Updated Feb 2017This is the second of six articles giving an overview as follows:
Risks within the firm may arise in any project, and are most easily controlled by the firm. It thus makes sense for them to be addressed as the first step in risk management.Identifying such risks requires benchmarking the firm’s practices and processes in relation to the recommended actions or published guidelines described below.Quality Management systemsEach firm should have a Quality Management (QA) Manual. At its simplest, this will comprise templates for documents and procedures for undertaking tasks. All processes should have a means for checking/review, and for feedback to learn from experience (good or bad!). The NZIA Practice Notes have numerous templates and the NZIA “GAP” (Good Architectural Practice) checklists from 2001 are still very useful; together with the recently revised together with the NZ Construction Industry Council Design Documentation Guidelines, they could form a good basic QMS framework.Capability and experienceArchitects are generally trained for problem solving and thus are not limited to designing projects that they have previously had experience in. There is usually the opportunity to work with specialist consultants on new technical issues, and to take on additional staff to meet resourcing shortfalls. However, the risk of taking on a project beyond the capacity and experience of the firm should be an important consideration. There are also risks involved in committing to additional technical or staff resources.Staff Staff need to be competent in their own right, but management should be monitoring whether they are actively carrying out tasks in the required manner. Every staff member should be conversant with and compliant with the QMS systems.Every staff member should be actively considering the liability issues associated with design and documentation decisions and output. Staff should be routinely reviewing their outputs – and those of more junior staff – on a “what if” basis. The test is whether documentation is factual, accurate, competent, unambiguous, capable of being implemented as required, and would withstand scrutiny under “hostile” conditions.Record keeping Thorough records of a project are not only essential to efficient management of it, but of huge assistance in the event that things go wrong. The credibility of those records is enhanced when it can be shown that they are prepared as a usual practice, regardless of circumstances, and not formulated only under emergency conditions.There need not be any particular form for keeping records, but their value in the event of a liability claim will be greatly increased if they are logically filed, conform to standard templates, are made at the time of the events reported on, and give the appearance of being reliable.When recording decisions made or instructions given, the name of the person who made the decision (or gave the instruction) should be recorded. When actions are called for, it should be clear who is to undertake the action, by when, and whether the matter has been actioned. If the consequences of failing to act have been specifically raised, then those specific consequences (and any conditionality) should be recorded.“Relevant records” for retention should include the technical information and manufacturer’s recommendations as to the use and installation of specific materials relied upon in the design. This is so that the firm can prove that they met such recommendations at the time of the design, despite subsequent changes to them.Records may need to “tell the story” in the absence of those who made them – perhaps under hostile scrutiny of others with first-hand involvement and possibly a reason to put their own “spin” on the issues. The records should therefore provide both the facts and context, on the understanding that they may be discovered and used in litigation.It is just as important to avoid recording some things as it is to preserve others. For example, references to personalities and opinions or conclusions as to the cause of a problem or how it might have been avoided are more likely to be detrimental than beneficial. Any such records should be clearly separated out from the others.Preservation and Destruction policyThere is a 10 year long-stop provision for liability in the Building Act. However, it is very likely that records early in a project will be relevant to actions later in that project, and therefore it would be unwise to discard records until 10 years has elapsed from the completion of the firm’s involvement in the project. That would be a prudent minimum.However, it is possible that it will be necessary to establish the date at which the firm was last involved in the project for the purposes of raising a limitation defence (i.e. that ten years has elapsed). Accordingly, it would be prudent to view (say) 12 years as a “safe” time.In the event that an architect is retained for limited services (say – up to and including obtaining a Building Consent) the design may still be relied upon until completion of the building. Accordingly the 10 (or 12) years should be regarded as running from the final date when the architect’s documentation was likely to have been relied upon for construction.Business managementIf the firm is not adequately in control of the “commercial” aspects of running the practice, there is a risk that cashflow, workflow, resource allocation and staff leadership may be inadequate.In smaller firms, or ones that have recently grown rapidly, it is often the case that work output becomes the all-consuming focus to the detriment of management of the business. This presents a risk to the commercial viability of the firm which in turn puts a stress on the work output: both quality and productivity. Unless the QMS processes are functioning to the necessary standards, this is likely to result in latent failures which set up the potential for liability claims against the firm.The acceptance of a commission which “stretches” the capability of the firm must be matched by a business plan which recognises the additional commercial management necessary.