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: adding specific 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
 Develop checklists that evaluate project type, budget,
client expectations, and potential constructability
challenges.
 Use project selection scoring matrices that assign points
based on key criteria.
 Conduct client interviews to 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 a qualified vendors list based on
past performance and expertise.
• Request references and check past
project experience.
• Consider pre-qualification
questionnaires to assess subconsultant
capabilities.
Pre-Agreement Phase

29. How to Mitigate & Reduce Risk at
Your Architecture Firm
 Conduct a feasibility study to assess project
scope and identify potential constraints.
 Involve key team members in proposal
development to ensure realistic timelines and
deliverables.
 Use risk registers to 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-standard contract
review checklists to identify areas of
concern.
• Consider using risk rating matrices to
assess the severity of potential contractual
risks.
Contract Review

31. How to Mitigate & Reduce Risk at
Your Architecture Firm
• Develop clear and concise written agreements outlining
project scope, roles, responsibilities, and communication
protocols.
• Use industry-standard architectural service agreement
templates as a starting point.
• Conduct workshops with clients to discuss expectations
and ensure alignment.
Client-Architect Agreements

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

33. How to Mitigate & Reduce Risk at
Your Architecture Firm
• Establish clear and documented communication protocols with clients.
• Use visual aids like renderings and physical models to enhance client
understanding.
• Implement a version control system to track design revisions and
manage client feedback.
Miscommunication & Client Feedback

34. How to Mitigate & Reduce Risk at
Your Architecture Firm
 Litigation from Bidders
• Develop clear and unambiguous bidding
documents outlining selection criteria and evaluation
process.
• Conduct a pre-bid meeting to address bidder questions
and clarify project requirements.
• Maintain a detailed record of the bidding process and
selection rationale.
Bidding & Contract Award

35. How to Mitigate & Reduce Risk at
Your Architecture Firm
 Inexperienced Contract Administrator
• Assign qualified and experienced personnel to manage contracts.
• Provide contract administration training for staff.
• Use contract administration checklists to ensure all key tasks are addressed.
 Unapproved Subcontractor Substitutions
• Include clauses in contracts requiring written approval for subcontractor substitutions.
• Conduct pre-qualification of potential subcontractors before awarding subcontracts.
• Maintain clear communication with the contractor regarding subcontractor selection.
Contract Administration

36. How to Mitigate & Reduce Risk at
Your Architecture Firm
 Warranty Claims
• Maintain a comprehensive recordkeeping system for all project documents
and warranties.
• Conduct a final inspection to identify and document any deficiencies before
project handover.
• Clearly define warranty terms and responsibilities in 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.
• Include escalation clauses in contracts to account for unforeseen material cost increases.
• Stay informed about relevant building codes and regulations and incorporate them into
project plans.
 Weather Disruptions
• Analyze historical weather data for the project location.
• Develop contingency plans to address potential weather delays.
• Consider incorporating insurance against weather-related project disruptions.
External Risks

38. How to Mitigate & Reduce Risk at
Your Architecture Firm
 Project Delays
• Utilize critical path method (CPM) scheduling to identify and manage critical
project tasks.
• Develop risk registers to track potential delays and mitigation strategies.
• Maintain open communication with 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 and documented communication protocols for all project
stakeholders.
• Conduct regular project meetings to discuss progress, identify issues, and ensure
alignment.
• Use project management software with 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 clear project brief that outlines project goals, budget, and timelines.
• Conduct client workshops to discuss expectations and ensure alignment
throughout the project lifecycle.
• Maintain regular communication with 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.