Effective risk management in A/E firms starts with strong relationships, open dialogue, and engaging the right partners early.
In their ongoing efforts to practice sound risk management, architecture and engineering firms might overlook the value of building strong relationships with their clients. Along with ensuring fair contract language, providing timely and thorough documentation, and facilitating frequent two-way communication, having effective working relationships with clients can keep projects moving smoothly and help design firms reduce the likelihood of being involved in a claim.
Why focus on building relationships? For starters, clients are the party statistically most likely to bring a claim against you. Generally, claims are triggered when the client loses time or money on a project. Strong client relationships typically rely on constant communication between design firm and the client over performance expectations and results as well as any developments that might impact them. Thus, it’s likely that direct discussion will occur on a timely basis on any potential issues on a project – which reduces the chance the design firm will be a target if the project ultimately is late or over budget.
Of course, there’s another key reason to invest time and effort building strong relationships with clients: Existing clients often represent the best opportunities for a firm to gain future work – either on the client’s other projects or through referrals or references.
Covering all bases to identify issues before they become claims
The ability to anticipate when potential issues may arise and addressing them with clients promptly can help your firm maintain effective ongoing relationships with clients. On the other hand, relationship breakdowns are more likely to occur after construction is underway and the contractor has the owner’s ear.
While it may require special effort on your part, building relationships and maintaining an ongoing dialogue with the general contractor and subs on the project can help facilitate a productive process with tighter coordination, fewer misunderstandings, faster identification of potential issues and, consequently, a reduced chance of incurring significant claims.
Of course, other relationships are critical as well. Indeed, those within your organization are often paramount. For instance, are your staff and colleagues comfortable approaching the leaders and more experienced team members at your firm when they need clarification on an assignment or timely direction if they encounter a problem? Is there a protocol in place to make it easier or more routine for employees to reach out and ask for help? Unfortunately, without such frameworks employees may be left hoping an issue will go away, which might only make the problem worse.
So, the point is, there should be a process in place to make communicating within the firm easy. Conversely, the failure to establish and maintain a culture that encourages frequent and open discussion can result in failing to prevent otherwise avoidable liability exposures.
Certainly, it’s important for everyone within your firm – as well as all those involved on a project – to trust one another and recognize that discussing issues as soon as they arise often is the fastest way to resolve them.
Engaging members of the extended design team
Additional critical relationships include those with your consultants or the prime designer, depending on your role and the roles of the other members of the design team. For a project to run smoothy the design team must not only consider themselves teammates, but they also need to function that way.
There should be open, honest discussions about potential timing issues and the impact that value engineering might have on a project. Furthermore, as with internal relationships within the firm, any problems that arise involving consultants, the prime designer or other participants should be quickly and actively discussed without fear of retribution.
Any issues that arise among design team members should be addressed carefully, keeping in mind that from a legal perspective all written communication is discoverable. In internal circumstances as well as those involving external design team members it often makes sense to address potential issues verbally at least initially until the magnitude of the problem is uncovered.
At the same time, engaging counsel to advise you on any issues that arise might help protect against potentially damaging discussions that ultimately may provide ammunition for claimants and their legal advisors. The aim is to prevent inadvertent internal communication from potentially strengthening a claim against your firm. Such outcomes can result when communication occurs before a thorough internal analysis of the facts has been completed.
Getting help from outside legal counsel, brokers, and carriers
With respect to legal counsel, it can be critical (given the current legal environment) to maintain an ongoing relationship with a lawyer you trust – ideally one well-versed with the AEC community and its issues. It also helps to find out if the attorney works with your insurance carrier. Carriers are actively involved in trying to avoid problems; however, when a problem can’t be avoided you will feel more comfortable with someone whom you have met, spoken to, or had a relationship with, advising you.
There is also the wider scope of helpful relationships that include professional organizations or societies, who will likely be on top of current risk and legal trends as well as pending regulations and legislation. Through active participation in their programs and events, your firm can gain valuable information on emerging issues along with best practices for building your business and managing risk.
Finally, your insurance broker and insurance carrier should always be available to you to discuss contract language, and potential or actual claim issues. They often can provide timely information and insights on issues or questions relevant to your practice, such as merger and acquisition trends, emerging employment issues, cyber liability, and coverages maintained by your industry peers. If they don’t have the answers, they’ll be in position to help you find the right sources to address them.
As many A/E firms have learned, no problem has ever improved by being ignored. Know the people – both within and outside of your organization – who are available to ask for help and advice when you need it. Develop relationships with your consultants and encourage them to let you know right away if or when there is a design issue, a timing issue, or an employee issue that might affect the project. And make sure they recognize that working together is always the answer.
 |
Lauren Martin is vice president and a risk manager and claims specialist at Ames & Gough. She can be reached at lmartin@amesgough.com. |