Kia ora
Although we are nearly 2 months into the year, we hope everyone’s holiday breaks were relaxing and restorative.

This issue of Communique begins with a diagram describing the various parties associated with NZACS and their roles and relationships. We also report on our inaugural NZACS Scholarship recipient; a tip to avoid building in a restricted area of a site; and a reminder about the NZRAB Code of Ethics Rules.
We also have some sage words from Board and Claims Committee member Colin Orchiston on the matter of record keeping with cloud-based Construction Management software.
We finish with a summary from a detailed report by our insurance partner Aon on Natural Catastrophes and how we could be considering this in our work.

One another matter, we draw attention to the information box at the top of all Communiques, namely the one that says PLEASE CIRCULATE TO YOUR STAFF - THEY TOO ARE MANAGING RISK! The use of capitals and the exclamation mark is assertive for good reason. Our mail distribution platform allows us to see metrics for how many emails are being forwarded to staff and how many are opening them, and this shows that a number of medium to large size practices are not getting the expected coverage. This could of course be due to the Communique being pdf’d and put on an intranet or some similar distribution process, but it could also mean that a large number of staff in practices are not reading Communique, which is not good for our collective risk management.
Note that typically there is only one person per practice that is receiving the Communique and so it’s important that person does forward them to other staff.

Ngā mihi

NZACS and Who’s Involved

With the winding up of the Acanthus Insurance Company in 2024, it’s timely to remind our members of the various parties involved with NZACS, their roles, and their relationships to each other. The diagram below summarizes this.

‍

NZACS Scholarship‍

Thank you to those members who applied for the inaugural 2024 NZACS Scholarship.

We are very pleased to announce the successful recipient, Mikayla Exton, an architect at Shaw & Shaw Architects in Christchurch. Mikayla will be travelling to the UK later this year to attend a 3-day course ‘Integrating Risk into Strategic Decision-Making’ at the University of Cambridge Judge Business School (pictured above). We look forward to Mikayla sharing her learnings with our members on her return.

As a reminder, the NZACS Scholarship is available to employees and principals of NZACS member firms. The purpose of the scholarship is to encourage and support practising architects and designers in NZACS member firms to develop commercial acumen and risk management skills. The annual scholarship is worth $25,000 and applicants can apply for all or part of the funding. Applications for the 2025 scholarship will open in July. For more details and to make an application go to our website.

‍

‍

‍

Boundaries, Rights of Way, Covenants – they are all Important

A member recently had an experience where their proposed design included an area of landscape treatment in what was in fact a Right of Way (ROW) which gave an adjacent owner vehicular access to a seldom-used part of their property. Fortunately, this was picked up by the contractor before onstruction work was commenced.  

The member reflected that while the ROW had been noted in the early design stage documentation, it had inadvertently disappeared, and their own QA review (based on pdfs of the documents) had not picked this up - mainly because the ROW was not on the same CAD layer at the property boundary.

It would be wise to ensure that restrictions like ROWs and Covenants which limit things like access, build-zones, heights etc are treated with similar significance as boundaries – which in effect they are – and perhaps all put on a CAD layer that ensures that they show up clearly on all relevant drawings.

NZRAB Rule 55

A couple of recent notifications has prompted us to remind our Registered Architect members of the NZRAB Code of Minimum Standards of Ethical Conduct for Registered Architects, in particular Rule 55 concerning conflicts of professional appointment.

If a registered architect, acting in the architect’s own capacity or representing a practice, is approached to provide professional services in relation to a project, and the architect knows that another registered architect has a current agreement for services for that project, the architect must notify the other registered architect.

Having to prove whether you knew or didn’t know of another architect’s agreement for services could take time (and money if a complaint is laid) so if you have the slightest inkling of that possibility, then confirm with the client that there is no current agreement in place that hasn’t been formally terminated. Or of course simply do what the rule says and write to the possible incumbent notifying them that you have been approached.

Record Keeping with Construction Management Software

The management of information and good record keeping is crucial to being able to defend yourself in the event of a PI claim.If you search for “Communication” in the members area of our website there are several articles which cover the importance of maintaining clarity in communications. This article considers how that applies to Construction Management Software.The reasons for clarity are:

• To confirm, action, monitor and enforce arrangements between you and your client, and between you and other project participants
• To identify and manage problems as soon as practicable
• To avoid misunderstandings
• To record issues in case they need to be reviewed at a later date – perhaps when the actual participants are no longer available.

Inevitably, when a claim arises, the facts are reliant on the written information available. We have seen claims – and members will probably recall their own examples – where a decision is arrived at after intermittent correspondence, and perhaps concluded with a simple statement like “As agreed on site on X date”.  Then at a later date a dispute arises about what was agreed, by whom, why, and for what reasons.Here are some basic principles:

• Wherever possible, every statement agreement or direction should be self-explanatory
• It should be consistent with the facts and context preceding it
• It should be capable of being understood by (or actioned by) someone who is competent in, but not involved in the issues.  That person may be reading it years later, and with only a poor knowledge of the relevant context.
• If it requires some action to be taken, then it should be clear who is required to take action, when, under what circumstances, and the consequences of failing to do so.
• If it requires a response from the recipient before it can be actioned, it should state what will happen if that response is not provided.
• It may or may not be necessary to include reasons in a statement, but if they are not included, then at least they should be recorded in a way which can be accessed at some later date.

All these are at risk if you are bound into a construction management software system like Oracle Aconex or Procore, where the project correspondence and documentation is sitting on the cloud. These platforms are usually paid for - and therefore ultimately controlled by - the contractor or client.  It may not be in their interests – or within their abilities – to provide you with the information you need to defend a claim years after the events. It would be useful if your terms of engagement provided for your access at some later date, but:

• You do not have control over that access,
• You might reasonably be denied access to correspondence between others that is relevant to your defence, and
• Access will only remain for as long as someone pays for it.
• If you do get access, you will probably receive a “dump” of hundreds or thousands of documents, only a few of which might be relevant.

It’s strongly recommended that:

• During the project you independently record whatever information you might need at some later date
• Whenever you are a party to correspondence, you take the opportunity to review it and if necessary amend or respond to it so that it meets the principles outlined above.

‍Natural Catastrophes and Insurance

The news bulletins in early 2025 were dominated by the Los Angeles wild-fires and the significant damage to many properties, some of which will cost many millions to rebuild.

There are the obvious re-build costs, but the associated costs of relocation, business disruption etc. mean that estimates for the economic impact for these fires are circa $US250B. This year already looks like it’s going to be a costly one for the insurance market. For the 2024 calendar year our insurance partner Aon produced a report called Climate and Catastrophe Insight. In 2024, the world endured $US368 billion in global economic losses due to Natural Catastrophe (Nat Cat) events. 60 percent of those losses were not covered by insurance, which significantly compromises the ability for communities to rebuild and adapt for the future climate.

The document has an international focus but because Australia and New Zealand had a relatively low loss year, there isn’t much of specific relevance. That said, there are a few things that can be applied to our location and the natural catastrophe risk that we face. Are you including some discussion on the natural catastrophe risks for a project with your client as part of the briefing process?

If a relevant claim were to arise in the future it is conceivable that you may be considered negligent for not addressing ever-growing and well-known risks.  In the case of climate-related risk this is primarily for temperature extremes, high winds and flooding. The other obvious catastrophe risk is seismic. As insurance inevitably becomes more expensive or places a greater share onto the owner, it’s good futureproofing to build this in early – as the report notes:

‍The most cost-effective time to introduce resiliency measures is at the time of new construction. There are numerous cost-benefit studies that estimate cost-to- benefit ratio of building resiliently in the range of 1:4 to 1:16. These benefits include avoided casualties, property damage, business interruptions, disaster response expenses and insurance costs.

‍There are many ways in which a building project can address natural catastrophe related risk including:

• Locating any critical infrastructure or contents well above a potential flood plain and ideally not in basements.
• Oversizing roof gutters, outlets, overflows and downpipes to get water away from the building as efficiently as possible.
• Reviewing existing roof fixings to ensure that they meet code requirements to deal with high winds, or indeed considering a degree of over-design for existing and new roofs if your client wants this.
• Building capacity into mechanical ventilation systems to deal with the greater extremes (of heat and cold) that we might see. The largest fatality event in 2024 was the Southeastern Europe Heatwave (1900) and 5 of the top 10 fatality events were associated with heatwaves.
• Adopting a low damage approach to seismic design, in addition to the code requirements for life safety. The Ministry of Business, Innovation and Employment, and the Natural Hazards Commission have recently published the first in a series of Guidance documents on this particular topic.