a/e ProNet Archives - Page 3 of 11

Announcing our New Scholarship for Engineering Students

By Lynda

Attention engineering students! This year, a/e ProNet has partnered with the American Council of Engineering Companies (ACEC) to offer a brand new scholarship:

The a/e ProNet Engineering Scholarship
Award: $2,500
Deadline: March 7, 2016

Eligibility

Students must be entering their junior, senior, fifth, or master’s degree year, in the fall of 2016 to qualify for the general scholarships. In addition, a student must be a U.S. citizen pursuing a Bachelor’s or Master’s degree in engineering or in an accredited land-surveying program to qualify.

Bachelor’s students must be in an ABET-accredited engineering program; Master’s students must either be in an ABET-accredited Master of Science (MS) engineering program, or have a Bachelor of Science (BS) degree from an ABET-accredited engineering program.

You can find the ACEC Scholarship Application here.

For more information, visit the ACEC website’s scholarship page.

The scholarship will be administered by the ACEC, and a/e ProNet member Mark Jackson of JCJ Insurance Agency in Orlando, Florida will serve as our representative on the committee. Good luck to all applicants!

Document Retention: More Paper or Paper-Less?

By Lynda

Which is better, more or less documentation in your project file after the job is complete? Despite recent advances in technology, document retention has become a difficult, expensive and complex proposition. Computers have changed design professionals’ work flows and methods, greatly increasing efficiencies, but also exponentially multiplying the volume of data; e-mails, attachments, drawing revisions, text and voice messages, not to mention folks are still sending faxes and letters, actual paper ones. All of this adds up and can become an unmanageable mess, even for the best of us.

Making decisions now about which project documents to keep and which to discard is like trying to pick who will win the Super Bowl in the year 2024. You never know which ones will be the most important until you are right in the middle of a claim. Experience and common sense tell us that there are certain documents that, no matter what, are probably safe bets to come in handy down the road. You may also be required by law or contract to keep certain records for certain time frames.

This article will offer suggestions on those categories of critical project documents necessary to defend claims, and which ones are better off being discarded as a matter of course after project completion. The question ultimately is framed as “what to keep and for how long?” Of course, these are only suggestions, and you should discuss implementation of any document retention program with your chosen legal and accounting advisors in your specific jurisdiction. Further, this article only addresses retention of construction project documents and not corporate, HR or tax records.

“Age of Discovery”

Modern construction projects, with all this data, are subject to modern lawsuits. These lawsuits are conducted by increasingly younger, tech savvy and sophisticated lawyers who sometimes make the litigation more about the discovery effort than about the facts of the case. Parties are allowed to submit detailed and specific “requests for production of documents” once in the lawsuit, or issue subpoenas to non-parties. State and federal court discovery rules could require parties to turn over copies of all information they have in their possession related to the project. Continue reading “Document Retention: More Paper or Paper-Less?”

Risk of Misclassifying Employees vs. Independent Contractors

By Lynda

The appropriate classification of employees is a frequent source of confusion for design firms, usually coming up around the renewal of a firm’s Workers’ Compensation policy. It is an issue ripe with risk on an Employment Practices level. Recent court rulings in Arizona and Utah have resulted in construction firms paying hundreds of thousands of dollars in back wages, damages, and penalties.

As explained on the Schinnerer Risk Management Blog:

In an age of rising benefit costs and other constraints on the operations of professional service firms, some firms are turning to a range of tactics to reclassify workers to take them off the formal payroll and, therefore, lower their costs and administrative burdens. However, doing so may subject the employer to state and federal employment law fines and penalties.

All this is happening against the backdrop of a broader shifting of risk from employers to workers, who are shouldering an increasing share of responsibility for everything from health insurance premiums to retirement income to job security. While the future might present a model where everyone is truly an independent contractor and neither those actually providing services nor those using the services have any continuing or controlling interest in each other, such a situation does not currently exist and any firm that thinks it can avoid employment responsibilities, tax obligations, or employment practices liability needs to carefully consider alternatives to hiring workers.

Regulators and courts have increased their scrutiny of the relationship between business entities and independent contractors. Alleged misclassification of workers has been one of the primary battlegrounds of this shift, leading to high-profile lawsuits.

For decades, some professional service firms have shifted work from employees to independent contractors to cut their overhead and labor costs and, at times, to qualify for special government procurement assistance. Often, this has been accomplished by relabeling workers and slightly altering the conditions of their work. And some professional service firms have simply ignored regulatory and tax guidance and “informally” used the services of professionals and clerical workers as “consultants” or “leased personnel” or “temps.”

Now, however, businesses—including design firms and construction contractors—are turning to other kinds of employment relationships, such as setting up workers as owners of limited liability companies (LLCs) in an attempt to shield the businesses from tax and labor statutes. In response, some state and federal agencies are aggressively clamping down on such arrangements, passing local legislation, filing briefs in workers’ own lawsuits, and closely tracking the spread of what they see as questionable employment models.

Visit the Schinnerer Risk Management Blog to continue reading.

If you have questions about the appropriate classification of your employees prior to your next workers’ compensation renewal, contact your local a/e ProNet broker. We’re happy to help!

Gearing up for EdSymposium15

By Lynda

Design firms depend on a set of very important people to keep their businesses running smoothly: office administrators. These folks “manage, market, advance, streamline, protect, and regulate firms in the A/E/C industry,” according to Natalie Newman, current President of the Society for Design Administrators (SDA).

At the SDA’s upcoming national meeting in Golden, Colorado–EdSymposium15 (October 8-10, 2015)–a/e ProNet will be in active attendance. On Friday, a/e ProNet President Eric Moore, CIC, of Moore Insurance Services, will make a keynote presentation:

Your Application Matters – How to Influence Premiums for the Better

It is important to understand what underwriters and insurance carriers look for when renewing a professional liability application/submission. In this presentation, attendees will learn how to better understand the underwriting process, how information is presented on the application, and improve their understanding of limit and deductible options when making the decision to purchase coverage.

Eric Moore specializes in providing risk management and insurance services to Design Professionals, including Architects, Engineers, Environmental Consultants and Land Surveyors.

a/e ProNet will also sponsor lunch on Friday, and our Executive Director, Dave Johnston, will be present to answer questions about our organization and how we can be of service to design administrators.

Lots of other exciting topics and activities are on the conference agenda, including a talk on Cyber Security and a chance for attendees to go rock climbing! We wish all SDA members safe travels and an enjoyable conference.

Insurance for Design Professionals vs. General Contractors

By Lynda

When it comes to the world of construction contracts, there is no one-size-fits-all solution regarding insurance. The Design Professional’s insurance policies cannot and should not anticipate the needs and risks of a General Contractor, for example. This comes up all the time at the beginning of contract negotiations. You can sidestep disputes further down the road if you understand the way your insurance policy and carrier will respond in the event of a claim. Here are a few Frequently Asked Questions:

The General Contractor has requested to be named as an “Additional Insured” on my professional liability policy. Can I accommodate this request?

It is not a good idea to name the contractor as an additional insured in the sub-consultants design E&O policy. The principal reason involves the “insured vs insured” exclusion found in virtually all design E&O policies. If the contractor believes he has a cause of action against his sub-consultant design firm, this exclusion will eliminate coverage for both the contractor and the design firm.

How can the General Contractor protect themselves?

The General Contractor may purchase “Contractor’s Professional Liability insurance.” This will protect the General Contractor from vicarious liability claims from third parties and also solves the problem of the “Insured vs.Insured” exclusion that would apply if the contractor would bring an action against the sub-consultant design firm, when named as an additional insured. Another benefit is a separate set of insurance limits. The General Contractor would have their own set of insurance limits that would not be subject to dilution or reduction from other claimants against the design professional’s errors & omissions policy covering their general practice.

Why would the General Contractor need Professional Liability coverage?

The General Contractor has the same “Vicarious Liability” for the negligent acts, errors or omissions of their professional sub-consultants as they do for the non-professional subcontractors. The General Contractor cannot rely solely on the hold harmless indemnity clause in the contract document. The hold harmless may not be enforceable in certain jurisdictions because of the language of the indemnity clause. The Sub-Consultant may not have sufficient insurance or their policy limits may be reduced or exhausted from other claims. The policies may be cancelled by the carrier giving notice or for non-payment of premiums. The General Contractor is then left with a false sense of security if they rely on the general liability insurance of the sub-consultant, which excludes professional design activities and responsibilities.

If you had more questions about this common issue, call your local a/e ProNet broker.

2015 ProNet Scholarship Winners Selected by the AIA

By Lynda

The American Institute of Architect (AIA) has selected Alyssa Tope, Assoc. AIA, and Edward Palka, Assoc. AIA, to receive the 2015 David W. Lakamp a/e ProNet Scholarship. Both winners will receive $5,000 to use towards their tuition.

Alyssa Tope, Assoc. AIA, completed her Bachelor of Science in Architecture and Sustainability at the University of Minnesota in 2013 and is enrolled in the M.Arch program at Virginia Tech while currently working towards licensure at WholeTrees Architecture & Structures. Working at a small (five person) office requires Tope to wear many hats, which has accelerated her learning about not only design, but also practice management and the business of architecture. She has gained experience in all avenues of business, including accounting, marketing, human resources, grant writing, code research, project management, and product research and development (with the USDA Forest Products Laboratory). Tope has also learned that many risks in project management can be prevented by having a team that knows how to collaborate and problem solve together by being aware of each other’s weaknesses and strengths. She enjoys working on the edge of what is currently accepted in design because, although it involves more risk, it is also where the greatest potential for change exists.

Edward Palka, Assoc. AIA, recently graduated from the University of Minnesota with a Bachelor of Science in Architecture and will begin the M.Arch program at Columbia University in the fall of 2015. He has held internships at HGA Architects & Engineers in Minneapolis, Poltronieri Tang & Associates in Swarthmore, PA, the Children’s Inn at the National Institute of Health (NIH) in Bethesda, MD., and has begun another internship at KieranTimberlake in Philadelphia. In these roles, Palka has had experience working on projects through all phases from pre-design through construction administration. Additionally, he has worked on research initiatives professionally and academically related to building information modeling (BIM) integration and education, daylighting strategies, and analysis of spatial configurations of housing developments. Beyond a passion for architecture, Palka’s professional experience has brought him an interest in the design of architectural practice itself, including firm structure, marketing, technology and workflow integration. He is currently working through his IDP hours, hopes to become licensed soon after graduating with his M.Arch.

Our scholarship is awarded to architecture students who demonstrate a particular interest in the principles of management in architecture practice. The jury for the 2015 David W. Lakamp a/e ProNet Scholarship includes: Thomas G. Coghlan Design Insurance Agency, Inc.; David B. Richards, AIA, LEED, AP, PMP, Rossetti and Jason Dale Pierce, AIA, NCARB, LEED AP BD+C, HOK.

Congratulations to Ms. Tope and Mr. Palka! Best of luck to you both.

For more information on the scholarship and to view the winners’ essays, visit the scholarship page at the AIA website.

Read the full 2015 AIA Press Release here.

Managing Employee Benefits: A Three-Legged Stool of Protection

By Lynda

For many design firms, the ability to offer and maintain competitive employee benefit programs continues to be one of the keys to attracting and retaining the best available talent. Yet, the regulatory and legal environment within which these benefit plans are being designed and administered is more complex than ever. Not only are there ERISA issues, but there is a literal alphabet soup of COBRA, FMLA, HIPAA, etc. With this greater complexity and heightened scrutiny comes risk: risk for the company itself, and the executives and administrators responsible for overseeing and administering the benefit plans.

The good news is that the risks are manageable and design firms with employee benefit programs can take advantage of a three-legged stool of insurance protection – Employee Benefits Liability Insurance, ERISA Bonds, and Fiduciary Liability Insurance. Many executives and administrators are confused about what each of these covers and whether or not they need them. This article will explain how each coverage evolved and what specific exposures they address. We also examine some risk scenarios based on actual litigation.

Employee Benefits Liability Insurance

Employee Benefits Liability insurance (EBL) very simply provides protection against claims arising from errors in the administration of employee benefit plans. This coverage was developed in the mid-1970s largely in response to exposures that arose from the 1962 court decision in Gediman v. Anheuser Busch. In this case, an employer was held accountable to the estate of a former employee for providing incorrect information to the health insurance company, which then in turn denied the employee’s claim. Thus, EBL insurance addresses claims arising out of errors or omissions in the administration of benefit plans. Three typical exposure scenarios covered by EBL insurance include:

An employer failing to properly enroll an employee for health insurance coverage, resulting in a denial of coverage.
An employer not providing an employee with the appropriate COBRA information after termination, resulting in the ex-employee being unable to continue participating in the health insurance plan as required by law.
An employer incorrectly calculating the amount of an employee’s pension benefit so that the employee decides to retire early only to find that the amount is much less.

Continue reading “Managing Employee Benefits: A Three-Legged Stool of Protection”

The Keys to Keeping a Project on Track

By Lynda

In 1985, after five years prosecuting criminals as an assistant US attorney, I became deputy general counsel of The American Institute of Architects. On my very first day, I was introduced to civil law. In his gravelly voice, the general counsel explained to me that the key to success in my new position was to “think liability”. I understood, as the traditional casebooks teach in law school, that appellate decisions in commercial cases tend to focus on determining where something went wrong and deciding who should be blamed. Liability was the proverbial ‘hot potato’, something to be avoided at all cost. As a result, lawyers teach and are trained to concentrate on anticipating potential liability and finding ways to avoid or transfer it so their clients are not caught in its web. The general counsel wanted me to think the same.

There are big downsides to lawyers defining “success” as drafting a contract intent on anticipating potential failures and pushing responsibility to other parties with the least bargaining power. Project problems require a nimbleness that can be lost if contract structures are excessively rigid. The industry as a whole also incurs huge costs from procedural requirements that needlessly force parties to jump through time-consuming hoops before an issue can be resolved. This kind of “success” hurts and ultimately impairs the competitiveness of the U.S. construction market.

The better a contract party has allocated project risk away from itself, the more it may also have created disincentives for other parties to collaborate, prevent problems and, when they occur, find solutions. It can also hurt the party who has used market power to divest itself of risk. Self-serving narcissism has never built either the trust or the chemistry necessary for group effort to succeed or for firms to get hired. It can also hurt the legal profession: Too many in the business world already think the best way to lose a deal is to bring in a lawyer to draft a contract. And these problems are all easily avoidable and totally unnecessary. Continue reading “The Keys to Keeping a Project on Track”

Scholarship Deadline Extended to April 17th

By Lynda

If you or someone you know is an architecture student, we’ve got some good news. Each year, we offer a pair of scholarships in partnership with the AIA, and the deadline for the 2015 applications has been extended through the end of the week!

The scholarship is open to fourth-year undergraduates, and graduate students of architecture enrolled in an NAAB-accredited professional degree program. The promotion and selection are handled entirely by AIA. Eligible candidates are required to submit an application to AIA’s national headquarters in Washington, DC, on their standard application form. Submissions are reviewed by jury members of the AIA Practice Management Knowledge Community. Candidates must submit a copy of their transcripts, two letters of recommendation, and an essay on how they would resolve a project management dilemma.

Extended Deadline: 17 April 2015

How to Apply

We want to help architecture students succeed. Good luck to all who apply!

Read about past winners of the a/e ProNet AIA David W. Lakamp Scholarship here.