Author: Bill Weltzer, Process Plus Construction Manager
October 14, 2013

A common phrase people use is “Pay me now or pay me later”; this is true when it comes to the value of keeping accurate construction documents for a facility and employing insured design professionals.

The years of large corporations housing their own internal engineering staffs are for the part long gone. Independent engineering companies are not only more efficient at producing quality designs at a quick turnaround, they also provide for the shift of design liability from the owner to themselves. Many facilities are operating in what I call a “Point and Pay” strategy with contractors. This approach deals with one question: “How much is it going to cost to do this?” I’ve seen this in action and believe it’s synonymous with the concept of one step forward, two steps back on so many levels. A few of which are:

Over paying for work
Greater assumed liability to the Owner
Conflict of interest (absence of unbiased 3rd party)
Lack of legal recourse on low quality work and injuries associated with failures
No retention of Record or ‘as-built’ drawings
Lack of standardization throughout the facility
Sub quality installations
There is a potentially high level of liability that is assumed when companies do not have drawings stamped by a professional engineer or architect, and/or up-to-date drawings of their facilities. I am amazed at how many large multi-national companies do not realize this risk. I once heard a contractor say “There is money in ambiguity and vagueness” The funny thing is, they are 100% correct. I would venture to guess that the lion’s share of that money goes to contractors and is a result of change orders associated with the lack of accurate and up-to-date documentation in a facility. They also say, “The devil is in the details,” but this is no truer than in cases like this. The reduction of capital project costs lies firmly in a facility’s ability to know what they have right now!

The sins of the past come back to haunt facility project managers and engineers at the start of a new project. For example, the cost to re-route underground lines and structures can be extremely taxing on one’s contingency fund and project schedule. Does anyone track the costs that are incurred due to these avoidable situations? The answer is generally no, but I’m guessing any potential future investor would be interested in knowing how that will reduce their dividend.

The objective of anyone writing a scope of work should be to effectively communicate a project’s design and operational intent and outcome. Secondly, it should minimize the potential for “extras” and provide for a safe and successful project.

If insurance companies were to audit the level of risk their clients are taking on at a plant level by not employing insured design professionals, they might reassess their current rates.

Until Owners bring site documentation up-to-date and employ fully insured design professionals there will be no “Pay me now” to the investors who expect results. If it has not been the company’s practice to do this, it may take a culture shift to change this behavior. Taking this approach will not necessarily result in immediate savings or returns; however, long-term both are typically realized.