Value Engineering:A Legal Perspective

David M. GovernoGoverno Law Firm LLC

260 Franklin St.Boston, MA

617.737.9045dgoverno@governo.com

www.governo.com

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Value Engineering:Legal Goals

Get Paid

Avoid Claims

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Value Engineering:Definition

Structured Process

Assess Design/Materials

Assure Goals Met

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Get Paid:Your Contract

Conflict Recognition & Avoidance

Clear Communication

Documented Agreement

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Get Paid:Additional Services

Build Value Engineering into Contract

Detail Your Scope of Services

Clarify Payment Terms

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Engineering Contract’sLiability Risks Lack of Detail

Indemnification Provisions

Warranty and Guarantee Clauses

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Value Engineering:Legal Protection?

Facility should operate “better”

But: What Goals? Risk Management Claim Avoidance

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Value Cutting = Liability

Sound “Goals”

Qualified Team

Proper Documentation

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Sources of Engineer’s Liability

Contract: Failure to meet terms

System/Facility: Failure to perform

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System or Facility’s Failure to Perform

Engineer’s Duty: Standard of Care

Specification of Less Durable Component

Documentation of Value Engineering Process

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Record Keeping

What to document?

How to describe?

Keep for how long?

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Case Study:Value Engineering

HVAC in Office Building

Fan and pump motors originally specified were “engineered” out to save initial cost

Less expensive/less durable motors Occupants complained Motors failed

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Case Study:Claims

Allegation: Breach of Contract

Failure to properly design

Selection of materials that were non durable

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Case Study:Documentation Owners & other consultants requested

change

Reason for change and expected results described

New operations and maintenance specified Owner’s acceptance documented No breach of contract No negligence

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Protect Yourself at all Times

Understand Analyze Act!!!