Tag: Engineering

To Hire or Not To Hire?

By Lynda

As the American economy recovers, all eyes are on the construction design industry, a key indicator of the economic climate. Design professionals are preparing for the next phase of recovery in a variety of ways. Not only is there the hope that new projects will begin to come in soon, but there is a backlog of projects which began two or three years ago, but stalled. These projects have been pending in different stages, some abandoned completely, many without funding to continue. Unfreezing from that limbo would mean the potential for immediate work in many design firms, and that work could require additional hands.

In the April issue of CSPE Online, The Official Newsletter of the California Society of Professional Engineers, a/e ProNet Member Reno Caldwell published a column which addresses this exact scenario. For architects, engineers, consultants, and other construction industry professionals, this will bring up one very important question:

To Hire or Not to Hire?

Excerpt:

“Raise your hand if you were thinking of hiring someone this time last year.  Had I posed this question to a group of business owners in April 2011, I am confident not too many hands would have gone up.  The following two questions may still be far fetched, but if the tide begins turn and the project light-switch flicks up it’s worth asking both:

  1. When will your firm begin hiring?
  2. Will errors and omissions liability affect your hiring decision?

“You may be thinking that errors and omissions liability has nothing to do with a hiring decision.  Are you sure?  Most business owners understand the importance of balancing risk for the potential reward.   The term ‘reward’ probably seems distant, but many design and engineering firms have multiple projects that have long been in a perpetual ‘waiting’ mode.  Your office could get busy very quickly should these projects become active within a few months of each other, and as new projects come in the door.   Yes, this will be a happy day!

“However, many business owners have depleted their retirement savings in order to keep the lights on and doors open over the past three years.  It will be very tempting to replenish the bank account when the economy improves.   The risk management pendulum could swing quickly from ‘low risk / low reward’ to ‘high reward without considering risk.’  This move would be understandably tempting, but I urge you to take a closer look beforehand.”

To continue reading (and to get some valuable advice) visit IOA Insurance Services’ website for the full text of this article, as well as a downloadable PDF.

About the Author: Reno Caldwell is Vice President of IOA Insurance Services. He operates from the San Francisco Bay Area office in Pleasanton, CA, which he joined in 2007. He has specialized in providing professional liability insurance for design professionals, construction managers, law offices and other professional consultants since 1996. Reno is an affiliate member of the California Society of Professional Engineers; IOA is the exclusive broker of CSPE’s endorsed professional liability insurance program. reno.caldwell@ioausa.com

Pinterest Pride: An Homage

By Lynda

a/e ProNet has been an advocate for architects, engineers, and other design consultants for more than 20 years. This advocacy includes an abiding interest in protecting the integrity and sanctity of the products delivered by design professionals. We’re proud of what our clients can do and have done to better and beautify communities across the globe.

Taking that pride one step further, we’ve created a Pinterest board dedicated to showcasing the fantastic designs of our ProNet Members’ clients!

Buildings, bridge, amphitheaters, parks, homes, aqueducts, highways, theme parks, wineries, storefronts, and resorts surround and inspire us daily. But as Peter W. Jones, AIA, President of AIA Florida recently reminded us, “Behind every magnificent structure is an architect who helped create it.” In fact, behind every magnificent structure is a team of imaginative, experienced professionals who worked together to meet that goal. And we’re proud to say that many of those professionals are the clients of our members.

If you love design, follow our Pinterest board today!

a/e ProNet at SDA’s EDSYMPOSIUM12

By Lynda

Longtime design industry advocate, a/e ProNet, announced this week that ProNet President Leslie Pancoast will make a presentation at EDSYMPOSIUM12, the 42nd annual education conference hosted by the Society for Design Administration (SDA), an affiliate of The American Institute of Architects.

For more than 50 years, the SDA has promoted education and best practices for design firm administrative personnel. EDSYMPOSIUM12 will take place from May 2-5 at the Embassy Suites Hotel in Portland, Oregon. a/e ProNet will sponsor Saturday’s luncheon, where Pancoast will make a two-fold presentation: Introduction to a/e ProNet and Professional Liability—Coverages, Nuances and Endorsements. SDA members will learn more about a/e ProNet and its active support for the design industry, as well as receive a brief overview of professional liability coverage and the standard endorsements available from most professional liability insurance providers for architects and engineers.

About Leslie Pancoast

Pancoast has specialized in the insurance needs of architects, engineers and other design consultants for more than 20 years. She is a Managing Partner of Insurance Office of America (IOA), one of the largest privately-held insurance agencies in the country. She is also the Branch Manager of IOA’s San Francisco Bay Area office, operating in California as IOA Insurance Services, which she opened in 2005. Pancoast has earned the designations of Commercial Insurance Counselor (CIC) and Registered Professional Liability Underwriter (RPLU). She has been an active board member of a/e ProNet since 2005, and currently serves as the membership’s President.

About a/e ProNet

Established in 1988, a/e ProNet is a national network of specialist brokers. The group focuses on providing educational resources and risk management services to its members’ clients. Its member brokers represent a combined annual professional liability premium volume exceeding $300 million, giving top-tier insurance companies a major incentive to work closely with a/e ProNet to enhance their various a/e programs.

As well, a/e ProNet makes a wide range of Risk Management resources available to all design professionals via their website, including ProNet Practice Notes, Guest Essays, ProNetwork News, Contract Concerns, Typical Coverages, and Frequently Asked Questions.

a/e ProNet is excited about the opportunity to partner with the SDA in order to provide this value-added educational resource to design firm administrative personnel across the country.

Additional information is available about a/e ProNet by visiting their website, following them on Twitter, and/or Liking their Facebook page.

Right of Set-off on Unrelated Projects

By Lynda

The following is an excerpt for the most recent ProNet Guest Essay by Frank L. Pohl, Esq. and James C. Washburn, Esq.:

“Frequently, general contractors will work with the same subcontractor or supplier on two separate, unrelated projects. When that happens, the situation may arise that on the first project (Project A), the subcontractor defaults on its contract, resulting in a back-charge that exceeds the subcontractor’s contract balance, i.e. the subcontractor owes the general contractor money. On the second project (Project B), the subcontractor satisfactorily completed its work and is due money from the general contractor. It may seem obvious that the general contractor would have a right of set-off, allowing the general contractor to deduct the amount due from the subcontractor on Project A from the amount that the general contractor otherwise owes the subcontractor on Project B. Seemingly, the general contractor should only have to pay the net difference or be able to avoid paying the subcontractor anything if the back-charge on Project A exceeds the amount due on Project B. However, as outlined in this article, that seemingly straight-forward right to “net out” the competing claims might not always be available.

“There are several different factors that can frustrate the general contractor’s right of set-off. In some jurisdictions, state statutes may prohibit the general contractor from withholding from the subcontractor the amounts received from the owner for the subcontractor’s work, such statutes holding that those funds are held in trust for the benefit of the subcontractor. Some states might even find the withholding of funds received by the owner for the subcontractor’s work to be statutorily criminal. On projects covered by a payment bond, courts in some jurisdictions have held that even if the general contractor has a contractual right to set-off, the Surety may not. As a result, in those jurisdictions, notwithstanding the contractor’s contractual right of set-off, the subcontractor may be entitled to recover the full amount on Project B (from our scenario above) from the Surety without any deduction of the amounts the subcontractor owes on Project A. Given that the general contractor must almost always indemnify the Surety, such a result has the practical effect of eliminating the contractual benefit of a right of set-off. Additionally, in certain circumstances, by the discretion afforded to judges under the rules of civil procedure, courts have required the two competing claims to be handled by separate lawsuits independently and without regard to the general contractor’s claim of set-off. This article discusses these scenarios and others that impact the right of set-off.”

To continue reading, download a the full PDF version of this article at our website.

About the Authors:

Frank L. Pohl, Esq. and James C. Washburn, Esq. are partners in the law firm of Pohl & Short, P.A. in Winter Park, Florida.  Pohl & Short, P.A. is a business boutique law firm concentrating in four main areas of business law: commercial litigation, real estate law, corporate law and trusts and estates.  Mr. Pohl has been advising clients involved in all aspects of real estate development for over 30 years.  Mr. Washburn practices construction law and is Board Certified in Construction Law by The Florida Bar.

This article is intended for general discussion of the subject, and should not be mistaken for legal advice. Readers are cautioned to consult appropriate advisors for advice applicable to their individual circumstances.

Your Company’s Auto Liability – What’s Covered? What’s Not?

By Lynda

Other than Professional Liability claims, Auto Liability claims are the largest exposure faced by Architecture and Engineering firms.

If your design firm is small to mid-sized, often “a standard BOP (Business Owner’s Policy) is sufficient to meet your property and casualty coverage needs. A BOP combines the basic coverage requirements a small to medium sized business owner would need in a package.” Those insurance companies that understand the specialized needs of design firms sometimes combine certain coverage enhancements within their standard BOP. These enhancements can include extended coverage for architectural models, a waiver of subrogation (as is often required by project Owners during contract negotiations), and even some limited Auto Liabilty coverage.

“If your firm does not own any autos, the BOP can usually include ‘Hired and Non-Owned’ auto liability coverage. This would pay for damages to a third party, on behalf of your company, if an employee causes an accident while using a rented car or the employee’s own car while on company business. This addresses liability to others, but what about damage to the rented car? Some but not all insurers will provide this protection in a BOP; it’s usually referred to as Hired Physical Damage coverage.”

Our latest ProNetwork Newsletter, Your Company’s Auto Liability – What’s Covered? What’s Not?, focuses on the necessity of this coverage. A coverage which, if both architect/engineer and broker aren’t careful, can be overlooked at renewal time.

What does Hired Physical Damage cover? And why/when would you need this coverage?

Your star employees requests permission to attend a conference hosted by your state professional society. The conference is about 200 miles away. Public transportation isn’t an option; therefore, with an eye toward keeping expenses down, your employee decides to rent a car to drive to and from the event in one day. He asks you about taking out the rental car company’s insurance coverage. You mean to call your insurance broker, but, pressed for time, you decide that the BOP must cover this and you know that the extra insurance from the rental company would cost anywhere between $15 and $50 for the day.

Tragically, on the way home, your employee swerves to avoid some large debris in the roadway and inadvertently hits an oncoming car with a young adult driver and three co-workers who were headed home from a client’s golf outing. No one is killed, and fortunately your employee walks away unharmed. The other four, however, are not as lucky. All four are hospitalized, miss time from work, and require significant rehabilitation. Both vehicles suffer total loss.

To read about the outcome of this “doomsday scenario,” and to understand how Hired Physical Damage coverage can help, download the full PDF version of our newsletter here.

ProNetwork News is the latest value-added resource produced by a/e ProNet. Each monthly edition includes an informative, timely article relevant to the design industry and authored by an industry expert. Contact your a/e ProNet broker for early access to these excellent newsletters.

About the Author: Barbara Sable is Assistant Vice President for RLI’s Professional Services Group. She is responsible for developing the content of RLI’s risk management programs and addressing the day-to-day needs of policyholders. RLI is an a/e ProNet Platinum Sponsor.

Beazley & Engineers Without Borders (USA)

By Lynda

A couple of weeks ago, a/e ProNet Tweeted about the student chapter of Engineers Without Borders at San Jose State University. The young engineers are reaching out to the country of Ecuador with a plan to purify the water there. EWB-USA currently has 350 projects ongoing in 45 developing countries. It’s exciting to see the organization succeeding in its mission:

EWB-USA supports community-driven development programs worldwide by collaborating with local partners to design and implement sustainable engineering projects, while creating transformative experiences and responsible leaders.

This is why we’re proud to announce that one of a/e ProNet’s Silver Sponsors, Beazley Group, is reaching out to support EWB-USA.

Beazley Group (BEZ.L), a leading insurer of architects and engineers professional liability risks, is making its risk management webinars available to Engineers Without Borders USA (EWB-USA) as part of the non-profit’s new online training program.

James Schwartz, US architects & engineers focus group leader at Beazley, said: “Beazley is an innovator in providing design professionals with insurance and risk management services, and has done so for more than twenty-five years. We are pleased to offer our on-demand webinars to a wider audience through Engineers Without Borders USA in order to support its valuable work. Engineers Without Borders already provides exceptional education opportunities to its participants. Adding our presentations on a range of topics impacting design firms is a perfect complement to its vision.”

Beazley currently offers live risk management webinars to its brokers and insureds, attended by hundreds of design firm professionals as part of its overall risk management program. These recorded 90-minute webinars – which include topics such as international projects and advanced sustainable design – will be provided to EWB-USA members by the non-profit organization’s training partner, Contract Solutions Group (CSG).

Click here to read to full press release.

Beazley has been a key market for architects and engineers professional liability for more than 25 years. They insure firms of all sizes. From construction managers to environmental consultants, Beazley covers professionals in the full spectrum of the A&E industry. They also offer Privacy Liability Coverage as part of their basic A&E policy. Click here to read more about Beazley’s professional liability insurance program for Architects and Engineers.

How to Choose a Professional Liability Insurance Broker

By Lynda

Recently, Bizjournals.com published an article on How to choose an Architect. The author stressed that the hunt for the right architect should include obtaining recommendations from friends and colleagues, calling a potential architect’s references, and studying his or her previous projects to ascertain quality and sustainability.

This process isn’t news to architects. Every job bid opens an architect’s firm and history to scrutiny, and that’s all part of an owner’s due diligence. What architects and engineers might not consider is that this logical due diligence should extend to them in the selection of their own insurance broker(s).

Remember, “Not every attorney can deal with the problems you are likely to find yourself faced with in professional practice; not every doctor can perform heart surgery; not every insurance broker can deliver the professional liability loss prevention and insurance services you need. Knowing this, it would seem to make sense for you to spend a certain amount of time searching for a broker capable of responding effectively to the unique requirements of your firm.”

a/e ProNet has put together a guide to finding the best specialist insurance broker for your design firm. Authored by David Lakamp, the founder of a/e ProNet, this guide addresses the qualities and qualifications you should require of the broker handling something as important as your Professional Liability policy. The following is an excerpt from our ProNet Practice Note titled How to Select a Professional Liability Insurance Broker:

Your professional liability insurance broker can deliver services of great value. This is as it should be, for you are paying for those services. Carefully selected and advantageously used, your broker can be as important to the management of your practice as your accountant or your attorney. Poorly selected and ill-equipped to advise you on the risks of professional practice, your broker may add little more of value to what you do than the cost of a few postage stamps at renewal time. The choice is yours.

There are many people in the insurance business, but finding the one broker best for you can be somewhat problematic. For one thing, your broker can be of real help to you only if he or she has a comprehensive understanding of what it is you are all about. Not all do. For another, the most valuable services your broker can deliver require an investment of time and resources few are prepared to make. Fortunately, there are knowledgeable brokers throughout the country who have made that investment. Your challenge is to find one you can rely on with confidence.

What a Good Broker Can Do For You

Your broker, first and foremost, is your advocate in the professional liability insurance marketplace. A good broker will know what the markets are doing, who the underwriters are, what they are looking for, and how to present your firm in the best possible light. This requires a thoroughgoing knowledge of the applications for insurance and a clear understanding of what the questions really mean, how the information being requested is likely to be interpreted, and how that information can best be communicated to the underwriters. The cost of your insurance will depend on this knowledge and on the skill and attention to detail with which it is utilized on your behalf.

A skilled professional liability insurance broker will be experienced in dealing with the underwriters in both hard and soft insurance markets. Today’s promises and prices may be real, or they may be of fleeting value. To evaluate the differences, you need competent, independent advice from a broker who is capable of a long look down the road ahead. Experienced brokers have been down this road before, and the value of the advice you receive as you seek to sort out the trade-offs between coverage options, company services, and premium dollars depends on that experience.

Other valuable questions answered by this ProNet Practice Note:

  • Why is it important to choose a specialist insurance broker?
  • How will I know a specialist insurance broker when I see one?
  • Where can I get good recommendations for specialist brokers in my area?
  • When I purchase insurance, why shouldn’t price be the bottom line?
  • What is the difference between an independent insurance broker and an insurance agent?
  • What questions should I ask an insurance broker to make certain he or she fits this criteria and will offer the best, specialized service to my architecture or engineering firm?

We invite you to download the full-length PDF version of this ProNet Practice Note here. For additional resources like this one, visit our website. And as always, the easiest way to find a specialist insurance broker for your firm is to get in touch with your local a/e ProNet Broker.

ProNet Client Project Profile: SkyVue Observation Wheel – Las Vegas, NV

By Lynda

There’s something happening in Vegas, and we’re happy to break the rules and share the event here. Construction began in earnest yesterday on the new 500-foot SkyVue observation wheel across from Mandalay Bay, a project for which ProNet client Wallace Morris Surveying, Inc. is providing engineering services.

More than 100 concrete trucks rumbled in before dawn on Thursday, March 1 to pour the foundation. Per the Las Vegas Sun:

The five-hour process, which began at 2 a.m., sets the stage for building the $200 million project that will change the landscape of the southern Las Vegas Strip.

Developer Howard Bulloch said passersby would see the wheel take shape this summer but the venue won’t open until July 2013.

“We have to build the wheel first before we build the retail building below,” he said.

The retail portion will include seven food-court options, five sit-down restaurants and a dozen stores ranging from clothing outfitters to electronics, Bulloch said. Developers declined to identify the establishments but said they would be recognizable names.

A 30-minute ride will take visitors 50 feet higher than Mandalay Bay with views facing north on the Strip.

The construction climate in Las Vegas has been notoriously sketchy since the global economic downturn in 2008, but Bulloch is pledging to see this project through to completion. Certainly, the SkyVue Observation Wheel will be a flashy ornament to the legendary city’s skyline, including 32 gondolas, each seating 24 people, and a 50,000-square-foot LED sign which will project from the wheel’s center. But better still, the wheel will ultimately employ a full-time staff of 500. Click here to see renderings of the envisioned project.

Congratulations, WMS!

Wallace Morris Surveying, Inc. (WMS) is dedicated to delivering professional land surveying services throughout Nevada and Arizona with a highly skilled professional team working together. It is also our mission to exceed your needs by dedicating to you a Professional Land Surveyor with years of surveying experience, respecting your need for timely services and by having the expert you hire be the actual person working on your survey. (Excerpted from the firm’s bio on the WMS website.)

Don’t Delay! Report That Potential Claim Today!

By Lynda

A Professional Liability claim is triggered by a demand for money or services. Once you receive such a demand, it’s easy enough to call your broker and report the claim. But what about reporting a situation that could give rise to a claim?

Say you’re standing on a job site, eyes wide, jaw hanging open, because you see that something isn’t right. You expect that the situation you see before you could (likely, will!) give rise to a claim, but you can’t be certain. Nor can you be sure that the accident/flaw/behavior/error be held against your firm, specifically. And maybe it’s fixable in the meantime. What should you do?

It is in the best interest of your firm to call to your broker anyway. Report the potential claim.

The following is an excerpt from our ProNet Practice Note entitled Reporting Claims and Potential Claims Under Professional Liability Insurance Policies (2010):

Early reporting has many rewards. Let’s look at an actual situation: An architect called his insurance broker to tell her that a one-ton balcony collapsed adjacent to a recreational pool area. The broker immediately notified the insurance company, who put the design firm in contact with a lawyer to start gathering information and to remind the principal of appropriate responses during the crisis. The insurer then hired a forensic engineering firm, all before the architect even pulled into the parking lot!

In addition, the broker offered her client tips on good public-relations skills when facing the media—still during their drive to the site. The architect was prepared with an alternate solution when his client wanted to sweep up and remove the debris, thereby erasing a critical part of the story should a claim be made later.

Reporting a circumstance or claim should begin your access to the power of your insurer, including its expertise, network of consultants and attorneys, and financial resources. You will not only get valuable assistance with the loss or possible loss, but you also often avoid making a bad situation worse.

What if our architect had told his client, “Don’t worry, I’ll take care of it” before his negligence was established, thereby possibly accepting financial risk without insurance coverage? Every claims adjuster has sad stories like this to tell. This is most common when a design firm receives a subpoena for testimony before being made a party to the action. Feeling they are fulfilling their civic obligation, they freely discuss matters with opposing counsel in what they may later consider an unwise fashion after they are joined in the claim and find that their casual, on-the-record comments harm their own case. Early advice from the claim adjuster can be invaluable.

Even if, later on, this policyholder discontinues their insurance or purchases coverage or options that are less favorable than they currently have, this claim will be covered under the terms and conditions of the policy in place on the date the circumstance was reported to the insurance company.

Even if you are not obligated to report a circumstance according to your policy requirements, you may still report it. By doing so, you will have more options to choose from at your next renewal. You may not ultimately decide to switch to a different insurance company, but you should have the freedom to do so. Unless the matter is reported, you are not free to consider other insurers, lest a claim arise with the new insurer from an unreported circumstance of which you were previously aware.

Visit the a/e ProNet website for additional information on this topic as well as many others. A full library of ProNet Practice Notes are available for free download.