INDIAN ASSOCIATION OF STRUCTURAL ENGINEERS PROFESSIONAL LIABILITY OF A STRUCTURAL ENGINEER. C 109, LGF, Shivalik, Near Malviya Nagar, New Delhi

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1 Professional Liability of Structural Engineer Recommendations INDIAN ASSOCIATION OF STRUCTURAL ENGINEERS PROFESSIONAL LIABILITY OF A STRUCTURAL ENGINEER C 109, LGF, Shivalik, Near Malviya Nagar, New Delhi

2 Professional Liability of Structural Engineer Recommendations PREFACE The objective of this document is to give wider publicity for the benefit of members as well as the profession at large and to make structural engineers aware of professional liability-both civil and criminal- and sensitize them so as to protect their interests. For civil (financial) liability, it would be most advisable to have a contract in which financial liability of structural engineers is specifically mentioned. As far as criminal liability is concerned the professional and his lawyer can show the procedure outlined in the document for forensic investigation of failure to the police officer. In this document the term structural engineer is used and is to mean a structural designer or a consulting structural engineer rendering structural design and other related services. 1

3 PROFESSIONAL LIABILITY OF STRUCTURAL ENGINEERS GENERAL 1. Structural Engineers are increasingly faced with issues of liabilities to the Client and / or to third party in connection with the services they provide. These liabilities include Financial liability Criminal liability. Structural Engineers, like other professionals, should render professional services as per the standards of services and expertise prevalent in the profession. It is assumed that such services are provided with due diligence and integrity which is expected from a professional. Unprofessional service can be either from lack of application of mind, i.e., negligence or carelessness, or undue compromise on technical standards for reasons not acceptable on technical, moral or legal grounds, or undertaking a project for which he does not have the requisite experience. A reasonable level of experience for various project categories is given in a separate document. 2. The responsibility of the Structural Engineer shall be commensurate with the scope of work agreed between him and his client. The structural engineer shall be liable if he fails to exercise all reasonable skill which he professes to have while negotiating the contract, care and diligence in the discharge of his duties as provided in the contract with the client. A structural engineer is liable for a negligent act committed in the performance of his duties. The action against Structural Engineer can be initiated by the Client on satisfying the following conditions: (a) He was not possessed of the requisite skill which he professed to have possessed based on the details of expertise of his firm/company provided to client. (b) There must exist a duty to take care, which is owed by structural engineer to his client. (c) He did not exercise, reasonable care and skill which he did possess, thereby he committed breach of such duty. (d) The structural engineer has committed a breach of contract (not honouring terms of agreement) (e) The client must have suffered damage due to such breach of duty. 2

4 3. The doctrine of duty of care 1 creates liability on the firm/company for any negligence by an employee 2. As far as the client is concerned, the liabilities will accrue to the consulting firm/company for breach of contract, since the contract for rendering services is between the client and the consultant firm/company. The employer has a duty of care to assign a task to a person who has requisite competence. 4. Sometimes the Structural Engineer (as a Proof-consultant, PC) is asked to check the design (and drawings) prepared by another structural consultant (Project Design Consultant, PDC) or is required to give an opinion concerning the same. This is called structural auditing or proof-checking. The party that gives the assignment of proofchecking (client) may be PDC, the owner of the property, a builder, etc. The terms of assignment may vary from a simple opinion, a study of the methodology, design calculations to complete checking and approval of execution drawings. The liability of proof consultant (PC) will depend on the nature and scope of the assignment. Although the primary responsibility of adequacy of structural designs-drawings rest with the project design consultant- PDC, proof consultant, PC has to exercise Duty of Care in the work of proof-checking of designs, drawings, etc. Any lapse in the duty of care amounting to professional negligence will attract liability issues. 5. The structural engineer s duty to care and breach of that duty leading to damage being caused to the client, needs to be established to hold him liable in a particular case. 6. Liability of a Structural Engineer when appointed by the Architect When the architect agrees with the client to provide structural design service and appoints the Structural Engineer and if it is proved that the client has suffered a loss due to structural deficiency the client may not claim damages from the Structural Engineer since there is no contract between the two parties. However, he may raise a claim against the architect and, the architect may in turn raise a similar claim with the Structural Engineer. If there is a contract between the Structural Engineer and the architect, the claim may be as per the provisions of the contract. In order to limit his liability it is advisable that the Structural Engineer does have a contract with the architect as per Model Agreement For Services Of A Structural Design Consultant (2014) published by the Indian Association of Structural Engineers, New Delhi. 1 The doctrine makes the employer responsible for a lack of care on the part of an employee in relation to those to whom the employer owes a duty of care. The employer is charged with legal responsibility for the negligence of the employee because the employee is held to be an agent of the employer. If a negligent act is committed by an employee acting within the general scope of her or his employment, the employer will be held liable for damages. Presently the employee has no legal liability with the client. However, once the Engineers Bill is passed, the employee if he is registered engineer shall also have a liability in addition to his/her employer. 3

5 7. Third Party Liability The Structural Engineer has a contract with the client only to whom he is liable for breach of contract including failure to exercise due care in his assignment. However, if a third party (not the client) suffers damage presumably due to Structural Engineer s negligence the third party can raise claim from the client; the client can in turn claim damages from the Structural Engineer. Normal contracts require that the Structural Engineer indemnifies the client to whom a claim may be made by a third party Limits of Liability The financial liability of the structural engineer shall be commensurate with the compensation received by the consultant for the service rendered. The duration of professional liability for structural design may be limited to time required to make the designed facility operational or one year after the completion of the project whichever is earlier. This should also apply to natural disasters such as hurricane/tornado, floods or earthquake even though the same may not occur during the useful life of the structure. 9. Indemnity Financial compensation which the client can claim and for which the Structural Engineers becomes liable arises out of a contract between consultant and the client for breach of contract, when it is proved that the Structural Engineer has failed to provide requisite duty of care in his work. This claim can arise out of direct damages/losses suffered by the client only. However, third parties may also have suffered damages due to the act of omission or commission by the Structural Engineer and may raise claim against the client. Hence the client may require in his contract that the Structural engineer indemnifies him against such claims. The claim for indemnity agreed in the contract should be kept within reasonable limits, commensurate with, and in no case it should exceed a reasonable proportion of the financial compensation receivable by the structural consultant. However, it would be advisable to include a specific limit of financial liability of the Structural Engineer, say ten (10) per cent of the fees. 3 Some insurance companies offering cover for professional indemnity include third party liability also. It would be advisable to ensure that this is so while taking out an indemnity policy. 4

6 10. Financial Liability (Indemnity) Insurance It is imperative that a consultant gets his practice insured so that he can carry out his work in peace. In India such insurance is available as Professional Indemnity Insurance Policy. Several insurance companies offer such coverage. All non-criminal liabilities are financial in nature and generally can be covered by insurance. Some details of a typical coverage are given below: Under this policy the Insured (Structural Engineer) is indemnified for any breach of Professional duty by reason of any negligent act, error or omission. This cover is available for professionals in their individual capacities / firms/companies either on annual basis or project basis. The policy-holder or insured and its named employees will be indemnified for all sums they become legally liable to pay to the Client for (i) Material damage- i.e. destruction/damage to or loss of tangible property (ii) Construction damage- (material damage to or defects in objects built by client on basis of work done by insured. Annual premium is based on the sum assured and annual fees of the insured which may be around 1 per cent of the Sum Insured per cent of Annual Fees. 10A.Confidentiality or Non-disclosure Of late the clients are insisting for the consultant to sign a non-disclosure or confidentiality agreement for guarding the information they supply to the consultant for purpose of design. This confidential information may include what the client considers a trade secret. Thus the data supplied by the client may include two types of information that should not be disclosed to others: trade secret and also processes, equipment, etc. Normally, the Confidentiality Agreement carries a time limit after which the Agreement becomes null and void. On the other hand if the client apprehends that he has also disclosed his trade secret, he may ask that the liability survives the time limit in the main agreement. The financial liability for breach of the confidentiality agreement (resulting into revealing information/data/chart, etc. supplied by the client, to someone or making the same public, by an employee or agencies appointed by the consultant) may be pretty stiff, usually much more than the fees. It is, therefore, advisable that a time limit is imposed for the duration of liability, preferably until the completion of the project; also it should be ensured that the financial liability for non-compliance with the confidentiality agreement is kept at a minimum. 5

7 11. Liability with the Local (Competent) Authority Many states in the country provide regulations enforced by local authorities for projects in their jurisdiction. In some cases the local authorities frame their own regulations. Usually the local authorities require registration of structural engineers possessing prescribed qualifications. The structural engineer is required to give undertaking with respect to the safety of the structure designed by him. The responsibility assigned to the structural designer under this undertaking varies with different local authorities. Usually the local authority holds the structural designer responsible for ensuring compliance with his design/drawings as well as regulations framed by the local authorities. He is also required to certify that the structure has been constructed with materials and workmanship as specified in the drawings approved by the local authority. Such an undertaking imposes a liability on the Structural Engineer with respect to public safety (criminal liability- as a structural engineer on record). 12. Criminal Liability Even though protection from financial liability of a consultant can be availed of by way of insurance cover, criminal liability is another matter. It arises due to a physical injury suffered by any one due to a negligent act of the Structural Engineer. He can be charged with criminal negligence as per Indian Penal Code if his negligence is proved. It is well-known that there may be several causes of structural failure such as (a) Defective material provided by the vendor (b) Defective workmanship of the contractor (c) Imposition of heavier loads by the occupant for which the structure is not designed (d) Natural disaster (e) Deficient structural design/drawings Even though forensic science concerning structural failure has advanced considerably in our country, unfortunately the authorities are unaware about the procedure that is required before taking any action. And the structural engineer is likely to be affected before it is established that he was responsible for the failure. The structural engineer has to prove his innocence in the court which may take a long time and involve heavy expense. *** 6

8 Professional Liability of Structural Engineer Recommendations RECOMMENDATIONS 1. The Structural Engineer specializes in design of structures. Hence, the Structural Engineer shall not be expected to take responsibility for adherence to his drawings or quality of construction for which other competent agencies are responsible. 2. As far as possible the Structural Engineer is advised to enter in to an Agreement directly with the client which clearly defines (a) his scope of work (b) financial compensation (c) financial liability in case of proven breach of contract, limit of indemnity provided to the client and the time period during which his liability under the contract is valid. 3. The financial liability of the Structural Engineer as well as limit of indemnity provided to the client shall be commensurate with the agreed professional compensation regardless of the financial damage suffered by the client The financial liability of a Structural Engineer shall be limited to ten (10) per cent of his professional fee. 4. It is important to limit the duration liability of the Structural Engineer. It may be limited to time required to make the designed facility operational or one year after the completion of the project whichever is earlier. This should also apply in case of natural disasters such as hurricane/tornado, floods or earthquake even though the same may not occur during the useful life of the structure. 5. The Structural Engineer is advised to take out a professional indemnity insurance to cover his financial liabilities. 6. All the above apply to the Project Structural Design Consultant as well as the Proof Checking Consultant appointed to verify design and approve Good for construction drawings. 7. The Structural Engineer shall be careful when signing requisite forms for building permit from the local authority and he shall not take responsibility for anything other than adequacy of his design and adherence to national building codes of practice. 8. The Structural Engineer is advised to study carefully any confidentiality agreement that he is required to sign. *** 7