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WCPGW: Risk, Risk – Just can’t get enough

A member has written in asking about taking on a ‘contract administration only’ phase of a project and if there are any implications re the contract and PI insurance.

 

Dear What could possibly go wrong?,

I have been approached by a previously unknown potential client who would like ‘formal client representation’ by an architect for a master builders contract for a new warehouse build. The documentation was carried out by a building designer. What are the things to watch out for, especially with regard to contract and insurance?

 

Dear ArchiTeam member,

Being an architect is a risky business and as an architect your appetite for risk is in the category of insatiable. But at what level – low, medium , high or mega. Each project brings its own risk dilemma, it is crucial to assess and understand what the potentials are before you take on any client and their project.

Now, the general risk topic is huge, so big that you can make a lifetime career and very pleasant living out of it. However, it is worth considering in a simple and rudimentary way a risk assessment for both the client and the project by posing a few questions to ourselves, for example –

Client – Why are they only now thinking it would be good to have an architect? Did they think that  costs can be cut by using a ‘designer’ or does the designer now see the build as too risky or beyond their skill level or have they just had enough with the client so they don’t want to continue?  Will the client pay you and on time,( a deposit can help with this)? Are they the nervous, needy type who will demand over servicing? A tight fee proposal can help by limiting the number of site meetings etc. and including hourly rate charges for work beyond your quoted service.  Contract Admin can take up a lot of time, especially if the documentation is deficient. Remind them that it will be costing them if there are problems with the previous work by others. Invoice monthly and be up to date on your time sheets.  Are they at the other end of the spectrum where they are obsessive and will continually monitor your performance?  Assess the client by carefully finding answer to these questions.

Project – a warehouse in itself is not a difficult build, so why get an architect now? A broader view may see others problems. Planning approvals, siting, traffic, setbacks, services, built on the boundary, etc etc. Are there problems they are currently aware of? The main issues beyond the build will be inadequate documentation by the designer and engineers etc, and the builder’s tender – as a risk to you do you want to take this on?  The MBA contract will not give you the authority required to impose yourself on the contract administration; you’ll be more of an observer and this will be extremely difficult to ‘represent the client interests’.

You’ll need to be up front with the client and the builder to amend the contract to allow you the authority required.

The ArchiTeam PI insurance broker, Greg Hansen, was approached for comment, he said

“The challenge to partial work is being very definitive about what work is and is not being done. It is easy for the customer to allege they thought the Architect was across all issues and then the onus is upon the Architect to be able to clearly demonstrate the documentation and advice outlining if they were not doing something. The ‘partial’ engagement often comes with greater risk. PI Insurers know that these projects can be harder to defend when allegations are made. Where the Architect has not been there since the start it can be more difficult to defend allegations without a complete file”.

Your CAA will require a carefully crafted, detailed and extensive disclaimer re work by others where you will advise that you are not reviewing their work for adequacy or correctness, their errors are theirs and not yours. Because this is a serious contractual matter it is most likely best done by a lawyer experienced in the field.

 

What level have you assessed your risk at for this project and client and are you being paid at a level that is commensurate with it?

Peter Finn, ArchiTeam director.

 

Disclaimer – ‘What could possibly go wrong?’ is not an advice column, it is only general comment from ArchiTeam who are not aware of your circumstances with any issue that you may have. You cannot rely on these general comments, each member must make their own decisions about any action they should take and seek independent advice of their own if they are unsure.

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