Risk Management2

Question 1

The four general categories of risk factors

Answer 1

• Negotiations and Contracts
• Selecting the Client
• Project Team Capabilities
• Communications

Question 2

AVOID RISK

Answer 2

Select project types that fit with firms experience and expertise Work with clients that have good reputations

Question 3

TRANSFER RISK

Answer 3

Contract transfers risk away from the architect, either back to client or down to consultants Insurance transfers risk away from the architecture firm

Question 4

ASSUME RISK

Answer 4

Accept work within the firm’s capabilities and maintain enough money to keep insurance paid

Question 5

CONTROL RISK

Answer 5

Adopt best practices and consistent procedures. Train employees Hire lawyers when necessary

Question 6

Biggest Risk Factors for: Negotiations and Contracts

Answer 6

1. Unclear or Inappropriate Scope of Service (38%)
2. Did not formally evaluate risks (16%)
3. Contract not in place before work started (12%)

Question 7

Biggest Risk Factors for: Client Selection

Answer 7

1. Client inexperienced in design issues (43%)

2. Client has history of claims/litigation (21%)

Question 8

Biggest Risk Factors for: Project Team Capabilities

Answer 8

1. Inexperienced Design Staff (50%)
2. Inexperienced on-site staff (20%)
3. Inexperienced project manager (18%)

Question 9

Biggest Risk Factors for: Communications

Answer 9

1. Lack of Procedures to Identify Conflicts, E&O (51%)
2. Project issues & disputes not handled correctly (20%)
3. Scope of services not explained to client (13%)

Question 10

Working without a contract issues

Answer 10

This can prevent you from being paid AND increase your exposure to liability.

Question 11

Avoid indemnifying the client.

Answer 11

This exposes you to risk from claims by third parties.

Question 12

What contract discusses dispute resolution?

Answer 12

Article 8 Claims and Disputes of the AIA B101-2017.

Question 13

What are the three methods of dispute resolution and in what order are they required to be completed?

Answer 13

The three listed methods of dispute resolution are Mediation, Arbitration and Litigation. Per the AIA document, Mediation is the required first step. If that fails to produce an agreement the parties can proceed either to arbitration or litigation. Previous AIA Docs went in order, mediation/arbitration/litigation. Not anymore with AIA 2017. Now the choice to go to either arbitration or litigation is pre-decided in the contract itself,

Question 14

What specifically does a mediator NOT do

Answer 14

A mediator does not make a decision or judgement about the issue

Question 15

What is the general goal of mediation?

Answer 15

The goal of mediation is to facilitate a conversation between the parties and have them come to an agreement themselves.

Question 16

What are the four components of arbitration?

Answer 16

A third party decision maker chosen by the parties• Neutrality of the decision• An opportunity for both parties to be heard• A binding decision or result (the owner-architect agree to this in the contract)

Question 17

What are the benefits of arbitration?

Answer 17

Privacy. Arbitration results aren’t required to be made public• Selection of the decision maker and more qualified decision maker (as opposed to a court-appointed judge)• Faster. It’s privately executed, no waiting on courts.• Can be less expensive due to less discovery.• No juries

Question 18

What are the limitations/problems with arbitration?

Answer 18

Less discovery. You are more likely to be surprised by new information at arbitration.• Can cost more than civil litigation. Arbiters need to be paid.• Limited review of the decision…it can’t be appealed except for in very specific instances with a narrow focus of review.