How To Handle Jobs In Progress When Closing Business 2

[Deker]

I’ve been self employed for the last six years but am closing the business to pursue a new opportunity. I’m looking for guidance on how to handle the following scenarios.

1. Drawings have been permitted, but construction has not started. Am I required to remain involved for construction administration? Or can another engineer take on that responsibility while I remain EOR?

2. Drawings have been completed but are currently being reviewed by the AHJ. I don’t expect to receive plan check comments until after my current insurance policy expires and the business has closed . It is possible that the plan check comments would require some minor revisions to the drawings. My insurance broker has told me that tail insurance only covers work that has ready been done, so no new work or revisions. Are my only options to (1) renew my insurance until I can get these jobs permitted, or (2) find another EOR to assume responsibility for the drawings and let them handle the plan check response and revisions?

I’d also appreciate any other advice related to wrapping up or transitioning jobs in progress while closing down a business. Thank you!

 

[JAE]

1. Drawings have been permitted, but construction has not started. Am I required to remain involved for construction administration? Or can another engineer take on that responsibility while I remain EOR? That depends upon what your contractual requirements are for each project. If you have scope of services that still require construction observations, submittal reviews, responses to requests for information, and maybe on-site visits to deal with unforseen issues - then you still need to provide those services. Another engineer could be contracted to step in for you but I would suggest your clients would want to approve that beforehand.

2. Drawings have been completed but are currently being reviewed by the AHJ. I don’t expect to receive plan check comments until after my current insurance policy expires and the business has closed . It is possible that the plan check comments would require some minor revisions to the drawings. My insurance broker has told me that tail insurance only covers work that has ready been done, so no new work or revisions. Are my only options to (1) renew my insurance until I can get these jobs permitted, or (2) find another EOR to assume responsibility for the drawings and let them handle the plan check response and revisions? Check back with your insurance broker on "work that has already been done" as it may be referring to new projects - not small revisions to completed projects - an important distinction. I don't think you can "find another EOR". You are the EOR since the work was accomplished by you / under your direct supervision. a new engineer can be brought in to take your place as EOR only if they fully review and possibly re-calculate everything in the project and then publish the design with their stamp. Simply transferring EOR status isn't really a simply transfer of a title.

 

[skeletron]

From my side of the border...

1. Yes, you would need to stay on for CA. There are ways around these such as:
(A) delegating another engineer to do all the CA and directly supervise them, but you would still be signing off on the letters of assurance at the end of the project; or,
(B) doing an official change of professional. You would need to submit a letter to the AHJ withdrawing your services and letter of assurance, and notifying the AHJ who the incoming professional is. The incoming professional would submit a new letter of assurance to take over. The intent is that there is "continuity of information" between professionals on the project (i.e. there is a zero-day gap between when the old professional left and the new professional jumped in).

2. I've been on the receiving end of this one. I believe those are your only options. As JAE mentions, bringing in another EOR is not as simple as transferring the status/title. My experience was the exiting EOR and I had a meeting. He passed on all design notes, correspondence, drawing files, etc. I performed a full review on the design, re-calculated as necessary. Then I took the drawings and plopped them onto my titleblock. I adjusted notes and other necessary design specs based on my review. By this time the EOR was able to leave the project and go to work for someone else. The exiting EOR negotiated a deal with the client (each party paid 50% of my fee). I proceeded like a normal project by submitting a new drawing set and letter of assurance.

 

[Ron247]

Consider how many projects you are talking and more importantly, what are the total fees involved. How prudent continuing the insurance would be is related to these numbers.

 

[Deker]

Thank you all very much for your input. Understood regarding the steps required to bring another engineer in and assume responsibility.

I'll need to check on exactly what the tail insurance covers. My policy refers to this as an "Extended Reporting Period" and uses the language below. It's item 2a that seems to imply that no drawings revisions are covered within the tail period. Perhaps this isn't such a big deal and it's only the minor revisions themselves that aren't covered, as opposed to those revisions voiding the coverage for the entire project.

VII. EXTENDED CLAIMS REPORTING PERIOD

A. Optional Extended Claims Reporting Period

1. If this policy is canceled or nonrenewed, you may purchase an Extended Claims Reporting Period
Endorsement. This endorsement to the policy, when issued, extends the period of time during which the
Insured may report claims to us.

2. The Extended Claims Reporting Period Endorsement applies to claims:

a. arising out of wrongful acts first committed or pollution incidents which first took place on or after the
retroactive date and prior to the end of the policy period; and

b. which are first made against the Insured and reported to us in writing during this extended reporting
period.

 

[JAE]

In 2a isn't the policy period that of the extended policy? Seems OK to me.

 

[Deker]

"Policy period" is bolded and defined earlier in the policy as the current one-year term, so I don't think so.

 

[human909]

I think the comments above are more relevant advice to your justification than my comments. But I'll contribute anyway.

• It is hard to go cold turkey. Jobs from 6-12 month (or longer) ago may continue to rear their heads.
• Depending on your the relevant laws in your jurisdiction you may be obliged to provide further input or just tell the client that you are no longer offering services.
• To a certain extent you trailing support for past projects is likely up to your own ethical obligations or contract with your past clients.

While I'm not a lawyer nor have any knowledge regarding the laws in your jurisdiction. I would think that in many cases you are free to leave clients to dangle in the wind once you have fulfilled the initial contractual obligations.

My context for saying this is my own observations watching mentor engineer enter retirement. An my own experience with how even small jobs rear their heads 12months later, (that happened yesterday).

From my perspective that isn't a terrible thing. I'm not at all close to retirement but when I get to that point I doubt I'll be in a hurry to go cold turkey and cease all work.

 

[Deker]

@human909 Agree that ethical and contractual obligations are huge considerations. I want to do right by my clients and make the transition as seamless as possible for them, but I’m also curious as to what exactly my legal obligations are. For example, if I include Construction Administration as 10% of the fee in my contract, but I haven’t yet billed that amount because construction hasn’t started, am I legally obligated to provide those services or can I terminate the contract?

 

[human909]

@human909 Agree that ethical and contractual obligations are huge considerations. I want to do right by my clients and make the transition as seamless as possible for them, but I’m also curious as to what exactly my legal obligations are. For example, if I include Construction Administration as 10% of the fee in my contract, but I haven’t yet billed that amount because construction hasn’t started, am I legally obligated to provide those services or can I terminate the contract?

I am not a lawyer, nor aware of the obligations in YOUR jurisdiction. But given you haven't charged for the services I would suggest you have no legal obligation to complete those services. Though you should review your written contract (if it exists) and also speak to a lawyer if it is appropriate.

Personally from a legal perceptive I'd say screw it. Your client's case is likely tenuous and not worth chasing by them. From an ethical perspective my response is different. Do what you think is right by your clients and yourself. If your are burnt out and need to shut down then do so, screw the others look after yourself.

On the flipside also do what you think is "right". Last night I spent almost an hour on a project that I finished 1 year ago. No additional charge and not a recurring client. So if I wanted to maximise my revenue I could have charged. But my own personal ethics said it wasn't fair or worth the time sending out another invoice.

 

[human909]

Oh and one other idea......

Try to hand off the responsibility to somebody else. The benefit to you is you can forget about the issues. The benefit to the "somebody else" is a few extra fees and potentially a bunch of extra clients. WIN-WIN. (Assuming you know somebody suitable to pass that responsibility to.)