Best Practices
A Loss Cause Too: Betterment

by Grant A. Simpson, FAIA, and James B. Atkins, FAIA

Summary: In their first AIArchitect best-practices article two years ago, James Atkins, FAIA, and Grant Simpson, FAIA, synopsized a crucial point to architect-client agreements: mistakes happen. Here, they jump into the shark tank once again to explain further that if a fix results in a net improvement, the client pays for the resulting enrichment.

Below is a synopsis of the article. For the full text, click on the PDF link located in the column on the right.

Central to the confusion over “betterment” is if and by how much owners are damaged when an architect, engineer, or contractor makes a mistake on their project. Secondarily, there is a general lack of understanding that some errors and omissions are to be expected, and thus some amount of damage caused by them is also to be expected.

The matter of “unjust enrichment” lies at the foundation of most issues surrounding betterment in the context of building construction. As defined in Black’s Law Dictionary, unjust enrichment is the:

“General principle that one person should not be permitted unjustly to enrich himself at expense of another, but should be required to make restitution of or for property or benefits received.”

It is not the intent of the law that any party be unjustly enriched by the outcome of a lawsuit. The fundamental intent is that parties bringing a lawsuit be restored to the same position as if no damage had occurred.

Nonetheless, when owners are confronted with repair and betterment costs, they frequently do not differentiate between them and often feel the design professional is responsible for both.

That said, there can be circumstances, imposed by contract, where an architect may be liable for all costs over a certain amount, including betterment. This can occur when an architect agrees to guarantee the total cost of construction. Although it is rare in architecture today, architects should be very careful when signing contracts with wording that constitutes a guarantee of construction cost or budgets, and they should never consider such clauses without the advice of an attorney.

Mistakes aside, betterment is enrichment
Architects are human and it is unreasonable to expect them to be perfect. When a mistake does occur, conformance to the standard of care will be determined by whether another architect may have made the same or a similar mistake under the same circumstances. This is true for any professional in any discipline. Because most mistakes cost money to correct, contingencies should be budgeted accordingly.

On the flip side of that coin, architects should also pay heed that excessive expenses as a consequence of errors and omissions they make may well exceed a reasonable standard of care and thus give rise to a reasonable expectation by an owner that the architect should reimburse those excessive expenses.

In general, though, if all or a portion of the cost for a particular claim issue involves work or scope that would have been necessary to construct the project regardless of whether the alleged error or omission had occurred, this work is betterment, which Black’s Law Dictionary defines as “an improvement of a … building that goes beyond repair or restoration.” It enriches the owner and is the owner’s obligation.

The spectrum of damages impacting the architect can range from no damage costs, as in the case where the entire resolution of the claim is betterment, to all costs incurred, as in the case where the resolution results in no improvement to the property or added value to the owner.

So as you are getting ready for that meeting with the owner of a new office building that you designed to explain why he or she will have to pay for the granite countertops that were not scheduled in the restrooms, grab a full-text copy of “A Loss Cause Too: Betterment” from the printer to give to the owner.

And don’t forget to be careful out there.