Three Ways to Limit Your Liability
There are many approaches to allocating risk. Limiting the engineer's liability to the owner is one of the most commonly used tools of risk management. Here are three common versions - the amount of liability is limited to the amount of the engineer's compensation, to the amount of available insurance proceeds or to a specified dollar amount. Other approaches could eliminate claims for consequential damages (those damages which arise not from the immediate act of the party, but in consequence of such act) or address where the loss was caused only partly by the engineer. It is important to establish with the owner at the outset that these techniques and approaches are commonly negotiated in the industry so as not to give them the impression you are asking for something unreasonable.

Drawings and Specifications Prepared by the Engineer are Your Own
These are considered instruments of service rather than products. Your ownership should remain paramount. Your contract should make it clear that the contractor does not acquire any ownership interest in drawings and specifications prepared by the engineer even after the project has been completed. They may not be used by any contractor subcontractor or supplier without the consent of the engineer. The owner has a legitimate interest in them having paid for them and can use them for his own purposes as long as their reuse does not expose the engineer to liability. The owner should be required to indemnify the engineer against any loss he might suffer from problems involving reuse.

You are Not a Party to the Contract between Owner and Contractor
But your duties and responsibilities are probably listed in it as the owner's representative and you should be familiar with what is there. That contract may spell out in more detail your responsibilities even more so than your own contract with the owner. If you start to perform your services in the construction phase, the law may treat you as having agreed to what is listed there. It is important there is no conflict between what the engineer's responsibilities are in the owner/engineer agreement and what may be in the owner/contractor agreement.

Liability into Infinity
You don't have to accept this. While there is little you can do about third party claims, you can negotiate with your client to set a period of time in which a claim can be made and when that period begins. This is all subject to state law which prevails if in conflict with contract language.

"I Could Have Made that Mistake"
A Risk Management seminar being held in St. Louis, MO, May 17, 2006. The Structural Engineering Institute invites you to attend a pre-congress workshop on Risk Management being held prior to the 2006 Structures Congress. The workshop will describe the nature of malpractice claims, present examples, and assess the impact Performance-Based Design will have on the engineer's exposure to such claims. The cost for attendance is $95. Attendees will be awarded 4 PDHs. Visit www.SEInstitute.org and click on the 2006 Structures Congress logo for more information or to register for the workshop.

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