ODOTODOTErrors & OmissionsErrors & Omissions

PolicyPolicy

ODOT/ACEC Conference PresentationODOT/ACEC Conference PresentationApril 17, 2007April 17, 2007

Cathy Nelson, ODOT Cathy Nelson, ODOT

AGENDAAGENDA

• Recap - Professional Engineering Accountability

• E&O Policy– Purpose– Key Elements

• Next Steps– Policy Review– Implementation

What is Professional Engineering What is Professional Engineering Accountability? Accountability?

• Being accountable to the engineering profession’s laws and standards

• Adhering to OSBEELS• Being technically competent• Adhering to the “Standard of Care”

• Applies to ODOT and Consultants to the same degree, but different consequences

Professional Engineering Professional Engineering AccountabilityAccountability -- --

ODOT’s Programmatic ApproachODOT’s Programmatic Approach

• Engineering Policies & Procedures• Training• Deviation Policy• Design Quality Program• Consequences for failure to comply

Performance Accountability Performance Accountability Consequences…Consequences…

Regulator ODOT StaffEngineers

Private SectorConsultants

OSBEELS Individual Engineer Accountable to OregonProfessional Practice Law

Revoke license & assess civil penaltiesOwnerODOT

Individual Engineer -Performance Mgmt.

Discipline

Individual Firm – Errors & Omissions

Cost RecoveryPublic Individual Engineer &

ODOT covered byOregon Tort Claims Act

Firm covered by General& Professional LiabilityInsurance

Draft E&O PolicyDraft E&O Policy

Applies To:

• ODOT A&E contracts

• ODOT Construction Contracts– Using Consultant prepared construction

plans and specifications– Consultant Construction Engineering and

Inspection– Consultant Contract Administration

Policy PurposePolicy Purpose

• Contract Procedures to identify, evaluate and resolve E&O issues

• Create shared understandingbetween ODOT & Consultants regarding Standard of Care

• Focus on resolving issues collaboratively/quickly -- 1stidentifying cost responsibility -- 2nd

Key Policy ElementsKey Policy Elements

Contract Language Requirements

• Indemnity• Insurance• Standard of Care• E&O Claims Process

Standard of Care DefinitionStandard of Care Definition

“The Consultant shall perform all Services in accordance with the degree of skill and care ordinarily used by competent practioners of the same professional discipline under similar circumstances, taking into consideration the contemporary state of the practice and the project conditions”

• Shared Understanding and Delivery of Appropriate Standard of Care

– Technical Competency– Appropriate care and professional judgement– Industry Standard of Practice– Site conditions

Negligent Perfect

E&O Claims Process -- GoalsE&O Claims Process -- Goals• Identify E&O issues early

• Timely Consultant notification of issues

• Work together to correct, mitigate or minimize effects

• Identify costs incurred when Standard of Care not met and provide resolution of cost responsibility

Claims Process -- Key Claims Process -- Key ElementsElements• Work issues at project level

– raise issues early– work collaboratively– track costs

• Escalate when necessary

Escalation ProcessEscalation Process

• ODOT CA requests Standard of Care Determination from Chief Engineer– Option 1 -- CE decides

– Option 2 -- CE appoints TI

– Option 3 -- CE appoints TI to chair TRC• 3 Technical Experts

Escalation ProcessEscalation Process

• If Standard of Care met --– All work together to resolve issues and

ODOT covers cost

• If Standard of Care not met --– ODOT pursues Cost Evaluation and

Recovery

Premium CostsPremium Costs

Additional costs incurred by ODOT and/or Construction project due to not meeting Standard of Care

• Cost of non-value added workDelays, inefficiencies, rework, extra work

• Not reimbursed by FHWA on federal-aid projects

Cost EvaluationCost Evaluation

Potential Mitigating Factors– Limitations on scope of services– Time constraints for service performance – Unforeseen or changed conditions– Third party requirements– Responsibility & comparative fault of

other parties– Other constraints….

Cost Recovery NegotiationsCost Recovery Negotiations

1) Negotiate at project level

2) Chief Engineer– negotiates resolution with Consultant– agrees with Consultant to share equally

the cost to present to a 3rd party neutral (non-binding)

– pursue other Alternate Dispute Resolution

– Escalate issue to litigation

Next StepsNext Steps

• Policy Review– Internal and External review– Comments due June 1st

• Implementation– Inclusion in future A&E Contracts– Discussion and training on policy purpose

and usage

• Monitoring