Errors and Omissions (E&O)by Professional Engineerson Department Contracts

Siddhartha Kamath, P.E.

LET’S FIRST DO A POLL.

• FDOT Design

• FDOT Construction

• Consultants• Design• CEI

• Others?

PREVIOUS DESIGN EXPO E&O SESSIONS*

• Did you attend a previous E&O Session?

• 2014

• 2015

• 2016

WHAT WILL BE PRESENTED

• E&O – What it is

• Why it is important

• Why FDOT seeks recovery

• Process from Discovery to Resolution

• Examples

• What FDOT has learned

Terms

• CCEI / EOR: Consultant (Construction/ Design)

• CPM / DPM: Project Manager (Construction/ Design)

• E&O: Errors and Omissions

• Premium Cost: Cost paid to contractor for non-value-added work

• E&O Premium Cost: Premium Cost fault of consultant

FDOT/CONSULTANT RELATIONSHIP

• FDOT expects a Design consultant (EOR) to produce complete and constructible plans for construction.

• DOT expects a CEI consultant to oversee construction activities in executing work shown in the plans produced by the EOR.• Expecting PERFECTION is unreasonable.• Consultant must be held accountable for errors.

SOME QUOTES

Will Rogers: “Good judgment comes from experience, and a lot of that comes from bad judgment.”

Ashleigh Brilliant: “It’s human to make mistakes and some of us are more human than others.”

Scenario

• Contractor discovers an existing condition not indicated in construction plans, notifies CCEI, and estimates cost to deal with condition will be $76,543.

• CCEI confirms contractor’s observation.

• FDOT approves a $76,543 Supplemental Agreement.

Scenario Questions*

• Question 1: Was there E&O

• Question 2: Was there Premium Cost?

• Question 3: Who should be held accountable?

Answer: It depends.

E&O – WHAT IT IS

Definition: Errors / Omissions by consultant in performing contractual services for the Department

• EOR Design Consultant

• CCEI Construction Engineering and Inspection Consultant

E&O – WHY FDOT SEEKS RECOVERY*

• Statutory Requirement – 337.015(3), F.S.

To protect the public interest, the department shall vigorously pursue claims against contractors and consultants for time overruns and substandard work products.

• The FDOT must hold consultants accountable for Avoidable E&O.

PROCESS – DISCOVERY TO RESOLUTION

• Discovery – by Construction (contractor/CCEI)

• Premium Cost – Construction determines

• E&O – FDOT determines

• E&O Premium Cost (< Premium Cost) – FDOT assesses

• E&O Recovery (< E&O Premium Cost) – Negotiation

• E&O recovery from consultant• Payment• Service In Kind (infrequent)• Combination

PROCESS – Design E&O

• Discovery – by Construction (contractor/CCEI)

• Premium Cost – Construction determines

• E&O – FDOT Design determines

• E&O Premium Cost (< Premium Cost) – FDOT Design

• E&O Recovery (< E&O Premium Cost) – Negotiation with EOR

• E&O recovery from consultant• Payment• Service In Kind (infrequent)• Combination

PROCESS – CCEI E&O

• Discovery – by FDOT Construction

• Premium Cost – Construction determines

• E&O – FDOT Construction determines

• E&O Premium Cost (< Premium Cost) – FDOT Construction

• E&O Recovery (< E&O Premium Cost) – Negotiation with CCEI

• E&O recovery from consultant• Payment• Service In Kind (infrequent)• Combination

Statute of Limitations

Negligence – 4 years

• Begins from issue discovery

• Department Legal – involve as soon as possible

Discovery

• Clock begins ticking upon issue Discovery – when issue is discovered.

EOR E&O: Department’s reviews of EOR’s submittals is not an obligation, but a practice adopted to identify fatal flaws, contractual violations, etc.

• EOR bears ultimate responsibility for accuracy, quality, constructability, etc.

• CCEI E&O: CCEI bears responsibility for fulfilling contractual obligations while overseeing construction.

Premium Cost*

• Definition: Cost paid to contractor for non-value added work

• Categories (CPAM2):• Work Delays or Inefficiencies• Rework• Extra Work

2 CPAM Construction Projects Administration Manual

EOR E&O – EXAMPLE 1 (DELAY)

Situation: A field conflict was identified with the proposed storm sewer between structures S-180 and S-183 (Sta. 779+18 to 784+20 RT) and the existing overhead electric line poles.

EOR E&O – EXAMPLE 1 (DELAY)

Analysis: EOR did not identify this conflict and showed existing to remain.

EOR E&O – EXAMPLE 1 (DELAY)*

Decision: Most efficient course of action was for utility to relocate their pole line, 85 compensable days.

Total cost of SA, due to delay: $789,000

EOR E&O – EXAMPLE 2 (REWORK)

Situation: Due to plan error, incorrect offsets were provided in the plans, resulting in a 14% commercial driveway slope.

EOR E&O – EXAMPLE 2 (REWORK)*

Analysis: Additional work is necessary in order to reconstruct the driveway to comply with the maximum 10% slope required at commercial driveways.

Total cost of WO, due to rework: $4,445

EOR E&O – EXAMPLE 3 (EXTRA WORK)Situation: In Revision 7, EOP elevation at S-128 was changed. Drainage riser for S-128 had been cast and not placed. S-128 inlet had to be lowered to meet revised elevation which changed from 17.01’ to 16.6’.

RFI 46 noted that the EOP grades on each side of S-128 did not correlate, and requested a resolution to the grade differences.

EOR E&O – EXAMPLE 3 (EXTRA WORK)*Analysis: EOR’s response revised EOP grades, necessitating the change.

Total cost of WO, due to extra work: $1,493

CCEI E&O – EXAMPLE 1 (DELAY)

Situation: Phasing or plan components were not constructible as shown in plans.

CCEI E&O – EXAMPLE 1 (DELAY)

Analysis: Compensable time ($ 37,347)

Premium cost due to delay: $37,347

CCEI E&O – EXAMPLE 1 (REWORK)

Situation: A field conflict was identified which involved avoidable rework.

CCEI E&O – EXAMPLE 1 (REWORK)

Analysis: Inaccurate directions were given to contractor by CCEI during construction.

Premium cost due to rework: $23,000

CCEI E&O – EXAMPLE 1 (EXTRA WORK)

Situation: Avoidable Extra Work resulting from CCEI directions to contractor.

CCEI E&O – EXAMPLE 1 (EXTRA WORK)

Analysis: Inaccurate directions were given to contractor by CCEI during construction.

Premium cost due to extra work: $173,996

E&O Premium Cost (Fault)*

Premium Cost / Consultant E&O

• EOR E&O – DPM’s call

• CCEI E&O – CPM’s call

WHAT FDOT HAS LEARNED

• Notification / Timeliness

• Resolution Tracking Data

• Resolving Issues – Benefit/Cost Analysis

Notification / Timeliness*

• Premium Cost / Consultant E&O

• Communication – essential

• EOR E&O• CCEI > CPM > DPM > EOR• Untimeliness / CCEI liability

• CCEI E&O: CPM > CCEI

RESOLUTION TRACKING DATA – EOR*

• E&O records (5/01/17): 958

• Largest Issue Premium Cost: $4,500,000

• Recovered amounts: Majority < $50,000, many $0

• Issues exceeding $50,000 Premium Cost: 68

• Issues settlement time: varies from days to years

EOR – RESOLVED ISSUES*

$0

$83,509

EOR – RESOLVING UNDEBATABLE ISSUES

• Immediately commence action to recover E&O Premium Cost

• Postpone action• Potential to combine with additional pursuable E&O

issues on same project.

EOR – RESOLVING DEBATABLE ISSUES

• Benefit/Cost (B/C) Analysis• Eliminate arbitrary thresholds across districts• Consistent approach, to be used by all districts

• Recovery Decision• B/C < 1: Drop action OR Delay action• B/C > 1: Commence action OR Delay action

Re: OIG Audit

RECAP – WHAT WAS PRESENTED

• E&O – What it is

• Why it is important

• Why FDOT seeks recovery

• Process from Discovery to Resolution

• Examples

• What FDOT has learned

QUESTIONS?

Siddhartha Kamath, P.E.

FDOT, Production Support Office

Tel.: (850) 414-4343

Email: Siddhartha.kamath@dot.state.fl.us