DCN ARCHIVES

March 14, 2005

Encon Group seminar

Professionals warned to be wary of shouldering too much risk

Architects and engineers need to be extra vigilant in a contractual climate where public and private sector owners are looking for ways to pass on project risks to consultants, industry members were told at a seminar recently.

“All the risk is being pushed on to the consultants,” John Gamble, president of the Consulting Engineers of Ontario, told participants at a loss control seminar in Mississauga, sponsored by the insurance management firm Encon Group Inc.

“Risk should be assigned to the party best suited to manage it. Don’t be afraid to say no to a bad contract.”

Gamble said engineers don’t want, and shouldn’t be, part-time lawyers. It was a theme that was picked up later in the seminar by Steven Stieber, another speaker, and partner with the law firm of Stieber Berlach Gibbs.

“You don’t want me playing consulting engineer. I don’t want you playing lawyers.”

In reviewing two legal suits where engineering firms were sued by owners —in one case successfully —he said consultants must be careful about contracts.

“Make sure you accurately set out the nature of the work that you will be doing and the limitations of that work.”

Stieber told the audience that he continuously receives calls from consultants regarding a whole series of questions that have arisen because of the tendering process.

Not only are those calls an extra expense for the consultants, they are taking on a responsibility and assuming a risk that belongs to the owner, he said.

“Go back to the owners and tell them: ‘Get your own lawyer.’”

Derek Holloway, Encon Group senior vice-president, said many of the legal lawsuits against architects and engineers arise over contract disputes and that’s why members of the professions have to carefully review contracts.

Derek Holloway

Often the lawsuits are “frivolous claims”, said Holloway who told the audience it’s time for the industry to pass on insurance rate increases to their clients.

Dealing with municipalities has its own complications for engineers and architects, he added.

Local governments don’t have a lot of money for projects and that’s why the design process is often marginalized, he said, noting that it’s also the reason the policy of “low bidder wins” is so entrenched.

Unlike the federal and provincial governments, local councils are comprised of individuals who are subject to public pressure and are worried about being re-elected, said Holloway.

“They can’t go to the taxpayer and tell them they’ve made a mistake.”

In a review of Bill 124, Holloway said most engineers and technologists shouldn’t be adversely impacted if they meet the provisions of the bill, which becomes law this July 1. One of those provisions is a requirement for professional indemnity insurance for designers whose services lead to a building permit.

The loss control seminar was one of several Encon Group has been holding across the country since November.

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