GEOSTRATA, 2017, July/August
CLAIMS AGAINST GEOTECHNICAL ENGINEERS
GETTING IT RIGHT IN THE MIDST OF UNCERTAINTY
By Patrick C. Lucia, PhD, PE, GE, M.ASCE, Lisa Yabusaki, Jason T. DeJong, PhD, A.M.ASCE, and David L. J. Coduto
Geotechnical engineering is one of engineering’s riskiest professions, prone to litigation due to the inherent uncertainty associated with characterizing the subsurface. Site investigations rarely provide a complete picture of the subsurface conditions at a project site, and require interpretation of the investigation and laboratory test results and the application of the engineer’s judgment before the results can be used for design. When the subsurface conditions and/ or soil engineering properties differ from those expected during design, delays and/or changes can occur during or after construction and result in a financial loss claim filed against the engineer.
By the late 1960s, the risks associated with foundation engineering were deemed so great that the insurance industry canceled all professional liability insurance policies for geotechnical engineers. Facing the prospect of practicing their profession without insurance coverage, a small group of geotechnical firms decided to join together to self-insure. This led to the formation of Terra Insurance, a company wholly owned by engineering companies, with the mission of primarily insuring the professional liability exposure of its participating geotechnical engineering firms.
Terra Insurance Company, RRG (Terra) succeeded the original company. Formed in 1988, it has been compiling claims history for nearly 30 years. The study described in this article is based on data from that claims history. Over the 25-year period from 1988 to 2013, Terra paid out nearly $125M from 897 claims, resulting in financial loss and payout by the insured and Terra. This cost of claims, out of the 1,500 total claims emanating from the select group of engineering companies insured by a single carrier, illustrates the enormous cost associated with claims in the geotechnical industry. Moreover, the data demonstrate the need for improvement in understanding the factors leading to claims so that the insured firms can improve their risk management practices to help reduce their exposure to professional liability claims.
Terra’s data on claims include information regarding client type, claimant, allegations, causes, manifestations of cause, primary services provided, and project owner type. The database was originally created by Terra, with help from the Geoprofessional Business Association (GBA, formerly the Association of Soil and Foundation Engineers [ASFE]), with the intention of tracking and identifying the major causes of professional liability claims. It should be noted that the firms in this study are a small subset of the number of all geotechnical firms and therefore are not representative of all firms providing geotechnical services. The data will be reflective of practice performed by firms with similar “best practices” risk management.
Often, a claim arises out of an assertion that the engineer has failed his or her legal obligation to meet the Standard of Care (SOC). So what is the SOC? Many agreements for geotechnical and geoenvironmental services include a provision that generally defines the SOC as that level of skill and competence ordinarily and contemporaneously demonstrated by professionals of the same discipline practicing in the same locale and faced with the same or similar facts and circumstances. The qualitative nature of this statement leaves the interpretation of the SOC subject to the opinions of experts.
When a design professional is accused of negligence, a trier of fact, such as a judge or jury, must determine whether or not the design professional breached the applicable SOC. Because the trier of fact must rely on experts to review and evaluate complex technical issues and explain their findings and opinions, experts should use reasonable inquiry of other practitioners to establish the applicable SOC. GBA’s publication, Recommended Practices for Design Professionals Engaged as Experts in the Resolution of Construction Industry Disputes, provides guidelines to help experts develop substantiated professional opinions that are unbiased by the adversarial nature of most dispute resolution proceedings.
Who Sues Geotechnical Engineers?
Geotechnical engineers typically provide services to project owners, such as commercial or residential developers or government agencies. Occasionally, they work as a subcontractor to other design professionals who prefer not to carry the liability of a geotechnical engineer through a contractual relationship.
When something goes wrong on a project, or is perceived to have gone wrong, all the parties associated with the project are typically named in the claim. The work of all professionals, except for the geotechnical engineer and the earthwork contractor, generally can be inspected. The geotechnical engineer and earthwork contractor face the added dilemma that a thorough inspection of their work after construction is complete could require destruction, or partial destruction, of the project, making allocation of liability complicated and at times subject to expert opinion. The qualitative nature of the SOC and the difficulties of evaluating the cause of earthwork-related problems often result in all parties financially contributing to the claim, although the responsibility may not be precisely known.
One question of interest is what’s the frequency of claims from different client types? The claims study reveals that developers are the most likely client type to successfully sue this sample of geoprofessional firms. As summarized in Table 1, 34.5 percent of all claims (309 out of 897) occurred when the geotechnical engineer’s client was a developer. These claims accounted for a total loss of $38.7M, with an average cost/claim of $125K. The next most frequent source of successful claims came from contractors: 11.0 percent of the total, with an average cost/claim of $133K. City and county governments were the third most frequent source of claims at 9.3 percent; however, the average cost was $238K/ claim or 90 percent more than the average claim from a developer. Homeowner claims only represented 5.0 percent of all claims and had the lowest cost/claim of $53K, although many of the developer claims resulted from a homeowner suing a developer who subsequently sued the geotechnical engineer.
What Scope of Service Leads to Claims?
A main objective of this study was to identify and evaluate those service areas in which improvements in practice can be made to mitigate future claims. The scope of service that led to the most claims was site investigations. In the context of this discussion, the term “site investigation” is the physical act of investigation at the site and the testing of the soil. The term “site characterization” is the conclusion reached on the subsurface soils and properties based on the data and applied judgment. Of the 897 claims studied, 393 occurred when geotechnical investigation was the primary service provided, resulting in a cumulative loss of nearly $51M (Table 2). While it is true that site investigation is typically the primary scope for most geotechnical engineering assignments, geotechnical claims usually stem from the failure to adequately characterize the subsurface stratigraphy, groundwater conditions, and/or the properties of the soils site-wide by extrapolating discrete pieces of data from the site investigation.
As shown in Table 3, allegations of negligent design/design error, inadequate testing, and inadequate investigation represent 55.9 percent of all allegations, and all relate to an inadequate site characterization. These results indicate that claims originate primarily from incorrect characterization of the subsurface stratigraphy (including missing a geologic feature), groundwater conditions, and the associated engineering soil properties of each layer.
What Type of Problems Lead to a Claim?
Table 4 summarizes the physical manifestations that led to claims associated with geotechnical investigations (393 claims out of a total of 897). Cracking and settlement were the most common problems encountered, with each accounting for approximately 18 percent of the total number of claims associated with geotechnical investigations. However, the losses associated with these problems differed substantially, with cracking only accounting for 12 percent of the cumulative losses and settlement accounting for 35 percent of the losses.
Cracking, settlement, and heave, all manifestations related to soil movement, combined to account for about 41 percent of claims when investigation was the primary service provided. These manifestations can result from failure to identify compressible or expansive soils, or from a construction defect by the contractor. Construction cost overruns and changed conditions, accounting for about 19 percent of claims, resulted from contractor claims alleging that unforeseen conditions were encountered.
Suggested Approaches to Mitigate Claims for Site Investigation Work When a problem arises and an allegation of negligence is made, the cause can usually be one or more of the following:
- An unforeseeable soil condition
- A construction defect
- A negligent act on the part of the engineer, usually during the site characterization
Just as site investigations are invaluable during the early stages of a project, strategizing and planning a site investigation are vital to its execution. While it’s common and required for geotechnical engineers to describe in detail the scope of the site investigation, it’s not all that common for the engineer to provide the basis for the scope. Typically, the basis is many years of experience within a particular geologic formation and experience at nearby sites. However, proposals do not often articulate how experience and applied judgment justify decisions regarding investigation methods, sampling frequency and location, and specified testing for a project site.
The most critical piece in planning the early phases of a site investigation is developing a hypothesis of expected site conditions prior to any physical exploration. Inherent in the hypothesis of the site conditions are statements of purpose describing why borings are placed where indicated, why the boring depths are as shown in the proposal, what types of soil are expected, and what types of tests are necessary to develop the properties needed for analyses. The detail of this hypothesis will vary by project, but it should be formed with all available data obtained from the desk study before proposal preparation, and it should take into consideration prior experience related to the project site.
The desk study, when combined with prior experience and the applied judgment of the engineer, should provide adequate information for a qualitative description of the site. It may be developed from information on the geomorphology or depositional environment of the site, expected soil types, groundwater conditions, or previous land use. Figure 1 illustrates this process and shows how a documented hypothesis can be used to meet the SOC, reduce uncertainty, and provide reasoning for further investigations if needed.
If the site investigation is carried out following standard procedures and guidelines based on the project objective, and the hypothesis appears to be supported by the investigation, any differing or unexpected conditions encountered later may be considered truly “unforeseeable,” thus helping support an argument that the SOC was met. When the conditions encountered during the investigation support a sound hypothesis, the plaintiff’s expert will have a more difficult task to claim an investigation that is not consistent with the SOC.
When site conditions are better understood and verified within the context of a hypothesis, the design may not need to incorporate the same degree of conservatism, and there is lower probability that a lack of knowledge will negatively impact the construction or performance of the project. The hypothesis serves as a reference to decide whether the remaining uncertainty from the investigation is at an acceptable level. If the hypothesis is not supported, further investigation may be required to evaluate the nature and magnitude of the differences between what is indicated by the data and the expected conditions. The consequences of these differences need to be considered in terms of the design. This approach turns the site investigation into a process of verification as opposed to one of discovery.
In developing the site investigation strategy, it’s important to remain cognizant of site-specific issues. While reference materials may provide a basis for the general layout and depth of borings, decisions regarding the subsurface exploration must consider how the geotechnical engineer can meet the project requirements for the site under investigation. The following list of questions provides some examples to help better understand how the investigation can be directed to obtain pertinent information:
Do expected geologic features require more extensive or additional investigation than what is typical from general guidelines?
- What prior experience does the geotechnical engineer bring to the project?
- What are the expected conditions that may impose limitations on design? What is the extent of any problematic features?
- What is the required precision for the evaluation of soil properties? How sensitive is the project to these properties?
- What is the possible range of values for relevant properties? How do assumptions affect these values, and what are the most likely conditions that assumptions can be based on?
Ideally, these questions will be addressed during the planning of the site investigation, and verified during the subsurface explorations and as data is collected and interpreted.
The initial hypothesis developed from the desk study should be clearly stated in the proposal. Data collected from the investigation should verify the hypothesis or justify further investigation and, if applicable, other recommendations if the hypothesis is not supported. Recommendations for further investigation should be rationalized with the risk associated with the uncertainty of these features and how that translates to the cost and performance of the project.
Ultimately, the goal of the site characterization process should be to verify the site conditions — not to discover the unknown. The process should allow a site characterization to be developed with the best information available, and should allow it to be defended in a SOC challenge. Such a process will also provide the best possible, engineered site characterization that can be developed based on the available data and the engineer’s experience.