Claims Retrospective: Identify and Document the Work You're Hired to Do—and Not Do

Posted on 8/25/2017 by ASCE Insurance in Documentation Claims Engineers

It is not unusual to discover problems outside a project's scope of work that may adversely affect the outcome, especially when the project involves an aging building or the property around it. Nor is it uncommon to find clients who do not wish to pay for remedying these "other" problems. It is always advisable to document all recommended work for a project, including other deficiencies, as well as any direct instructions from the client. To illustrate this point, the following real-world example provides a context for further explanation and discussion.

Case Study: Condo Association Sidewalk Reconstruction

An engineer is hired to replace a sidewalk adjacent to a large building constructed in the 1920s that has been converted into condominiums. The sidewalk is in obvious disrepair, and the municipality has ordered the condominium association to repair it or else risk being fined. While observing the current condition of the sidewalk, the engineer notices the area between the sidewalk and the building is not sloped correctly, and water is being driven against the foundation of the building. The engineer inspects the basement of the building and confirms there is some leakage in the basement due to decay of the mortar and sealant over the years.

The engineer explains to the condo association this condition should be fixed or the reconstruction of the sidewalk, as originally designed, may exacerbate the problem. The engineer supplies the condo association with several quotes for a grading redesign and offers to provide the names of competent contractors to handle the grading and waterproofing of the basement. However, the condo association chooses not to spend the money necessary to redesign the grading around the building and reseal the basement. They instruct the engineer to reconstruct the sidewalk as originally designed and as required by the municipality.

After the sidewalk is completed, the condo association claims the engineer negligently designed the sidewalk, causing the leakage in the basement. The engineer is caught by surprise because the condo association was informed of the leakage and specifically warned the sidewalk project could make it worse if additional deficiencies were not addressed. The engineer was acting in good faith and trying to "help" the client. What could have been done differently in this situation to help prevent miscommunication and outright false accusations?

Best Practice for Risk Management

In order to ensure both understanding and protection, all work required for a project should be documented whether it is approved for completion or not. The engineer in the case study above should have outlined all of the recommended work, including the additions noted upon further inspection, in a written proposal or contract for the condo association to review. The portion of the work requested and approved should have been initialed by the association. Any work the association did not approve, or was unwilling to pay for, should have been noted by a strikethrough. This type of documentation would provide proof of deficiencies identified by the engineer, possible negative outcomes, and the condo association's choice not to pay for the remedy. It would be difficult to argue the engineer’s work caused the leakage, or increased leakage, with a written rejection of the recommended work.

Whenever a client is unwilling to spend the money, especially a small amount, to correct a defective condition, it should heighten suspicions they may try to blame those involved with the project, including the engineer. Accordingly, the best risk management practice is to document the deficiencies and the recommendations for addressing them, even if the client has made it clear they will not be completing the work.