Professional Liability Update- Limiting CADD Liabilities Part 1

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May 1999

Limiting CADD Liabilities Part 1: The Risks and the Remedies

 

Virtually every substantial design firm in North America now uses computer-aided design and drafting (CADD) on its projects.

Architects, engineers and other design consultants have found that CADD can make the delivery of services more effective, efficient and accurate. What’s more, many clients now demand that design services be delivered in an electronic form.

Despite its advantages, the growth of CADD has been a mixed blessing for design consultants. While CADD certainly increases productivity and enables firms to provide a wider range of design and ancillary services, it also poses new challenges – and liabilities.

CADD can complicate communication and coordination among design team members, especially if they are using different software products and hardware systems. CADD can also increase client expectations in terms of both project schedules and scope of services. Therefore, clear understanding must be established in terms of how CADD files and documents will be delivered and used.

 

CADD Danger Zones Here are some of the most common problems associated with CADD that can lead to potential liabilities.

 Defects – The number of new software products that hit the market every month is astonishing.

Unfortunately, defects and bugs (including the Year 2000 or “Y2K” bug) in purchased CADD software have been all too common and may not be detected until after a design is completed and delivered, and construction is in progress. And if bugs are detected in commercial software, you can still be held liable for any errors or omissions in your completed designs or deliverables.

 Incompatibility – Files generated by one CADD product can’t necessarily be accurately read by another. What’s more, although translating electronic files from one CADD system into the format of another system can generally be accomplished, it can require detailed planning and coordination among multiple parties.

Not all files or hardware systems are compatible, and file translations don’t always work easily or completely. Plus, the recipient may not operate the file transfer protocol correctly.

 Transmission errors – The potential for transmission errors is enormous, whether the transfer takes place on disk or over a network like the Internet. The computer from which the data is transferred may have a hard disk error. The floppy disk onto which data is transferred can be defective.

In transit, the disk can be subject to physical damage or magnetic forces, compromising data. Information sent over the phone lines can be corrupted while passing through any number of servers, modems and other hardware. The recipient’s computer may have a damaged hard drive or floppy disk.

At any of these stages, errors can creep in, sometimes undetected.

 Inaccuracy – Today’s advanced CADD systems allow you to prepare drawings with great accuracy and then extract precise dimensions. Those who receive your electronic files often assume that they can use their own CADD systems and other computer tools to measure your graphics – and then rely on those measurements as final.

These assumptions can be dangerous. Some factors – such as data precision, system precision and accuracy in translation – can make transferred computer files less than accurate. And those who rely on them may even try to hold you responsible if their systems calculate incorrect measurements.

 Unauthorized changes – Any electronic file you deliver can be changed as soon as the other party receives it. Changes may be deliberate or inadvertent, and can be made without leaving a trail to trace the origin. A client may make the change, or pass the file to someone else – a contractor, for example – who changes it and then uses the modified file.

Once you deliver a CADD file you may find that the client is lax regarding who has access to the files, how many copies are made or how the files are modified. They may even lose track of which version is the correct design.

 Viruses – Computer viruses can be conveyed through disks and from transmissions through the Internet. Viruses can attach either to electronic files or to electronic media and can damage or destroy programs and critical files and spread throughout your – and your clients’ – computer systems.

Usage Is the Key

Even when the above danger zones are avoided, liability concerns may still arise depending on how the CADD files are used. Here are common client uses of CADD documents and issues to consider:

 Project archive – Some clients simply want to obtain the electronic CADD files to keep as an archive of the project. Point out to clients that electronic files are not ideally suitable as archives for two primary reasons:

1. The magnetic charge on a disk or tape deteriorates over time. After several years a computer diskette can become unreadable or, worse yet, altered so that apparent design errors may arise. A weld symbol, for example, may disappear.

CD-ROMs or hard drives may have a longer life, but these too can deteriorate or become damaged.

2. The information in an electronic file is compromised every time there is a subsequent upgrade or change in software, operating systems or hardware. The old CADD file may not be readable, or may deliver faulty information. Despite some software manufacturer claims, not all programs are “backward compatible.”

 Delivery to third parties – Often, clients will provide your electronic files to the contractor or other consultants. If third parties use your electronic files to conduct their own work, your liability exposure grows.

 Subsequent projects – Unbeknownst to you, clients may intend to use the CADD file as the basis for designing a subsequent project phase or to start a new project.

Using copies of a site-specific design to construct other projects can be disastrous. You may end up incurring liability without even knowing your design was being reused – and without receiving compensation for reuse of the design.

 Facility management – Clients may intend to take your CADD files and have their own staff modify them for facility management use. But because facility management drawings are quite different from construction drawings, such an adaptation can prove difficult.

Facility management drawings, for example, include operational information about furniture, fixtures and equipment. This may lead to unanticipated demands on your time in helping the client complete the project – and disputes over added fees for such services.

 Record drawings – Some clients may want to keep the CADD files as project record drawings (commonly called “as-built” drawings). But construction drawings are rarely the same as as-builts. Construction drawings represent the design of the project at the time of the bidding or at the time the construction contract was signed. They do not typically include the design and detail changes made during construction and they rarely portray the project as it was actually built.

Unless the client understands the differences between these two sets of documents, he or she may become a dissatisfied customer – and look to you to make it right.

 

Managing CADD Risks

So how do you handle all of these risks while still reaping the advantages that CADD offers? Take these steps when working with your clients:

 Address the issue up front – Explain the risks of CADD from your perspective. Discuss the advantages and the limitations of CADD drawings. Address compatibility concerns. Set realistic expectations and time schedules. Explain that Mylar hard copies or microfilm make the longest-lived project archives.

 Determine client uses of CADD – Explain the limitations of use as described above. If the client intends to use the CADD files for determining material quantities, for facility management, for as-built drawings or on subsequent projects, consider offering extended services at an additional fee to meet those needs. Propose to update the electronic files through post-construction changes. Also discuss security issues and restricting access to CADD files on a need-to-know basis.

 Identify all CADD deliverables – Find out exactly what electronic files the client expects to receive and when, as well as the desired forms of delivery. Seek added compensation of any CADD deliverables that increase your cost of or liability for completing the project. Avoid delivery of any CADD files not required by contract.

 Refuse third-party deliveries – If at all possible, refuse to deliver CADD files directly to third parties, such as contractors, with whom you have no contractual relationship.

Deliver files to the client and let them deliver copies to others. Also let your client assume responsibility for reuse or misuse by others, as well as responsibility for updating third parties if the design changes.

If you must deliver CADD files to third parties, charge an appropriate fee and tightly restrict author- ized use through separate contracts with these parties (to be addressed in Part 2 of this report).

 Set specifications – Discuss in detail with all parties using the CADD files the requirements for hardware and software compatibility.

Select software carefully, then read and follow all documentation and license agreements that come with the software. Outline the procedures for file submittals – on disk, over the Internet, etc.

If files must be translated, make pilot tests of translations and file exchanges before any significant production work. Then monitor ongoing production and review drawings to make sure all project team members follow the CADD specifications.

 Establish an Internet policy – Set rules for transferring and downloading files or information over the Internet. Immediately check the content of any files received over the Internet.

Most important, use (and update) anti-virus software for receiving information over the Net or on disk.

 Train staff – Once hardware and software specs are set, make sure your staff is thoroughly trained to use them.

Document your training efforts – this may help limit liabilities should a subsequent software error or hardware failure result in a project error. Estab- lish quality control procedures for proper software use.

 Assess Y2K readiness – In conjunction with the client, seek assurances that all parties to the project will be Year-2000 ready.

 Verify accuracy – To the best of your ability, verify the accuracy of all CADD files and data received from your client or other parties before releasing them to your staff.

Determine the degree of precision of the data and rely on it accordingly. Then verify again all translations whenever files are conveyed from one system to another.

For your CADD files, agree to correct any errors or discrepancies during a limited acceptance period as part of the basic agreement. Make any corrections or changes requested at a later date for an additional fee only.

 Refuse to give electronic seals and signatures – It is far too easy for someone to modify the content of a file so that it contains something quite different than the drawing on which you originally placed your electronic seal or signature. Further, it is also easy for someone to copy your electronic seal or signature and use it elsewhere.

Also consider removing company logos, title blocks, proprietary symbols and other identifying marks from any electronic file you deliver to your client.

If you must provide seals or signatures, document every file you deliver, including dates of each transaction and a hard copy of the contents of the file.

 Document delivery of files – Although standard operating procedures prior to the use of CADD often required the maintenance of a corresponding log or the retention of transmittal sheets, electronic transfers of data are often not documented.

Establish procedures to document how project CADD drawings will be prepared. Then, with every receipt or delivery of electronic files, require a hard copy of every drawing represented by the CADD files and a transmittal that lists all files and their authorized usage.

Also keep a permanent record of all procedures, drawings and transmittals made through the life of the project, along with a duplicate set of files on disk and hard copies on microfilm, Mylar or vellum.

 

Part 2: Contractual Protections

Following the procedures outlined in this article will go a long way toward controlling CADD- related liabilities. However, a key tool to minimizing liabilities is your contract language. Part 2 of this report (in our July, 1999 issue), will provide sample contract language, address the important issue of design ownership, and explain how to protect your copyrights.

 

 

Disclaimer: This article is written from an insurance perspective and is meant to be used for informational purposes only. It is not the intent of this article to provide legal advice, or advice for any specific fact, situa- tion or circumstance. Contact legal counsel for specific advice.