From NZACS’s beginnings as a co-operative society over 50 years ago, we have promoted risk management education as a benefit to all members. That is why we publish Communique, have seminars and webinars, contribute to NZIA initiatives, maintain a website resource (www.NZACS.co.nz ) with now over 100 articles on risk management, and encourage firms to circulate Communique to their staff.
In furtherance of that education policy, the NZACS Board now announces an annual $25,000 scholarship. This is aimed at applicants who may take leadership in management, education, and research in risk management relevant to architects. A paper describing this in more detail is attached, and on our website.
Insurance policies typically require full payment at the start of the insured period, with cancellation if payment is outstanding for more than 60 days.
NZACS must meet its obligations to insurers on time, so our preference is that you make full payment of the NZACS membership and insurance premium to us by the due date too!
For the most part, members respect that they have longer- than- standard terms to pay, and pay on time. But cash flow can be unstable, clients may not pay on time, and projects get delayed or cancelled. So as a benefit to members, NZACS offers the option for you to pay in 3 instalments.
The third instalment was due in March. If by now you have not completed your payments and do not have specific arrangements in place with Aon, please contact Aon to discuss further.
Our November 2023 Communique described a recent NZ cyber attack on an architecture firm. Our thanks to NSP (https://nsp.co.nz/ ) for providing much of the information in the following article, which outlines what members can do to mitigate or prevent an attack, and to protect themselves.
Cyber security is a business asset. Most cyber security breaches are due to human error, and most attacks begin with a phishing scam. Cyber crime is a well-funded and resourced business – all the more reason not to leave your door open for them.
There are some 1,200 architectural design companies in New Zealand, and more than 70% of them have five or fewer staff. It’s rare to have in-house IT expertise within such a team. Perhaps the issue of cyber security just does not appear on the radar?
Architectural practices communicate and disseminate client contact details (emails, online meetings), handle delicate financial information (invoicing, updating bank account details, payment schedules), and share confidential legal and professional documentation (contracts, building permits, bidding, negotiations and construction administration).
That’s a lot of information flowing through cyberspace internally and externally, and just one weak point can expose a firm to a cyber-attack, perhaps resulting in business interruption and financial and reputational damage.
Remote working puts teams at particular risk. It’s tempting to give that document a once-over at the airport lounge or check the inbox at the local library.
Common types of cyber-attacks:
What’s to be done?
Review your in-house cyber robustness. Are essential files, business data and information backed-up? Are Wi-Fi networks secure, and company devices “clean” and set with antivirus software? Are passwords and user access up to date? For example, passwords should be changed every three months, and multi-factor authentication adopted.
Foster a “cyber safe” culture and raise cyber risk awareness: the benefit of using strong passwords, learning how to identify phishing scams, and understanding how a digital identity is tracked online. This can be as simple as discussing cyber risks, and encouraging staff to be wary of unusual or unexpected emails or phishing scams.
Initiate ongoing cyber security training of staff. Create a specific staff position to direct and maintain cyber security policy, so that all team members understand their responsibilities.
Cyber security differs from IT support, but there are IT security specialists who can work with the firm to prioritise and guide cyber strategies, mitigate vulnerabilities, and reduce the likelihood of cyber breaches.
Please also note that the Cyber cover offered by our insurers comes with some basic requirements for your cyber security that must be in place for the cover to be called upon.
Terms of Engagement often (and hopefully) include a limit of liability clause.
In some cases this might be a multiple of the fees (as per short form engineering terms), or some defined amount such as the NZIA default cap of $250,000. It is open to clients to change these figures so long as they are agreed, and in projects which come under the Consumer Guarantees Act it is not possible to apply such limitations.
Often the limitation clause is a primary defence against a claim. But these issues rarely get tested in court, because the overwhelming majority of disputes are settled by negotiation or mediation.
A recently decided High Court case (Tauranga City Council v Harrison Grierson Holdings Ltd & Constructure Auckland Ltd [2024] NZHC 714) has now reaffirmed that a limitation clause included in the contract for engagement is enforceable.
Of course, Court decisions are usually subject to “ifs and buts”, and if you are interested in the details you should follow up elsewhere.
https://www.justice.govt.nz/jdo_documents/workspace___SpacesStore_809e9bdc_8996_4ba8_8f98_0a3a801f6a7b.pdf
Alec Couchman (NZACS Claims Committee) has provided much of the following content from his experience.
In our March 2013 Communique, we reported “From the claims coming in, and research undertaken as a result, it seems that there may be a relatively recent world-wide issue around the actual corrosion performance of 304 and 316 stainless steel in highly corrosive environments such as in swimming pool buildings.”
NZACS has had several cases of stainless steel failure before and since. Swimming pools, marine exposure, maintenance/cleaning regimes, stress cracking, and substitution with lesser grade product have all featured. The most recent case concerns school laboratory sinks, where various chemicals were tipped in by students, the cleaning regimes were questionable, and the specified SS product varied in composition from expected.
The quality and composition of stainless steel - even of the same specification - can vary. And there are nearly 50 different compositions and treatments which fall under the general description of “stainless steel”! Suspicions have been raised of products out of China because of the quality problems, and relatively small variations in constituent metals – notably molybdenum – can have a significant effect on performance but remain unidentified without a specialist test by a metallurgist.
Components which are safety-critical but are not washed frequently are vulnerable to stress corrosion cracking, including brackets for suspended elements, pipework, rod/bar supports, wire rope supports, fasteners, ceiling wires, cable strapping and hose clips. Some components, such as twisted wires as well as some bolt, nut and washer combinations create crevices, which further increase the risk of corrosion attack.
If you are specifying stainless steel we advise caution and close assessment of potential corrosion issues. Cost-cutting by using a lesser grade than would be conservatively prudent may be directly related to later failure or dissatisfaction. There is plenty of literature available, but even if you specify the “correct” product, specify a suitable finish, and detail items in a sensible way, in a critical situation it would be prudent to include on-site verification and testing of the actual product supplied. Then follow up with instructions on maintenance and care by building users.
There’s some excellent information, including webinars on the website of the NZ Stainless Steel Development Association https://www.nzssda.org.nz/ .
And – as an allied comment – some buildings (for example schools) combine high levels of abuse accompanied by low maintenance levels.
You would think that since the Building Act 2004 is 20 years old now, the idea of a CCC is understood. But NZACS claims files routinely provide cases where clients spurned the use of their architect for construction phase services, then turn on them several years later when they are unsuccessful in selling their building because a CCC was not issued.
Partial Services are a regrettable fact of life. But even if you are not involved in the construction phase, you should educate your client – in writing - about their responsibilities: especially the need to get a CCC, and the ongoing maintenance procedures for guarantees, warranties, and the general good condition of the building.
Those of you that have been engaged to obtain a post-construction approval of the works will know that it is an expensive and fraught exercise.
In one unfortunate case, the architect was called by the client several years after completion to supply some documentation that the client had lost (claimed never to have been received). The architect, in good faith, delivered the papers by hand. Alas, that visit was later held to be some form of inspection which conferred responsibility for defects on the architect. A VERY expensive and calamitous outcome.
A wise architect once remarked that the first estimate a client receives is the one that sticks in their mind.
Alas, wise architects are often old architects, and their wisdom is not baked in to newer incarnations.
If you are lured into venturing a probable cost at an early stage, a prudent response would be to avoid specifics, and venture a non-binding figure which is high enough to cover foreseeable AND unforeseeable speculation, and proffered subject to as many preconditions as can be managed!
Don’t forget to state whether or not the estimate includes GST.
It’s a good idea to list what isn’t included, but be aware that a legal eye might later be reading that list: “dogs sheep cattle etc” might be held to exclude poultry (only two legs), whereas “farm animals and machinery” should include poultry and tractors!
You would think that a contractor or developer, when put in the same position, would adopt the same approach. But – yet again (groan) - NZACS has a recently notified claim that suggests otherwise.
In this claim (as in others) the contractor (or developer) committed to delivering a project at a fixed price based on an early estimate. Of course for a welter of reasons the eventual cost was more than expected. This has spelt doom for other contractors, but this one has been enterprising enough to blame the architect.
Does this sound familiar to you?
The fee for engaging a quantity surveyor to provide an initial estimate could be money well spent, even if not recoverable from a client.
The NZACS website is a few years old now and we are currently carrying out a rebuild of the site to improve its speed and security, and some of the graphics.
When the site is ready we’ll let you know. In particular we will request that you to log in with your email address and create a new password in order for you to gain access to archived copies of Communique.
In March 2013, Colin Orchiston took over the Communique editorship from Alan Purdie.
The role includes writing articles and collating and editing articles provided by others – typically NZACS Board members – and co-ordinating the content of the website resources. As a member of the Claims Committee, Colin has had direct access to claims information, and this has often formed the basis of articles.
Now, after 11 years in the role, and with Michael Davis recently appointed to the Claims Committee, it is appropriate that Michael takes over the editorial position.
We take this opportunity to thank Colin for his considerable contribution to the NZACS architectural community, and trust that we might continue to tap into his wealth of knowledge and experience going forwards.
Peter Marshall (Chair)