Schinnerer's RM Blog - scopeofservices tag

Do not define government rules and regulations as contract documents

Tue, 08 Nov 2011 14:42:00 GMT

Professional services agreements often incorporate terms from other documents by reference. In a recent client-drafted contract review we came across the following clause:

The Contract Documents consist of and include:
a) This ten (10) page Agreement.
b) All Exhibits referenced within or attached to this Agreement. c) All approved Change Orders.
d) All applicable governmental and agency ordinances, standards, policies, regulations, resolutions, conditional approvals, rules and permit conditions, whether or not specifically named as part of the Contract Documents.

The terms that are most often incorporated are the terms that matter the most.

Design professionals should be wary of any clause that seeks to make all government rules and regulations that are deemed applicable part of the contract documents. By definition, a professional services agreement is intended to describe the role and responsibilities of the parties to a contract; incorporating government rules and regulations into the contract documents provides no meaningful guide to either the client or the design professional and in our opinion such a clause should be deleted. It is difficult for the design professional to ascertain what the inclusion of the applicable government rules and regulations means. The prudent thing to do from a risk management perspective is to identify the specific government rules and regulations that pertain to the project, and then write the scope of services so that the impact of the applicable rules and regulations are accounted for. This approach reduces the contract terms between the client and the design professional to a limited universe of documents that explain the roles and responsibilities of the parties.

Right to rely on information provided by your client

Tue, 22 Feb 2011 19:59:00 GMT

The standard AIA and EJCDC form documents state that the client will provide surveys and other information to the consultants and that the consultants are entitled to rely on the accuracy of such information. This allows you to describe the scope of services you are providing correctly since you are referencing information on which you are entitled to rely. Client-drafted contracts, however, may change the responsibilities. Recently, we came across the following clause in a contract review:

Client shall furnish surveys describing physical characteristics, legal limitations and utility locations for the site of the Project. However, the Consultant remains fully responsible for verifying the accuracy of this information.

If you agree to this provision, it means that you have taken on the responsibility of verifying the accuracy of the information provided. Depending on the project and the information provided you have to decide whether this is a reasonable responsibility to assume under the circumstances. From a risk management perspective, it is prudent to examine your scope of services and increase the fees you are charging for the increased risks if the client is unwilling to provide you with a right to rely on the information provided.

Engineer's Contractual Duty

Mon, 07 Feb 2011 14:09:00 GMT

On January 21, 2011, the Illinois Supreme Court ruled in Thompson v. Gordon that a design professional’s duty is described by the terms of the contract and cannot be expanded based on expert testimony offered by an opposing party. The engineering firm in this case had been hired to design the replacement of an existing bridge deck. Approximately six years after construction was completed, the plaintiff was injured when another driver lost control of the car, hit the median separating traffic, and landed on the car the plaintiff was traveling in. The plaintiff’s expert testified that the replacement of an existing bridge deck required the engineering firm to consider adding a Jersey barrier in the median to improve the bridge deck. The court held that as a matter of law the engineering firm’s duty to a third party is described by the contract and cannot be expanded by plaintiff’s expert testimony.

This decision is an important victory for design professionals. It is critical that design firms take the time to properly define their scope of services in clear and unambiguous terms so that a third party (like a judge) can determine the parties’ intent. As this case shows, it is important that design firms have the scope of services included in the contract before services begin.

The recent opinion can be found at http://www.state.il.us/court/Opinions/SupremeCourt/2011/January/110066.pdf.