Risk and liability: two words that strike a degree of fear into the hearts of anyone involved in the building industry, and if you’re a small-time property owner working on a small project, chances are you’re at the bottom of a very slippery slope.
That’s because municipalities, which once assumed most of the responsibility for building decisions made within their respective boundaries, have become extremely gun shy about assuming risk thanks to too many high-profile, expensive lawsuits and settlements.
Instead, they’ve offloaded that risk onto professionals, such as engineers, who in turn have become more selective about the kinds of work they’ll undertake. This has meant homeowners and small developers now have to jump through very expensive hoops to get someone to sign off on the work once covered by municipal inspectors.
Engineer James Wetherill of Braun Geotechnical in Surrey, for instance, has a policy of automatically turning down all residential work unless the developer is on a preapproved list of companies he’s willing to work with, or the property owner can show that risk is being mitigated (by hiring professional contractors, for example).
What a lot of people don’t understand, he said, is that when a development of any kind is started, the property owner is, in effect, their own project manager, unless they hire someone specifically to take on that function and all of its attendant responsibilities, including liability.
“[The property owners] are unaware that they’re actually the project manager, so they treat their engineer as the project manager,” said Wetherill. “We provide, as consulting engineers, design requirements, but we don’t provide any instructions on how to build things. We leave that to the construction professionals and the project manager.”
Not being part of the actual construction process, there’s no way for the engineer to guarantee the work being done, so the only means of reducing risk to acceptable levels is by only working with trusted developers and contractors.
“About 12% of our annual revenue goes to insurance premiums,” said Wetherill, who’s been an engineer since 1994. “Risk management is very high on our list of priorities, so much so that we actually consider our insurance provider a business partner that we consult with before taking on certain kinds of work.”
Bill Louwerse, a principal with Lang Structural Engineering out of Abbotsford, acknowledges that risk isn’t as big a factor for him as it is for geotechnical engineers, primarily because he’s not dealing with the hidden mysteries of the earth, but it’s still an important factor in his decision-making.
“We’ve been to mediations where people who have no insurance don’t even get mentioned, they only go after the ones with insurance,” said Louwerse.
Two points are key to this problem – the insurance concept of joint and several liability, and the statute of limitations for filing claims.
Joint and several liability is a big problem, according to Peter Mitchell, director of professional practice, standards and development for the Association of Professional Engineers and Geoscientists of BC (APEGBC).
It creates, he said, a situation whereby anyone with liability insurance (an engineer, for example) can be on the hook for an entire court settlement if all others found liable end up not having the resources to pay their share. That means even if the engineer is only 5% to blame for the problem, he or she could end up footing the whole bill.
The statute of limitations in most Canadian provinces is 10 years, but in B.C., the statute allows for a 30-year window of opportunity to sue. Professor Oldrich Hungr of the geological sciences department at the University of British Columbia said this is problematic because, while individual projects might have minimal risk, over the course of a career the amount of cumulative risk could be huge.
“If you do these jobs several times a week for 20 years, a career, even though those [individual] residual risks are very small, … in the end one of them is going to catch up with you,” said Hungr. “That’s why people don’t want to do [smaller projects], because it doesn’t make sense.”
Mitchell said a big part of the problem facing people working on smaller projects is that they generally don’t have a good understanding of the work required before a letter of assurance can be signed by an engineer.
He adds some practitioners are prepared to accept more risk than others, a point confirmed by Wetherill who routinely recommends other engineers that specialize in smaller jobs and/or accept more risk.
So how does a homeowner or small developer get what they need from an engineer? Well, Mitchell said a good place to start is the APEGBC website to learn how the engineering profession operates.
Then, when the hunt for an engineer begins, ensure you find someone with the right kind of experience because, as Wetherill said, “There’s no such thing in the engineering field as a true jack-of-all-trades.”
Get references from previous clients, he said, and above all make sure you get proof of primary professional liability insurance if that is important to you. Ask to see the insurance certificate. The key, said Mitchell, is to be an informed consumer who gets enough information to assess the risk and make a knowledgeable decision. •
