Partisan Professionals: Contractors Deserve Ethical Treatment
by Kevin O’Beirne, PE, FCSI, CCS, CCCA, CDT
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In managing their myriad priorities, architects, engineers, and geologists are obligated to behave ethically, both by their licensure and codes of conduct established by non-profit, professional organizations. However, design professionals’ eagerness to be viewed as supporting their clients’ short-term interests, while preserving their own reputation and client relationships, sometimes comes at the expense of ethics and objectivity. This is especially true when consulting engineers, architects, and geologists are too partisan against construction contractors retained by their clients.
It can be difficult for a design consultant to admit making a mistake—especially when professional liability insurance carriers often discourage or prohibit it—or to decide in favor of the contractor to the disadvantage of its client, the owner. Some owners and consultants may believe that consultants should avoid giving the client bad news.
In this writer’s opinion, such behavior is inappropriate. To illustrate: most people would be outraged at a physician who failed to objectively and fully deliver bad news to their patient, together with appropriate advice and professional judgment. Yet, it is reasonably common for design professionals to be tempted to do so, as demonstrated by the following two examples.
Example 1: Some years ago, a consulting engineering team sought in-house advice to support their denial of a contractor’s request for additional compensation. The issue concerned electric motor-operated opening systems for large, overhead coiling doors for a new building under construction. The overhead door specifications had three different types of door openers, ranging from very basic and inexpensive to the top-of-the-line motorized opener. Only one type was needed, but all three were specified. The engineering team asserted the most-expensive system was intended. Neither the specifications nor the architectural drawings indicated which of the three overhead door operators was required.
The project had separate prime contracts for general construction, electrical, plumbing, and HVAC. The general contractor contended it had included in its bid price only the least-expensive door operators. The electrical plan drawings showed no conduit or controls for the desired electric motor operator, but a power feeder schematic drawing indicated electric motors for the overhead doors’ operators. The engineering team contended that, in the short bidding period, general contract bidders should have read and understood the electrical schematic drawings—even though electrical work was in a separate contract—to determine that the engineer intended an electric operator for the overhead doors.
The engineer had dug in its heels and repeatedly denied the general contractor’s request for a contract price increase. It was also possible the electrical contractor might demand additional compensation for conduit and cabling if the general contractor was successful in its pursuit of additional compensation for the equipment.
After objectively evaluating the general contract’s requirements, the engineer’s in-house advisor sided with the general contractor. On many other projects, this writer has observed design teams attempting to enforce similarly opaque requirements.
The engineering team explained to their advisor that they had stuck to their guns because, “We told the owner early in the process that electric door operators were clearly required by the general construction contract. We’ll have egg on our faces if we retreat now.” The advisor suggested it was probably better to accept some loss of face than to lead the owner into a claim or dispute they would likely lose. The advisor further advocated honesty and objectivity were the best means of avoiding paying attorneys to argue the matter later.
In the end, the engineering team told the owner they, “went to in-house experts for a fresh perspective” and, eventually, although not exactly pleased, the owner approved the general contractor’s change order and the engineer’s relationship with the owner recovered relatively quickly. Lawyers were not involved.
In a situation like Example 1, some owners may take the position that the consulting engineer, architect, or geologist should pay the contractor’s change order. In such situations, the “betterment” or “added benefit” defense is relevant.
Example 2: Several years ago, a consulting engineer’s project team asked an in-house advisor to evaluate entitlement in a contractor’s sizable claim seeking an amount equal to 10 percent of the contract price. The contract included EJCDC C-700—2007, Standard General Conditions of the Construction Contract.
When the engineer initially discussed the contract’s claims procedure with the owner’s relevant department head, the owner became incensed upon learning the engineer would endeavor to impartially determine entitlement. The owner asked, “You [the engineer] would sit in judgment of my position rather than supporting me to get what I want in this claim? After all, I pay your invoices!” The consultant’s engineering team was understandably alarmed at the owner’s words and tone, later urging its in-house advisor to, “see things more like our client wants,” and expressing concern about their near-term business prospects with the owner.
The advisor asserted the engineer was obligated to be impartial, citing the state’s professional engineering laws and regulations, which expressly required licensed professional engineers to “be truthful and objective in all matters.” The advisor contended it would be unethical—and possibly a violation of the state’s engineering regulations—and contrary to the owner’s longer-term interests, if the engineer was partisan in evaluating the claim. In oral discussions, the contractor had made it clear a substantive denial of its claim would result in litigation.
The consulting engineer’s advisor stated to the engineering team, “We might as well do the right thing by objectively determining the contractual entitlement, before lawyers and expert witnesses have to be hired so that the local civil court can objectively decide the case.” As in Example 1, above, the advisor suggested it was better to give the owner “bad news” earlier rather than lead them to an expensive battle in which they might lose.
The owner consulted with its own in-house legal counsel, who advised that the engineer’s objective determination of entitlement was in the owner’s best interest, which is how the engineer proceeded. Eventually, although the contractor was somewhat displeased with the engineer’s decision on the claim (due to insufficient documentation of claimed costs), they did not litigate and the parties eventually settled. Citing the state’s engineering ethics regulations was likely a key step toward the amicable settlement. A total denial, as the owner’s department head demanded, would likely have led to legal fees, an expensive discovery process, depositions, court testimony, expert witness fees, and an uncertain outcome.
Most US states’ laws and regulations governing the design professions—architecture, engineering, geology, and others—have mandatory codes of ethics that require design professionals to be truthful and objective. Being charged and convicted of violating such requirements can be very serious. Similar codes of conduct exist for members of many leading non-profit organizations representing design professionals, including the American Institute of Architects, National Society of Professional Engineers, American Council of Engineering Companies, International Association for Promoting Geoethics, and others.
Furthermore, starting with its 2013 edition, EJCDC C-700 explicitly requires the Engineer to impartially interpret the construction contract. Similarly, since 1997, AIA A201, Standard General Conditions of the Contract for Construction, requires the Architect to impartially interpret the contract and, since 2007, A201 requires the Initial Decision Maker to show impartiality in rendering decisions on claims. Supporting these, both AIA B101—2017, Standard Form of Agreement between Owner and Architect, and EJCDC E-500—2020, Agreement between Owner and Engineer for Professional Services, expressly obligate the design professional to impartially interpret construction contracts.
Thus, as tempting as it may be for the design professional to act in a partisan manner favoring the entity that pays its invoices, honesty, objectivity, and ethics are not only the best approach, but are also likely professional obligations, regardless of whether the construction contract or professional services agreement expressly requires impartiality.
Copyright 2020 by Kevin O’Beirne
The content of this blog post is by the author alone and should not be attributed to any other individual or entity.
Kevin O’Beirne, PE, FCSI, CCS, CCCA is a professional engineer licensed in NY and PA with over 30 years of experience designing and constructing water and wastewater infrastructure for public and private clients. He is the engineering specifications manager for a global engineering and architecture design firm. He is a member of various CSI national committees and is the certification chair of CSI’s Buffalo-Western New York Chapter. He is an ACEC voting delegate in the Engineers Joint Contract Documents Committee (EJCDC) and lives and works in the Buffalo NY area. Kevin O’Beirne’s LinkedIn page.