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Do You Have a Quality Control Manual?

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By on Nov 23, 2012 in All Topics, Newsletters, Operations |

More and more owners, developers and governmental agencies are contractually requiring that design professionals have in place a quality control manual and/or quality control procedures. If you are one of the many firms that do not have a manual or policies in place or your policies are only loosely followed, it may be time to take a serious look at this issue.

The adoption of quality control standards brings a measured uniformity to your firm’s practice. It can also be a demonstrative factor in establishing performance that meets the standard of care. Firms without any quality control standards or procedures are often left at a loss to explain why a particular employee or group within the firm missed something or failed to follow a seemingly understood procedure.

However, the adoption of too detailed a manual or list of procedures can have the opposite effect. The quality controls may, in fact, alter the applicable standard of care. Furthermore, once adopted, the failure to follow the standards and/or procedures outlined in the manual can create a presumption that a firm’s, or its employees’, performance was negligent. Therefore, it is imperative to take care in adopting and using quality control standards that will meet the ongoing needs and reality of your firm. In other words, the manual should contain requirements that your firm can realistically meet.

QUALITY CONTROL PROGRAM

Requirements
Quality control standards should set forth the general requirements that will guide employees in performing professional services. This should not be mistaken for outlining the performance of services that meet the applicable standard of care. The standard of care not only reflects adherence to internal procedures, but also the exercise of professional knowledge and judgment. Quality control standards typically include general requirements for all areas of the firm’s practice affecting or affected by the quality system.

In terms of its contents, as a minimum, the Quality Control Manual must include the following:

  • The company’s policy that describes the company’s commitment to quality.
  • An explanation of the company’s documentation structure.
  • Policy statements demonstrating management’s intention to comply with an industry standard and/or contractual requirement. These policies must include:
  • How management expects company operations to function.
  • Who is responsible to implement these expectations (by function or job title).
  • Where and when the policies are applicable within the organization.
  • What interdependencies exist between functions and processes.
  • Reference to the actual “operating procedures” of the company.
  • Assignment of one or more “management representatives” for quality in the organization.
  • A description of the company’s organization (usually in the form of an organization chart, top level of the company only).

Typically, the key program elements address the following:

  • Quality Control Budget
  • Staffing
  • Incorporation of Basic Checking and
  • Review Procedures
  • Peer Review Procedures
  • Client Quality Assurance Procedures

Quality Control throughout the Project
From proposal to executed contract and from conceptual design through final completion, quality control must play a role in development of uniform standards. The development of quality assurance procedures is critical to the following key areas:

  • Potential Clients: What is your experience with this client? Is the client financially solvent; involved in excessive litigation?
  • Proposals: Who prepares and who reviews proposals? What standard terms and conditions are used?
  • Contracts: What are the policies for reviewing and signing contracts?
  • Project Initiation: Who is responsible for setting up a new project?
  • QA/QC Project Performance: Who is performing the quality control activities during the Project?
  • Closeout: At the conclusion of a project, who is preparing a summary of the quality control results?

Disclaimers and Limitations
A Quality Control Manual is intended as an internal guide, and is not a substitution for, or modification of, specific contract requirements. It is intended as an internal guide for the firm’s principals, associates, administrators, and managers to assist them in controlling those day-to-day project and contract issues that exist in almost every office. However, nothing in a Quality Control Manual is intended to create a warranty, either express or implied, to the professional services rendered by a particular firm. Lastly, it is not meant to replace or modify the applicable standard of care governing the performance of services on any given project. Even with such disclaimer language, firms must instruct their employees to make reasonable efforts to follow the procedures outlined in the manual. No disclaimer can completely prevent an opposing attorney from making a big deal about a perceived failure to follow procedure.

CHECK & REVIEW PROCEDURES

Project Checklist
A firm should consider establishing a policy that project checklists be maintained on each project. The checklist might include an overview of tasks to be done, and be tailored to conform to the complexities and scope of each individual project. General categories of items that should be considered include:

  • Scope of services
  • Schedule of performance
  • Specific requirements
  • Budget
  • Contacts with authority to consent
  • Specific exclusions
  • Reporting requirements
  • The scope of the individual project review will vary depending upon the nature and complexity of the project.

Documentation and Records
Ask any cynical lawyer, and he or she will tell you that the only events that really transpired during a project are those that are documented in writing. A case based on “he said” versus “she said” is not likely a winnable one. “Writing” in the legal arena takes many forms: e-mails, videotape, diaries, schedules, sketches, etc. It becomes vital that a design firm keep impeccable records of their progress during a project: from contract negotiation, through conceptual design, through construction administration. All employees should understand the importance of keeping good records of telephone discussions, site visits and construction meetings. These records play a crucial role in litigation for many reasons, including:

  • Providing evidence that the terms of the contract were met;
  • Documenting client and governing agency changes;
  • Confirming the custom and practice of the firm; and
  • Evaluating performance of the design professional in issues involving project delay, changes, or general negligence.

A project file should include:

  • Contracts, invoices, and confirmation of payment
  • Correspondence (including e-mails, letters, and phone memos)
  • Meeting minutes
  • Design drawings, plans and calculations
  • Directives, change orders, requests for information, etc.

All communications that have been copied to other individuals should be so noted. Transmittals listing the specific items sent, and confirmation of receipt of same, should also be maintained in the project file. (Note commentary on document retention, below.)

Finally, all communications with attorneys, insurance carriers, and/or insurance brokers should be kept separate from the project file.

Sub-Consultant Procurement and Collaboration
In choosing a sub-consultant, the prime should be familiar with that professional’s experience, history of performance, financial solvency, insurance status, and involvement in litigation. A reference check, or simply casual conversations with other members of the community, may provide good information about the sub-consultant’s past performance. However, a written contract between a prime consultant and a sub-consultant is as important as that between the prime and the owner.

RECORDS MANAGEMENT

General Procedures
A key component of the quality control management program is the control of documents. Document control is an essential preventive measure ensuring that only approved, current documents, specifications, and standards are used throughout the organization; proper documentation of project events, conversations, decisions and conditions are maintained; and disposal of non-essential, out-dated documents is systematic and orderly.

Your client contract may even dictate a records management, audit, and retention policy. You may be required to maintain certain project and/or accounting records for a specific period of time. It is important to know the contractual terms and/or regulatory requirements so that appropriate documentation methods are followed. Again, someone should be assigned responsibility for monitoring compliance.

Document Retention and Disposition
In adopting document retention policies and procedures, a firm must consider the possible administrative, legal, and business requirements that may arise with respect to documents in its custody. The policies and procedures are meant to strike a reasonable balance between those requirements and the practical considerations involved in protracted document retention (including space constraints and storage costs).

Someone within your firm should be selected as the “document retention administrator.” The document retention administrator shall: endeavor to ensure the uniform application of these policies and procedures; resolve all specific issues not addressed by these policies; and make recommendations to the firm’s management regarding the firm’s document retention policies and practices.

A key element of the document retention policy will address the destruction/disposition of documents. Subject to the specific exceptions noted below, a policy statement should be addressed to the destruction of most project files so many years (i.e., 5-6 years) after the substantial completion of professional services on a given project. Because of certain specific regulatory, legal or administrative requirements, certain classes of documents will be retained for longer or shorter periods. The statute of limitations and statute of repose in a given jurisdiction will also serve to guide you in the length of time documents should generally be retained. Regardless of these time periods, generally you should permanently keep a copy of your executed contract and a copy of the permitted set of plans and specifications. Also consider the following:

  • Specific Contract Requirements – Confirm the contract requirements for each project/client.
  • Legal Proceedings – Do not destroy any documents at the end of the retention period(s) if the documents are known to be under subpoena, or are otherwise the subject of an actual, pending or anticipated dispute.
  • Pre-Destruction File Review – Before documents are destroyed, the document retention administrator should endeavor to determine whether the documents are under subpoena or are otherwise the subject of an actual, pending, or anticipated dispute such that they should not be destroyed.
  • Destruction – The destruction of documents and project files consistent with the above policies should take place at least once each calendar year. The document retention administrator shall keep a permanent record of all project files destroyed.
  • Disclaimer – As with the general quality control manual, some type of disclaimer or limitation should be added: “Nowhere shall it be construed to establish or create a duty, or to provide any obligations beyond those imposed by law, to any third party. A failure to comply with these procedures should be presumed to be inadvertent.” Again, even with this disclaimer, every effort must be made to implement and follow the policy.

Electronic Documents
With the dawn of the “electronic age” and/or “virtual paperless” environments, the retention of electronic information has become an increasingly hot topic.

With the passage of document tampering and destruction provisions of the federal Sarbanes-Oxley Act and recent amendments to the Federal Rules of Civil Procedure, the storage and retrieval of electronic information has taken center stage. Every company or firm is required to have someone with knowledge of the storage and retrievability of electronic records.

First and foremost, you are well-served by consulting with your Information Technologies (“IT”) person or outside firm as to your company’s current system capacities and procedures. You need to have some understanding as to volume, usage, existing archiving (locally and system-wide) and time expended in existing and potential procedures. Your IT consultant may also know something about industry requirements and/or practices that will further assist you in adopting a formal policy.

You should review both legal/regulatory and contractual requirements concerning the retention of electronic documents and/or records in general. E-mails are records that need to be retained in some format/location for generally the same lengths of time as “hard-copy” documents. Next, what is the procedure for purging/deleting e-mails, from local hard drives, the company’s system and/or separate server? How are you planning to implement and enforce this policy? Much like the hard-copy policy, the electronic information policy must address retention, destruction, system requirements, and storage capabilities, monitoring and enforcement.

Just when you thought you were done – be aware that e-mails are certainly not the only electronic files. You have to apply at least the broad elements of the policy to Internet downloads, instant messaging, text messages, Websites, e-faxes and on-line bulletin board postings.

The use of electronic documents has had a significant effect on document retention requirements. It is important to consult with an IT consultant and legal counsel to determine if your firm’s existing record retention policy adequately addresses the use of electronic information, and specifically, the retention, storage, retrieval, and destruction of the same. The risks and costs of failing to address the retention of electronic information are too great to be ignored.

Conclusion
Establishing a sound Quality Control policy will assist your firm in consistently maintaining a high quality of performance. Your firm manual should address the key elements discussed in this article as well as be tailored to best suit your firm’s needs. The bottom line is that you be able to demonstrate that you have some Quality Control procedures in place, and that your firm is taking reasonable steps to follow such procedures in performing its professional services.

A version of this article was originally prepared for a/e ProNet by Jacqueline Pons-Bunney, Esq., and Peter Stacy, Esq. and is entitled: Drafting A Quality Control Manual: A Design Professional’s Guide. Please contact us if you want a copy of the completed guide.

Peter Stacy, Esq., is an attorney practicing with Weil & Drage’s Laguna Hills, CA office. He earned his Bachelor of Arts Degree in Political Science from Occidental College. He obtained his Juris Doctor from the American University in Washington, D.C. His practice primarily focuses on transactional services such as business formations, complex contracts negotiation, professional and corporate compliance, employment matters, mergers and acquisitions, and ownership transitions. Mr. Stacy has authored articles and presented seminars on risk management to a variety of professional organizations and private firms.

Weil & Drage, APC, focuses its law practice on the representation of design professionals. The firm has offices in California, Nevada, and Arizona. Its experience covers all aspects of complex construction and business-related matters, including contract negotiation, pre-litigation, litigation, trial, and post-trial appellate matters.