By Aun Japanwala and Tasmeea Islam
How engineers reduce the risk of a claimBusiness & Professional Engineering
Engineering projects can be complex and challenging to manage. Whether you’re designing a small storefront or a new transportation hub, the pressure is high, as is the potential for errors. And when errors arise, regardless of who’s at fault, today’s society is quick to point the finger. Accusations of negligence or malpractice can cost a lot to defend against—and tarnish your reputation and credibility.
Understanding the risks
The following are the top three risks faced by engineers:
- A client claims you made a mistake.
According to claims data from Victor Insurance, 52% of claims are caused by design errors. With so many different measurements and models, it’s easy to slip up, no matter how careful or precise you are. When you’re juggling multiple projects, it’s near-impossible to detect every single error before submitting the final plans, even if you’re double- or triple-checking your calculations.
- A client accuses you of negligence.
Engineering projects rarely go smoothly. Sudden disruptions in performance, schedule and pricing may be unaccounted for under the existing terms of the contract. If a client isn’t aware of delays or cost overruns well in advance, you might be accused of negligence or breach of professional duty.
- A client names you in a lawsuit.
When a budget is at stake, clients can become aggressive. Whether or not you’re at fault, they may look to pass financial responsibility onto you if an error or omission loses them money. And even if a claim is frivolous, you’ll still have to defend to clear your name.
Managing the risks
Here are some tips and tricks to help you avoid a claim:
- Practise good contract management.
Set clear expectations regarding the project, including the terms and conditions; the timing, delivery and termination of services; and the pricing and payment schedules. Seek legal counsel if necessary. Make sure you understand your legal obligations and amend your contracts as needed for adequate protection.
- Ensure you have the contractual ability to stop working if you’re not being paid.
This is key just in case your project gets held up. Additionally, all invoices should state they are subject to the terms of the master agreement.
- Implement quality control processes.
Review your work constantly and keep a list of active clients to make sure you don’t bite off more than you can chew
- Document everything.
Maintain a complete record of all provided services and interactions. Note the date and time, all discussed topics, any issues, any recommendations you made and why, along with the client’s refusal, if applicable.
- Be thorough.
Take photos and/or videos of any problems or errors you encounter. Always follow up discussions with a summary email, particularly for verbal agreements or instructions given to other parties.
- Be cautious.
Don’t put your stamp of approval or sign off on anything you’re not 100% comfortable with. You may have to explain your reasoning to a judge if it’s called into question. Similarly, don’t agree to switch materials or brands of specified products unless you’ve tested them yourself and can certify such changes will have no major impact. Always document your rationale for switching and/or not switching materials.
- Don’t certify what you can’t see.
This is key even if a contractor tells you they’ve done something before with no issues. Do your research. Ask for third-party reports on efficacy and safety before making any changes or approving anything risky.
Keep all relevant parties informed of updates to design plans and layouts, pricing and deadlines, bylaws and government and safety protocols. Be particularly mindful of budgetary and scheduling changes or anything else that could drive up the project’s total cost.
- Strengthen your insurance coverage.
By covering your damages, including legal expenses, administrative costs and court settlements, the right insurance will mean legal action doesn’t jeopardize your business, even if the claims made against you are groundless.
- Consult with a risk advisor who specializes in the engineering sector.
A licensed broker will have the expertise to deliver a specialized approach that aligns with your needs and strategic objectives. Risk advisors can also help identify your exposures and adopt a proactive approach to risk management.
Aun Japanwala is the engineering practice manager and Tasmeea Islam is a marketing and communications specialist for PROLINK. To learn more about your exposures and how you can protect yourself, visit www.prolink.insure.
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