Managing risk and contractual liability. Part 6: Dangerous projects and problem clientsStructural engineers were appointed for the design of a project involving rammed earth walls and three oors of timber-framed apartments over the front section of the building. The rammed earth walls were poorly constructed and did not match the specication. They had also been damaged by water ingress due to exceptional weather conditions. A steel frame was therefore inserted so that the earth walls were no longer load bearing. In spite of this, it was maintained by the employer that the walls were unsuitable from the outset.Under the main agreement between the employer and the tenants, disputes were to be resolved by expert determination. The nominated expert was critical of the design, specication and workmanship of the earth walls and determined that they would need to be demolished. The employer proceeded to replace the walls and sought recovery from the engineers, architects and the Case study 132 TheStructuralEngineerJune 2015Professional guidanceContractual liabilityIt can sometimes be easy, with the benet of hindsight, to recognise that some projects were always destined to turn sour. In these cases, the engineers exposure can lie simply in having been involved in the wrong job or in having worked for a certain type of client often one and the same thing.Reasonable skill and care is in theory an objective standard of performance, but in practice it is inherently circumstantial. As Case study1 shows, courts examine with the help of expert witnesses what other engineers would have done in the same circumstances because (crucially) what might constitute acceptable practice in one case may be inadequate in another. However, the reasonable skill and care test can often extend beyond merely an independent review of whether or not the design should have worked it can also involve looking at what the engineer ought to have anticipated in terms of the clients expectations or the extent to which the client was reliant on the engineers advice. Some claims against engineers result in substantial out-of-court settlements in circumstances where the cases against them might not have been particularly compelling on a purely clinical textbook-style analysis, but where there were other relevant factors at work, e.g. the risk of a claimant-friendly judge nding in favour of an apparently innocent householder who has been left out of pocket. In other cases a nding of negligence might have been inevitable (Case study 2), but it was the nature of the project rather than the extent of the engineers failure that led to unusually severe nancial consequences.In Case study 3 there would have been no early warning signs to the engineer to avoid The sixth part of our series from insurance broker Grifths & Armour focuses on problematic projects and clients.Part 6contracting team, all of whom appointed their own independent experts.Our clients expert produced a very favourable report concluding that we were in a strong position to defend any allegations of negligence. All of the defendants maintained that the walls had not needed to be demolished, but their experts reached inconsistent conclusions, creating the need for further expert input.Despite our initial condence, it became clear that with layer upon layer of experts opinions in the frame our own experts view risked making little impact on a judge. The only realistic outcome in court was an arbitrary apportionment of liability among all of the defendants, despite any judges best eforts at forensic analysis. As the threat of a trial drew ever closer and overall costs continued to escalate given the number of parties involved, a negotiated settlement grew ever more attractive.The direction that the wall should be demolished and replaced, issued at the original expert determination, was efectively binding on all parties. Despite all of the other experts disagreeing with his conclusion, the court would have taken the view that the developers were entitled to act in accordance with the original experts direction unless we could show that it was obviously unreasonable and incorrect. The solution adopted was far more expensive than other possible remedial schemes, but we would have been deprived of all usual lines of argument about the claimant not having mitigated his loss.LessonWe remain of the view, based on expert evidence, that in this case the engineer had done nothing wrong. But his hands were tied by being at the tail end of a dispute resolution process which was already advanced by the time he became involved.the project for any technical reasons but the relationship between the developer and the contractor should perhaps have prompted the consultant to stop and think.Finally, working for so-called lay clients always introduces its own complications. The term is used here in its broadest sense, certainly extending beyond householders and amateur property speculators. For example, some local authorities are well resourced with staf who are highly experienced in construction projects, but others appear to be wanting in this regard. The genuine desire to deliver high-quality projects to the taxpayer can give rise to ambitious proposals which a professional developer might have recognised as being unrealistic and which are then subject to variations. Attempts at recovery actions against the construction team can then be driven by political motives rather than by genuine and objective causes for redress (Case study 4).TSE42_32-33 H&S Legal risks v1.indd 32 21/05/2015 11:26www.thestructuralengineer.org33A rm of structural engineers was retained for the design of an iconic centre in a European capital. The architectural design was breathtakingly revolutionary but the engineers had to make it work. They solved problem after problem and the structure was successfully erected, opened by the President and universally acclaimed. Teething problems were unavoidable and led to a series of claims by the client against the designers, contractors and subcontractors. Further claims were made at the conclusion of the ten-year decennial liability period.The building is unique and the Case study 4Structural engineers were appointed on a 60M new- build mixed development. During construction of the superstructure it was noticed that the fth oor of one of the buildings was sagging after the concrete slab had been poured. It quickly became apparent that steel beams for that oor had been undersized and emergency propping was required. It was later decided that the incomplete building should be completely taken down and rebuilt to a revised structural plan. Damages amounted to 7.2M inclusive of delay costs, and our defence costs amounted to a further 475000.There were two key issues:(1) The engineer had originally been appointed by the developer but later novated to the contractor to complete the detailed design and construction stages. Case study 3A structural engineer was appointed for a major of ce development consisting of ve buildings at a business park. During nal checks serious problems were discovered with the structure, the steel frame being insuf cient to support the buildings glazing structure. The building would therefore have been susceptible to movement in an unpredictable way under wind loading, which would have caused the exterior glass panels to collide and shatter. Inadequate bracing in the central core and insuf cient strengthening to the connection between the roof and the core gave rise to such fundamental concerns over the structural integrity of the building that it was condemned as unsafe.The problem had arisen because the project engineer, notwithstanding his 15 years of experience, had been operating out of his depth and with inadequate supervision. Extensive remedial works were required and there was no defence to liability.LessonThis project was not so inherently dangerous that it was always going to be problematical, but this case shows what can happen when an engineer operates out of his depth. Here the employees managers should have recognised his limitations and at the very least ensured that thorough checks were undertaken by peer review or otherwise.Case study 2ConclusionSome of these cases highlight that while the likelihood of claims can be signicantly reduced by good risk management, there are circumstances in which the professional was simply unfortunate. That is not to say, however, that lessons cannot be learned. In some cases early warning signs were overlooked by an enthusiastic design team. Ideally, they should have been identied, discussed openly with the client and recorded in writing.This series has been adapted from Reinforcing the Simple Messages and Contractual Liability Claims: Lessons to be Learned, published by Grif ths & Armour.Grif ths & Armour is a leading independent and privately owned UK insurance broker and risk management adviser. For further information, scan the QR code or visit www.grifthsandarmour.com. Grif ths & Armour is authorised and regulated by the Financial Conduct Authority.However, both the contractor and the developer were part of the same group of companies. This adulterous contractual relationship had created a conict in the event of problems with the scope of work as dened by the employers requirements, or the scope of services expected of the engineer by the contractor, it was unlikely that the nancial consequences would be absorbed by either the contractor or the developer. This created additional, residual risks for our client which were not appreciated until after problems had arisen. The contract sum was subject to a guaranteed maximum price. This was reduced by negotiation between the employer and the contractor but all of the risks associated with that had largely, in efect, been dumped on the engineer.(2) The design faults arose largely out of the engineers failure to coordinate designs and drawings at the interfaces with various subcontractors while the guaranteed maximum price was being developed. At this critical point in the project the engineer failed to deploy adequate resources to meet the demands of the design process. Inadequate calculations were prepared in order to substantiate what appeared on the drawings.LessonUltimately this claim arose as a result of design errors by the consultant, but the project was always (with hindsight) going to be risky. It might be regarded as an exceptional situation but, issues of common ownership aside, how many developers and contractors enjoy relationships that are a little bit too close for the engineers comfort?structural engineers were uniquely placed to analyse each claim, whether or not they were a primary defendant in the various proceedings which were brought by the client (a government agency) in various courts.After a 14-year campaign no payment was made for any of the claims, but the structural engineers had to bear the cost and expense of years of work to achieve this result.LessonIn this case the consultant probably did nothing wrong but had to invest time and cost in defending a claim. The root cause was an employer who had taken on a project which was beyond both his means and understanding.ISTOCKTSE42_32-33 H&S Legal risks v1.indd 33 21/05/2015 11:26