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Claims corner: as schools open, design professionals fear claims will too

schools-claims-by-state-blog3

This chart shows the five worst states for claims stemming from school and college projects, according to Schinnerer and CNA claims stats.

Students are returning to school. Teachers are preparing curricula; Parents are breathing a sigh of relief. And design professionals are concerned that a school they designed could result in a claim. Should these design professionals be worried? Except for residential projects, schools & colleges generate the most claims (frequency) and the most expensive claims (severity) against design professionals, particularly in the five states shown in the chart to the left.

School projects create unique issues for design professionals as they typically involve an elected school board rather than an individual as the client. Board members often have diverse goals and expectations. School board membership may change during the course of the project and decisions reached with previous board members may be forgotten. Seeing a project through to completion can get tricky.

Funding issued through bonds rarely provides a cushion for unexpected expenditures. Project managers on school projects often rely on fast-tracking and value engineering to manage costs. Roofs and HVAC systems are typically the target of value engineering, and unsurprisingly, these problem areas often create claims on school projects.

Contractor selection on school projects is typically based on competitive bidding. This is one of the greatest risks for design professionals. The competitive bidding process motivates contractors to underbid projects. The pressure to recover some of what was left on the table during bidding often results in cutting corners, substitutions, or change orders. Claims for delays and extra costs, which are expensive and difficult to defend, are common. Prepare the owner for these possibilities during project bidding.

Lastly, several school districts around the country have developed their own professional services agreements that do not fairly allocate risks and responsibilities and often contain broad indemnifications, uninsurable warranties and guarantees, and expanded standards of care. All of these provisions raise a design professional’s exposure to liability.

What can design professionals do to manage the risks of school claims?

  • Document all decisions, recommendations, and agreements.
  • Have a contract that clearly defines the roles and responsibilities of all parties and details communication channels and procedures for handling change orders and disputes.
  • Avoid warranties and guarantees in professional services agreements. They can increase the standard of care and unreasonably raise clients’ expectations.
  • Be aware of the risks of the competitive bid process. Try to avoid ambiguity in the project documents and document the contractor’s activities. Make every effort to respond in a timely manner to all inquiries and submittals, and carefully document all communications.

Carefully identifying and analyzing the risks of each project can help design professionals chose those projects that are more likely to be successful and claims-free. The Schinnerer Risk Management Matrix can assist firms in calculating their risks for a particular project or client. Also, for examples of the types of claims that we’ve handled on school projects, please read “Educate Yourself on School Claims.”

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