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Awareness of Professional Liability Claims

Posted By Graeme Lloyd FSAIMechE, Friday, 13 April 2018
Updated: Friday, 13 April 2018

All registered Mechanical Engineers in private practice should be aware of the possibility of having to  defend themselves from claims arising from any alleged failure to perform an expressed or implied obligation.

Engineers should also be aware that claims involving non-compliance or errors of judgment under statutes like the Occupational Health and Safety Act already incur criminal liability. The Engineering Council (ECSA) is also mandated to have rules for inquiry into complaints by any member of the public into an allegation of unprofessional, improper or negligent conduct by registered engineers.

The ECSA Professional Engineer registration process is based on a benchmarking peer review system with the key criteria being that, in the public’s eye, the Pr Eng. certification must always be considered a top quality assurance performance standard. Engineers must always demonstrate that they are working in accordance with recognised good practice. Most Professional Service Agreements provide a useful guideline against which to measure the required performance standard of competence. The following is a commonly used definition of Good Industry Practice.

“The standards, practices, methods and procedures conforming to applicable Law, and exercising that degree of skill, care, diligence, prudence and foresight that would reasonably and ordinarily be  expected from a skilled and experienced person engaged in a similar type of undertaking under similar circumstances.”

Similar circumstances
Engineers must accept that they will be liable if they do not exercise a certain standard of reasonable skill but how should this be correctly evaluated? A person’s skill is derived from the appropriate ability, aptitude, knowledge and experience of that particular individual.

An Engineer would be judged as negligent if he or she genuinely overlooked or did not foresee the possibility of consequential harm occurring, but this same possibility would be apparent to another reasonably competent engineer in similar circumstances.

Registered Professional Engineers are fully expected to show a higher duty of care and may be regarded as grossly negligent if they undertook certain work knowing full well that they did not have the necessary special skills.

The legally accepted standard or yardstick by which professional liability will be allocated is the ordinary average and not the highest level of competence or standard of care expected of members of his profession working in the same field. Engineers should be cautious about accepting that they should provide the highest professional standard of performance.

No professional is always expected to be 100% perfect. Doctors, Lawyers and Accountants are highly unlikely to provide a guarantee to clients that they will always correctly solve every problem they are confronted with. 

On the dotted line
Engineers are advised to avoid signing an onerous agreement that demands that their services will be provided with whatever skill, care and diligence is required so that the final design will be fit for the purpose intended. This can possibly result in a liability claim because the client believes the obligation to achieve his or her understanding of a fit for purpose result was not fully achieved.

Engineers should carefully check if their Professional Indemnity (PI) insurance cover provides for this open ended fit for purpose result. Certain voluntarily or additional contractually assumed liabilities may actually be excluded in their PI insurance cover. The insurer must always know precisely the nature of the particular risk they are covering.

Today’s Engineers operate in a more competitive and higher risk environment and should explain to clients that if they insist on pushing for inexpensive commercial solutions, they cannot also then demand incompatible standards of durability as well as low maintenance expectations.

By Graeme Lloyd FSAIMechE
SAIMechE Central Branch Treasurer

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Michele Rivarola says...
Posted Tuesday, 17 April 2018
Please note that under normal circumstances there is no PI insurance cover for the engineer when he/she accepts an appointment where the design has to be "fit for purpose". Most if not all insurance companies will be very reluctant to provide policy extensions as liability under such appointments cannot be determined.
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