Risk-Management_Professional Practice 3_Architecture.pdf

Professional Practice 3

1. Risk Management
MANAGING PROJECT RISK AND OPPORTUNITIES

2. Risk Management in Architecture
Architecture projects are prone to risks of
different types and severities.
These risks can come in the form of threats
and opportunities.
While you cannot eliminate risks, you can
manage and mitigate them.
That is where risk management in
architecture comes in.

3. What is Risk?
an uncertain event or condition, that if it occurs, has a positive
or negative effect on a project’s objective”.
This means risks could pose as threats or opportunities to any
project.
Architecture risks occur at different project phases, including the
pre-agreement phase, proposal stage, architect-client
agreements, bidding and contract award, contract
administration, and even post-construction.

4. Common risks architects and firms
face

5. Common risks architects and firms face
Choosing projects that
don’t align with
expertise or difficult
clients.
Inadequate Client & Project Selection

6. Common risks architects and firms face
Unwritten agreements
or inappropriate
standard forms
leading to disputes.
Unclear Contract Formation

7. Common risks architects and firms face
Setting unrealistic
expectations and facing
project difficulties later.
Overpromising in Proposals

8. Common risks architects and firms face
Poorly defined roles,
leading to confusion,
delays, and cost
overruns.
Unclear Roles & Responsibilities

9. Common risks architects and firms face
Costly rework, safety
hazards, and project
delays
Design Errors & Omissions

10. Common risks architects and firms face
Design revisions,
project delays, and
compromised design
intent.
Miscommunication During Design

11. Common risks architects and firms face
Missed deadlines, cost
overruns, and unresolved
issues.
Inexperienced Contract Administration

12. Common risks architects and firms face
Disputes with clients
and contractors due to
poorly defined project
scope.
Unclear Project Scope

13. Common risks architects and firms face
Permitting delays, labor
shortages, and other
external factors
impacting timelines.
Unforeseen Project Delays

14. Common risks architects and firms face
Material price
fluctuations, weather
disruptions, and
regulatory changes
impacting the project
External Factors Beyond Control

16. What is Risk Management?
Risk management deals with
strategically putting measures in
place to identify, assess, and
mitigate potential risks that could
impact your project’s
success,budget, and
reputation/that of your practice.
This mitigation will often include
preventing or controlling risks.

17. Why is Risk Management Crucial for
Architects in the AEC Industry?
Without risk management, you’re setting
up your stakeholders and yourself for many
issues and legal suits which will cost you
time, money, potential clients, and your
reputation.

18. Risk management helps:
become aware of factors that could
impact your project.
If they’re opportunities, you find
ways to ensure you take
advantage of them. Threats?
Find ways to control or prevent
them.

19. Risk management helps:
make risk-intelligent
decisions.
Being aware helps you to
plan and make data-driven
decisions for the success of
your project.

20. Risk management helps:
Ensure risk accountability.
So many stakeholders are often involved in
architecture projects.
Sometimes, the lines between who owns what is
blurred.
However, risk management will help assign roles and
responsibilities to appropriate stakeholders and how
each may be liable to potential risks if they do not go
according to the contract or for some other reasons.

21. Risk management helps:
Ensure readiness
When risk management is implemented,
everyone will be ready to face the
project and problems that arise head-on.
You know what to expect, how to
prevent or control it when it happens.
Because you have a plan!

22. Steps to manage risk and minimize
litigation potential
Identify the Risk (Identification)
identify potential risks early in the
project’s lifecycle.

23. Steps to manage risk and minimize
litigation potential
Assess the Risk (Assessment)
explore the likelihood and impact of those risks
against certain project and practice objectives,
as well as factors like project schedule, budget,
design, etc.

24. Steps to manage risk and minimize
litigation potential
Create a Risk Mitigation Plan (Mitigation
Planning)
device strategies and tactics to address them.
Risk mitigation planning or
treatment could include:
•Avoidance:suggesting alternative materials
•Mitigation:including buffer timelines
•Transfer:addingspecific insurance clauses
•Acceptance:incorporating flexibility into designs

25. Steps to manage risk and minimize
litigation potential
Implement Strategies to Monitor and Control
Risks (Monitoring and Control)
putting processes in place to monitor risks at your
firm continuously – throughout the project.

26. Steps to manage risk and minimize
litigation potential
Communicate Regularly
(Communications and Attestations)

27. How to Mitigate & Reduce Risk at
Your Architecture Firm
Client & Project Selection
Developcheckliststhat evaluate project type, budget,
client expectations, and potential constructability
challenges.
Useproject selection scoring matricesthat assign points
based on key criteria.
Conductclient interviewsto assess communication style,
experience with construction, and budget flexibility.
Pre-Agreement Phase

28. How to Mitigate & Reduce Risk at
Your Architecture Firm
Subconsultant Selection
•Maintain aqualified vendors listbased on
past performance and expertise.
•Requestreferencesand check past
project experience.
•Considerpre-qualification
questionnairesto assess subconsultant
capabilities.
Pre-Agreement Phase

29. How to Mitigate & Reduce Risk at
Your Architecture Firm
Conduct afeasibility studyto assess project
scope and identify potential constraints.
Involve key team members in proposal
development to ensure realistic timelines and
deliverables.
Userisk registersto capture potential project risks
and propose mitigation strategies.
Request for Proposal / Proposal Stage

30. How to Mitigate & Reduce Risk at
Your Architecture Firm
•Partner with legal counsel to thoroughly
review client-provided contracts.
•Leverage industry-standardcontract
review checkliststo identify areas of
concern.
•Consider usingrisk rating matricesto
assess the severity of potential contractual
risks.
Contract Review

31. How to Mitigate & Reduce Risk at
Your Architecture Firm
•Developclear and concise written agreementsoutlining
project scope, roles, responsibilities, and communication
protocols.
•Use industry-standardarchitectural service agreement
templatesas a starting point.
•Conductworkshopswith clients to discuss expectations
and ensure alignment.
Client-Architect Agreements

32. How to Mitigate & Reduce Risk at
Your Architecture Firm
Design Errors & Omissions
•Implementdesign reviewsat key project
milestones with internal and external
stakeholders.
Design & Documentation

33. How to Mitigate & Reduce Risk at
Your Architecture Firm
•Establish clear anddocumented communication protocols with clients.
•Usevisual aidslike renderings and physical models to enhance client
understanding.
•Implement aversion control systemto track design revisions and
manage client feedback.
Miscommunication & Client Feedback

34. How to Mitigate & Reduce Risk at
Your Architecture Firm
Litigation from Bidders
•Developclear and unambiguous bidding
documentsoutlining selection criteria and evaluation
process.
•Conduct apre-bid meetingto address bidder questions
and clarify project requirements.
•Maintain adetailed recordof the bidding process and
selection rationale.
Bidding & Contract Award

35. How to Mitigate & Reduce Risk at
Your Architecture Firm
Inexperienced Contract Administrator
•Assignqualified and experienced personnelto manage contracts.
•Providecontract administration trainingfor staff.
•Usecontract administration checkliststo ensure all key tasks are addressed.
Unapproved Subcontractor Substitutions
•Include clauses in contracts requiringwritten approvalfor subcontractor substitutions.
•Conductpre-qualificationof potential subcontractors before awarding subcontracts.
•Maintain clearcommunicationwith the contractor regarding subcontractor selection.
Contract Administration

36. How to Mitigate & Reduce Risk at
Your Architecture Firm
Warranty Claims
•Maintain acomprehensive recordkeeping systemfor all project documents
and warranties.
•Conduct afinal inspectionto identify and document any deficiencies before
project handover.
•Clearly definewarranty terms and responsibilitiesin construction contracts.
Post-Construction

37. How to Mitigate & Reduce Risk at
Your Architecture Firm
Material Price Fluctuations & Regulatory Changes
•Monitor industry publications and economic forecasts to anticipate potential price changes.
•Includeescalation clausesin contracts to account for unforeseen material cost increases.
•Stay informed about relevantbuilding codes and regulationsand incorporate them into
project plans.
Weather Disruptions
•Analyze historical weather data for the project location.
•Developcontingency plansto address potential weather delays.
•Consider incorporatinginsuranceagainst weather-related project disruptions.
External Risks

38. How to Mitigate & Reduce Risk at
Your Architecture Firm
Project Delays
•Utilizecritical path method (CPM) schedulingto identify and manage critical
project tasks.
•Developrisk registersto track potential delays and mitigation strategies.
•Maintainopen communicationwith all project stakeholders to ensure timely issue
resolution.
Project Management Risks

39. How to Mitigate & Reduce Risk at
Your Architecture Firm
Unclear Communication
•Establish clear anddocumented communication protocols for all project
stakeholders.
•Conductregular project meetingsto discuss progress, identify issues, and ensure
alignment.
•Useproject management softwarewith communication and collaboration
features like Monograph, Newforma, and zipBoard.
Project Management Risks

40. How to Mitigate & Reduce Risk at
Your Architecture Firm
Client Expectation Management
•Develop a clearproject briefthat outlines project goals, budget, and timelines.
•Conductclient workshopsto discuss expectations and ensure alignment
throughout the project lifecycle.
•Maintainregular communicationwith clients to address concerns and manage
expectations proactively.
Project Management Risks

41. Benefits of Robust Risk Management
in Architectural Practice
•Minimize project delays and cost overruns.
•Reduce the likelihood of design errors and rework.
•Enhance client satisfaction through clear
communication and project delivery.
•Improve risk allocation and protect architects’
professional liability by minimizing the risk of litigation.
•Foster a proactive and collaborative project
environment.