement is a obligation for the firm to provide the owner with assurances that the work is being completed in conformance with plans and specifications. Owners have viewed this service as a warranty of the contractors work. Failure of the design firm to comply with inspection contract terms can result in liability. Based on the firm breaching this obligation, and the “proximate cause” of the failure of the firm to discover the defect, the firm is then held liable for the cost in correcting the defect.
SmartRisk has successfully helped firms improve their practice and risk management efforts. If you have any questions, or are interested in obtaining more information, please contact us.
You are welcome to forward this newsletter to others who may be interested.
Thank you.
|
artRisk