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Re: Fees and Insurance for Structural Observations

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What you describe is an insurance policy for the client rather than a professional services agreement.  I t would be like going to a doctor and expecting him to insure that you will be in good health for the next ten years.  The builder expects to make 20% profit on these houses.  That is quite a bit more than your $700.00.  The risk should be at least proportional to the benefit.  However "professional services" is not a product .  It is a service provided to give the builder the benefit of your expertise based on specialized education and experience.  In addition to the code requirements it is a selling point to customers to indicate quality in his product.
Your contract should provide that the client hold you harmless against third party lawsuits concerning the quality of the product that he produces.  You should be responsible for honestly representing your qualifications and for making good faith observation visits and reports; and no more that that.
The engineers who say that this is too hard to do are the ones who are constantly complaining that they are abused by clients, architects, lawyers, etc.
Richard Hess, S.E.
----- Original Message -----
Sent: Saturday, July 10, 2004 12:47 PM
Subject: Fees and Insurance for Structural Observations



I have an opportunity to provide structural observation services for new residences and town homes for a national home builder. The scope of work would involve two site visits per dwelling. The first would be a foundation observation prior to placement of concrete. The second would be a framing observation prior to installation of insulation and drywall. A field report would be issued for each and followed up with a formal stamped site visit report. I have estimated the time requirements including travel and overhead, and have considered providing the Client with a twenty-five percent discount due to the anticipated volume of homes. Proposed foundation observation fee may be around three hundred dollars. Proposed framing observation fees may be around four hundred dollars. The fees must be a fixed cost per the Client. Anybody near South Carolina who could comment on proposed fees?


One potential problem is that the Client’s consulting agreement requires me to provide ten years of E & O coverage with one million dollars coverage beyond final payment for the observations. I estimate that there may be two years worth of observations. Therefore twelve years of E & O per contract. This contractual duration of time concerns me since I am a sole proprietor.


What are typical time requirements to contractually provide E & O coverage for structural observations? Same question but for structural design of the following: residential, commercial, industrial?


Since I am currently in digest mode, feel free to contact me directly.




Jonathan D. Smith, P.E., Owner

Summit Engineering & Inspection

236 Lorraine Drive

Travelers Rest, SC 29690


Phone: (864) 834-3385

Fax: (864) 834-3261


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