Part 1 of this series (SparView Vol. 5, No. 16) looked at service-provider issues in assessing liability and insuring for risk in 3D laser scanning. This week's focus is owner and EPC perspectives on these issues, and a review of professional liability essentials.
Owner perspective
What are asset owner organizations doing to apportion liability and manage risk associated with 3D laser scanning? "We handle it two different ways," one owner executive with extensive laser scanning experience tells us. "If I contract with an external engineering supplier, in their scope of services I dictate that this is a 3D job, I want to use laser scanning, here's why, and here are the deliverables I need." The EPC in turn may contract a laser scanning service provider. If the service provider "gives bad information to the EPC, it will cause me pain," this owner says. "But I don't have a contractual relationship with that service provider, so I would hold my EPC accountable."
On the other hand, this owner continues, "when I use my own in-house engineering group, I may contract directly with our in-house laser scanning group. If they were to make a mistake, I would just eat it – we are self-insured for our own engineering work from a liability viewpoint." In either case, owners' interests are further protected by "errors-and-omissions and other kinds of insurance – sometimes I [the owner] am self-insured; other times the EPC has to have E & O insurance."
But industry practice remains far from settled. "If an external service provider were to give me bad data," an owner tells us, "I'm not sure what I would do – I've not yet had an experience where I've had to go after a laser scan service provider" for non-performance. "If that happened, I would refer to the contract to determine his liability – he might have to go back and re-scan." But this would not fully remedy the problem. "We do have warranty and quality provisions in our contracts," this owner continues, "so I could well elect to exercise my right to withhold payment in the event of non-performance. But still that would not help my schedule."
Absent settled practice, an important safeguard for owners' interests is the fact that "service providers are motivated to do good work," this owner observes. "So it gets down to whether you as an owner understand the issues – how to specify the job, how to check data quality, registration and control," and the like.
EPC perspective
How do EPCs apportion liability and manage risk around laser scanning activity in a project? Much of the answer lies in standard contract terms governing performance and liability. "For us," one EPC executive reports, "the issues tend to be wrapped up in the contractual liability that exists between EPC and client." Insuring for this liability is a routine part of doing business for EPCs.
Thus, for EPCs, managing this liability does not require "the same money outlay as laser scanning service providers often have to make up front on a job" for professional liability coverage and any necessary bonding. Can EPCs offer their service providers any help with this? "As subcontractors," we heard from one EPC, "service providers are expected by EPCs to manage their own liability." Admittedly "the return on what service providers are doing is not really commensurate with the risk they're often asked to assume," he says. On the other hand, "why would they be any different than a tried-and-true traditional surveyor? If laser scanning service providers can get themselves into that category" in the professional-services definitions used by insurers to categorize and define risk, "then it will become a different conversation."
Better understanding of laser scanning by not only insurers but also more owner organizations is part of the answer, in this EPC's view. "Terms like 'laser' scare people," he observes, "but there's no survey job out there that isn't using a laser instrument already." Even where the EPC's owner client perceives risk, "EPCs are not going to cover this risk for service providers," he says. "To me, part of the answer lies in convincing owners to lighten up on their requirements for laser scanning service providers before EPCs bring them into the plant."
