Watch for “red flag” clients, says expert
June 20, 2011
By Canadian Consulting Engineer
At the Consulting Engineers of Ontario annual conference in London on June 16, delegates heard advice from Peter Needra, a vice-president of XL Insurance's Design Professional Group, on how to avoid the risks of litigation.
At the Consulting Engineers of Ontario annual conference in London on June 16, delegates heard advice from Peter Needra, a vice-president of XL Insurance’s Design Professional Group, on how to avoid the risks of litigation.
Needra has been involved in professional liability insurance for engineers and architects for 26 years, and before that was a practising consulting engineer himself.
Relying on research XL (formerly DPIC) has done with 10,000 claims in the U.S. and Canada, Needra said that most claims on consultants come from clients, with disputes over the scope of work as a major cause of trouble. He said they have found that mediation is a huge help.
There are certain “red flags” consultants should watch out for with clients, said Needra, such as clients with a history of litigation, and those who are in poor financial condition. Less obvious as a potential trouble spot are clients who are inexperienced in construction. For example, he had even heard of a school board who decided to do the construction review themselves.
“I’m not saying don’t work with these clients,” said Needra, but “it will take more effort and communication on your part.”
For their own part, consulting firms must also be careful to assign the right staff to projects. Many claims come about because junior and inexperienced staff are put in charge. For example, he said, a young staff member of one company was sent to a work site and the contractor hurried him to accept a change to the concrete mix. The result was a $1 million claim. You have to realize how intimidating it can be for an inexperienced staff person when they’re faced with making decisions under pressure in those kinds of situations, Needra suggested.
The biggest risk of liability that consultants face has nothing to do with their technical competence, he said. It’s all about “communication, communication, communication.”
It’s very important that a client lists to you as the consultant, he said, even though your advice may cost more dollars. “They must trust you.” Since claims usually result from a disconnect between what your client’s expectations and the services you are being paid to do, you need to have regular progress reports regarding scheduling changes and budget issues.