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Design Firms: How Risky Is Your Next Project?

There’s an area of business that all too many architectural design firms tend to overlook. In the excitement of chasing that project they’ve just heard about, they sometimes forget to look at the risks involved should they be awarded the job. Yet controlling is one of the most important contributors to the company’s long term profitability.

Well-run design firms follow specific strategies to keep liability claims low and infrequent. Here’s a very helpful article posted in ENR.COM that can guide you as you consider whether that next project is your masterpiece…or your financial downfall:

Project and Client Selection: Develop a Project Evaluation Checklist

Is it a good project for your firm? What do you know about the client? Does he/she have a history of suing their design professional? Is the money there? How’s the schedule? A process to evaluate prospective projects and clients can dramatically decrease the likelihood of a claim. 

Sign Equitable Contracts

If there is a problem or litigation on a project, your contract will become a source of scrutiny. A contract is supposed to lay out who is supposed to do what as well as outline terms and conditions. A well-written contract that accurately describes the intent of both parties will help prevent misunderstandings and simplify the resolution of any disputes that arise.  Well-run firms have developed contract review policies and procedures to make sure their contracts are reasonable. 

Identify Problems Early

While the definition of a claim in a Professional Liability policy is “a demand for money or services,” most Professional Liability policies also allow for and strongly encourage their policy holders to turn in “circumstances” which may give rise to a claim. I cannot emphasize how important this is. It can not only protect your insurability down the road, but the earlier you act on a potential claim, the quicker and less expensively it is generally resolved.  Educate your staff to know the warning signs of a potential claim. More at ENR.COM

The article goes on to discuss dispute resolutions provisions that you’ll want to check for in any contracts you sign. As both a project leader and a J.D. myself, I’ve always found it critical for this aspect of the negotiations to be dealt with throroughly and carefully.

All too often, contracts with design experts are a case of “you don’t know what you don’t know.” So even if you’ve got decades of experience in drafting contracts and contract scopes, it’s always a wise idea to run this past your attorney. And as quoted in the article…make sure you have the right professionals on your side, i.e. a knowledgeable attorney and specialist insurance broker. And I would also recommend a professional with expertise at drafting agreements for design and engineering work that maximize performance and reduce risk. Get this critical process right, and you’ll be on the right path to finding projects and clients with whom you can have an enjoyable, litigation-free experience.

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Project Management: How To Shave 15% Off The Cost of Your Next Project

No doubt you’ve heard the old saw that ignorance of the law is no excuse. In project management, the same principle applies to the design, construction or expansion of your company’s facilities. What you don’t know could really jeopardize your project’s success, if not prematurely change your employment status.

There are several solutions. Here’s one:

First, start with some simple self-assessment. Setting aside phenomenal growth industries, most companies won’t attempt building new or expanding existing facilities more than once in the career of the average employee. This means there is no institutional knowledge or wise-sage that can guide the company through the complex, costly and risk laden process of engaging and managing design and construction professionals. This is an area where simple referrals won’t work.

Are you experienced enough to hire the experts you’re going to need for this project?

Architects, engineers and contractors come in many flavors. One thing all design and construction professionals have in common is that they’re experts, or at least seasoned veterans, at engaging with prospective clients while managing their exposure to risk and maintaining a fair profit. This is definitely not the same as saying that the above mentioned professionals have a win-lose mentality. That’s just not true. But shouldn’t the consumers of architectural and construction services be experts, too?

In other words, as the buyer of these servers, are you the expert you should be? And if you’re not, what are you putting at risk?

Do you have a solid, empirically based process for examining the capabilities and expertise of the design and construction professionals you’d like to hire? Too much is at stake to simply ask around for referrals. Relationship-based decisions are almost always correlated with poor results. To be successful, and to save money, you need a reliable, proven process that aligns the most efficient and capable professionals to the goals and objectives of your project.

I’m not referring to the various “delivery” methods like design-bid-build, design-build or CM at risk. I’m addressing the need for an evidence-based process for selection of the best fit design or construction team.

For example, this process should address:

  •  What can be expected to happen or be needed but is not included in the proposal?
  • What other vendors are involved that the design or construction professional doesn’t have control over?
  • What risks will be considered unforeseen or not determinable?
  • How will these risks be identified – and mitigated?

Do this phase of your project correctly and, in my experience, you’ll save at least 15% of the costs of your entire project. Do it incorrectly and you could risk losing much more.

For best results, I suggest the following: hire a broadly experienced and highly qualified project manager before you hire anyone else. That’s right. A good project manager can help you find the best architects, engineers and contractors. He’ll choose based upon how good these experts are, how deeply experienced, and how good a fit they are for you and your company.

He’ll choose without the emotion attached to “referrals from friends.” He can help you through contract negotiations, examining not just the proposals but the contracts associated with them. He’ll help you avoid problems you didn’t know you had. He’ll push ahead even when you’re busy with other tasks. He’ll save you time. Most importantly, he’ll save you at least that 15% I mentioned above. And he could save you much more than that.

Let me leave you with this one last thought:

Success or failure hangs upon your ability to handle these first critical steps. It’s baked in. Your alignment with the right expert design and construction professionals is central to that first step. You can go it alone—and face enormous risk—or you can get someone on your team who has the proven ability to ensure that you’re partnered with the right A&E and construction team.

Want to know more or just want to sleep better? Call me.
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Construction Site Video: Here To Stay?

Video cameras are everywhere these days. And now that they’re built into most cell phones, they’re even more ubiquitous than just a couple of years ago. Today, the increase in the number of construction site video cameras and the paybacks they deliver are almost as broad as the roles of people using them.

If you’re not already familiar with this trend, here’s a great article from ENR.Com:

http://enr.construction.com/images2/2014/01/enr01132014tech_mrmc.jpg

Mark Penny, a senior vice president for the Dallas region of Manhattan Construction Inc., says his company, a large, self-performing general contractor, has used many vendors, although it most recently has turned to EarthCam. “We have a lot of high-profile jobs that people want to see. They are a great opportunity for us and the client to showcase the construction, which makes the job of selling what we do a lot easier,” he notes.

Penny says the cameras can improve security, but “that’s not their primary use.” The photographic record also can verify that activities such as concrete placement are done on schedule. But, he says, “in the end, we have a time-lapse video that’s just a great wrap-up marketing piece. We have a lot of high-profile jobs that people want to see. They are a great opportunity for us and the client to showcase the construction, which makes the job of selling what we do a lot easier,” he notes.

Penny says Manhattan doesn’t use job cams for safety monitoring, either. “We have on-site safety guys. If we are doing that on a webcam, we may feel we are missing the mark,” Penny says.

Site cams do everything from showing project progress and quality control to showcasing sites that the project owner wants to share with his investors, board of directors or other key officers and officials.  Many project managers report increased productivity when cameras are in place, resulting in ROI’s many times the cost of the camera equipment itself.

What are the costs?  The article continues:

Hardware and plans vary from low-resolution off-line cameras that store images for retrieval to ultra-high-resolution units that have big zoom lenses and internet-operable controls. Users can vary shot frequency and pan, tilt and zoom, or PTZ, at will. The images stream to websites and storage systems. Costs vary from a few hundred dollars a month to $30,000 or more per camera per job, depending on the level of sophistication and service.

 

Are these cameras merely for show, or do they actually provide financial returns on the jobsite. Time will tell. We suspect they’ll be around for a long time.

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Picking A Great Project Leader: Think Football.

An article caught my eye the other day about the similarity between a great project leader and a great football coach. The best project managers are usually the best planners. Same with football coaches.

Check out this brief article from Best Practices Construction Law:

Coaching football.
Successful football organizations consist of specialized teams or units: (a) the offense; (b) the defense; and (c) and special teams. Within those teams there is often a further specialization. For example, the defensive team consists of linemen, linebackers and secondary. All of these specialized units must plan and work together in order to be successful. In construction, the specialized units consist of crews headed by project engineers and/or foremen.

Planning the project.
After a contract is awarded, the contractor’s first task is to put together a project management team. The makeup of the team will obviously depend on the size of the project and the contractor’s field personnel. On a big project constructed by a large company, there may be project engineers. On a smaller project, there may only be foremen. The team may or may not have been involved with estimating the project. Once the team has been assembled, the project engineers and foremen must study the plans and specifications in great detail. The project engineers must consult with the estimators to learn how the estimators conceptualized and bid the project. Taking the estimators’ concepts, the project engineers and/or foremen develop a detailed, coherent work plan for constructing the project.

Only change I’d suggest in this comparison is that, in our experience, a well-experienced and properly credentialed project manager is needed to field marshal the entire construction process–including the hiring of the general contractor. The project manager is your man on the team. He keeps open communications with the contractor, pushes for deadlines, analyzes issues that crop up, and when he does his job right, saves you money and time on the project.

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