Contract advice for owner's representatives

March 2012 » Columns » PROFESSIONAL PRACTICE
John P. Bachner

Dear Owner's Representatives:
I wrote this "Professional Practice" column for owner's representatives, believing that CE News readers would forward it to those like you who, in their opinion, could benefit from the advice. The subject is contracts; what they're supposed to be, what they've become, and the damage being done.

Given the context, contracts are supposed to be legally enforceable documents that memorialize promises that an owner and a civil engineer make to one another as they prepare to embark on a mutually worthwhile, beneficial project. Regrettably, you also use the contract as a club to beat the civil engineer into submission before the project begins, evidently forgetting that a civil engineering project's success depends on people – civil engineering personnel, in particular – and their attitude is extremely important. That memory lapse can create major project expenses, hidden from view.

Why do you do it? Because you eagerly follow your lawyers' win/lose business advice such as how to use onerous, one-sided contract terms to obtain the equivalent of a multi-peril project insurance policy underwritten by the civil engineer at no charge to you. Lawyers who give advice like that are not the problem; you are, because, as the owner's representative, you should know that civil engineering projects are successful because of cooperation, not words; that the win/lose attitudes epitomized by onerous contract provisions make cooperation a risky behavior.

But you don't seem to care. You insist on contracts that stick out their chin and say to the civil engineer, "Make the owner a named insured on your PLI policy, even though it's impossible to do. Meet the highest level of care, even though it's undefinable. Defend the owner against claims, even when you do nothing wrong. And, by all means, indemnify the owner against the consequences of its own negligence."

Assuming the civil engineers who work on your project know they're uninsurable for the exposures you create – meaning they could lose their life's savings by working for you – do you think it might affect their attitude and their technical approach to your project? Do you think they'll regard you as a real project partner or someone to avoid? Do you believe they'll recommend creative, new cost-saving approaches to a client unwilling to accept its fair share of risk? Or is it more likely they'll opt for costly, off-the-shelf defensive-engineering approaches that help them manage their risk, the owner be damned?

Surely you've heard, "If it sounds too good to be true, it is." Free insurance? Forget about it. Either it's free but worthless, because the civil engineer lacks the necessary assets, or it's not free and you'll pay for it in construction costs, or life-cycle costs, or both. Trust me: You can manage your risk far more effectively and get a lot bigger bang for your civil engineering buck by using alternative, win/win means that intelligent, accomplished civil engineers can recommend, if you'd only invite them to.

"But our contract is accepted all the time," you might say. "Of course it is," I'd respond, "but that's not the point. Your contract is a cooperation-killer that costs your employer far more than it saves. It requires you to deal with firms that can't do any better than clients like you. Become a better client and you'll deal with better firms that will get you better results."

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 john@asfe.org.


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