Risky Business – Protecting Your Assets

Why is civil engineering such a risky business? In part, because the process of designing and constructing our infrastructure is extremely complicated, and enormous amounts of money are at stake. But the real culprit tends to be many civil engineers’ naivet.

Are you nave? Let’s find out. What’s the best defense against claims?

Did you answer good design? If so, you’re wrong. The best defense is being penniless because if you don’t have any money, no one will sue you. As it so happens, few practicing civil engineers are penniless, if only because they have insurance.

Without question, good design is important, but it does not have nearly the protective quality that many civil engineers attribute to it. Just ask my friend, Hank. One of the most prominent and highly respected engineers in his neck of the woods,” Hank practiced for 35 years without even the hint of a claim. Then one day, he made the mistake of signing what appeared to be a seemingly harmless document. In just a few agonizing years, he lost his practice and his reputation, not to mention almost all of his money.

It did not matter that the design involved was flawless, or even that Hank was not the engineer of record, which is why naivet creates so much risk. Hank learned the hard way that civil engineers need to function well in two worlds. In one, they are engineers. They identify the technical challenges confronting their clients and then apply their knowledge, experience, and judgment to create systems that achieve the desired outcome. In the other world – the engineering service industry – the ability to engineer is not nearly enough to survive, let alone thrive. There, civil engineers need to comprehend tort law, contract law, and statutory law. They need to know how to lead and to manage; how to support and to supervise. They must be good writers and good speakers. They need to master human resources, accounting, client relations, sales, and even bill collection. And that doesn’t even begin to scratch the surface of what’s required.

So who can blame civil engineers for wanting to believe that the ability to design well is all one needs, given that, once that myth is exposed, there’s so much to learn! But learn you must, because failing to gain and apply the requisite knowledge is what makes the business of civil engineering so risky.

In my admittedly biased judgment, the best place to begin your quest for knowledge is the ASFE’s website (www.asfe.org). Since its creation in 1968, ASFE has been focusing on the business of civil engineering. It has developed an array of materials and programs designed to help engineers assess and minimize risk. Believe it or not, however, one of the most important lessons ASFE imparts is something about which I can tell you between here and the end of this issue’s column!

About six of every 10 claims against design professionals are filed by owners – your direct and indirect clients. Another 20 percent are filed by contractors. And while just about all of these owners and contractors are organizations rather than individuals, people make the decision to sue. As such, approximately eight of every 10 claims are filed by people whom civil engineers should know well, and with whom they should have good relationships. It’s not that having good relationships with owner and contractor representatives will make you bulletproof; it won’t. But it surely can facilitate the kind of communication that nurtures non-litigated resolutions when problems occur.

And bear in mind what those problems really are all about. If you are under the impression that the sequence of events is design error/construction problem/search for the guilty/file a claim, then you’re wrong. The real sequence is budget overrun/search for financial assistance/claims against the vulnerable, with vulnerable being defined as those with money who will have a difficult time convincing a jury that they’re not liable.

Do you want to make civil engineering less risky for yourself? Just develop better relationships with owners and contractors. In that way, you’ll be in a much better position to help make budgets more reasonable and, should overruns occur, you’ll enjoy a lower likelihood of being in harm’s way. In other words, you’ll be in a better position to protect your assets.

Here’s another observation: Every year you have about 1,000 opportunities to break bread” with representatives of clients and contractors. How many of those opportunities are you using? If it’s less than 25, your risk is far higher than it should be. Establish good business relations to enhance your communication and good will. The fact that doing so can be – and should be – enjoyable is not a good reason to avoid doing it. It’s your risk. Lower it!

John P. Bachner is the executive vice president of ASFE, a not-for-profit trade association that provides programs, services, and materials to help geoprofessional, environmental, and civil engineering firms prosper through professionalism. Visit ASFE’s website at www.asfe.org.

Posted in Uncategorized | January 29th, 2014 by

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