1. Value Engineering: A Legal Perspective David M. Governo Governo Law Firm LLC 260 Franklin St. Boston, MA 617.737.9045 dgoverno@governo.com www.governo.com

2. 2 Value Engineering: Legal Goals Get Paid Avoid Claims

3. 3 Value Engineering: Definition Structured Process Assess Design/Materials Assure Goals Met

4. 4 Get Paid: Your Contract Conflict Recognition & Avoidance Clear Communication Documented Agreement

5. 5 Get Paid: Additional Services Build Value Engineering into Contract Detail Your Scope of Services Clarify Payment Terms

6. 6 Engineering Contract’s Liability Risks Lack of Detail Indemnification Provisions Warranty and Guarantee Clauses

7. 7 Value Engineering: Legal Protection? Facility should operate “better” But: What Goals? Risk Management Claim Avoidance

8. 8 Value Cutting = Liability Sound “Goals” Qualified Team Proper Documentation

9. 9 Sources of Engineer’s Liability Contract: Failure to meet terms System/Facility: Failure to perform

10. 10 System or Facility’s Failure to Perform Engineer’s Duty: Standard of Care Specification of Less Durable Component Documentation of Value Engineering Process

11. 11 Record Keeping What to document? How to describe? Keep for how long?

12. 12 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

13. 13 Case Study: Claims Allegation: Breach of Contract Failure to properly design Selection of materials that were non durable

14. 14 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

15. 15 Protect Yourself at all Times Understand Analyze Act!!!