Jane Doe, P.E., is a prominent civil engineer who, during her 40-year career, has been involved with hundreds of construction projects. Jane has never made a technical error and has never had a claim filed against her.
That—s fiction, of course, because as we all know, —To err is human.— If you believe you can perform perfectly over four decades, you—re deluding yourself. Nonetheless, let—s assume you actually can do it. Will that make you claim-proof? No.
Fact: Something almost always goes wrong on civil construction projects and, when it does, it—s common for invited attorneys to play background music for principal project participants who begin —La Danse de Les Gooneybirds,— jumping up and down pointing fingers at one another. Their purpose? To demonstrate the indignation needed to frighten others into contributing to alleged damages, even when the only real problem was an unrealistic budget. Will perfect engineering protect you from that? No way. Those who want you to —contribute— will retain a hired-gun expert willing to swear to a judge or (more commonly) a jury that, your actual perfection notwithstanding, you made a serious error that caused everything to go wrong. Then you have to decide if you want to spend whatever your professional liability insurance (PLI) policy deductible is to prove you were blameless, knowing that for every dollar you shell out it—s probably costing your firm another two, three, or more dollars in wasted time. Do you really want to spend $100,000 or more in a possibly losing effort to prove a claim worthless when you can make the whole thing go away for a $75,000 settlement?
Geoprofessional practice is the riskiest form of civil engineering. Therefore, Terra Insurance Company, created in 1968 by the founders of ASFE/The Geoprofessional Business Association, requires its insureds to be members of ASFE and use ASFE—s programs, services, and materials that focus on best geoprofessional business practices and, in particular, practices designed to help professionals become outstanding professional consultants.
Becoming an outstanding professional consultant does not just happen. Firms and individuals have to work for it. And it—s that work-for-it aspect that discourages all too many firms and practitioners from getting better, because working for it takes time and time is money. Some smaller firms justify their noninvolvement by saying that nontechnical professional development is something they don—t have to worry about: They have PLI and only sign contracts vetted by their PLI agents. Besides, they haven—t been sued (yet). And some larger firms that take the same route seem to believe that claims are inevitable, so they budget for them in overhead and have contracts reviewed by in-house attorneys.
However, investing in consultant-focused professional development pays better dividends than anything else civil engineering firms can invest in. As an example, assume a firm requires its professional staff to spend 40 hours of company time and 40 hours of their own time in consultant-focused professional development each year. Let—s also assume that the firm requires professional staff to spend at least 60 hours of company time each year cultivating relationships with representatives of owners, other professional firms, contractors, and subcontractors. Now add this assumption: Investing that time prevents one $100,000 cash-and-time claim payout every 20 years, saving $200,000 over a 40-year career.
In this scenario, a company would invest 4,000 hours to convert a $200,000 loss into a $200,000 profit. Given that civil engineering firms look to net about a 10-percent profit, $200,000 is what a firm would net on $2 million in fees. Divide $2 million by 4,000 hours and you—re looking at $500/hour as your rate of return on consultant-focused professional development. Of course, that assumes that every 20 years you avoid only one serious claim instead of two or three, and it also assumes that your enhanced relationships only help you manage risk —” that they generate no repeat commissions, no referrals or recommendations, no joint-venture opportunities.
Bottom line: You—re a professional consultant. Do you want to lower your firm—s risk and increase its profitability? Become an outstanding professional consultant. It—s really that simple.
John P. Bachner is the executive vice president of ASFE/The Geoprofessional Business Association, a not-for-profit association of geoprofessional firms —” firms that provide geotechnical, geologic, environmental, construction materials engineering and testing (CoMET), and related professional services. ASFE develops programs, services, and materials that its members apply to achieve excellence in their business and professional practices. He can be contacted at firstname.lastname@example.org.