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Flashcards in Practice Management - Risk Management Deck (69)
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1
Q

Agency

A

legal concept in which one person (the agent) acts on behalf of another (the principal) in dealings with another (the third-party)

2
Q

In the concept of agency, who fulfill the roles of the agent, the principal, and the third-party?

A
Architect = the agent
Client = the principal
Contractor = the third-party
3
Q

Legally speaking, when the agent consents to act on behalf of and represent the interest of the principal, the agent is empowered to ____?

A

create a legal relationship between the principal and third-parties.

4
Q

Vendor

A

Someone who supplies a specific product for a fixed price.

  • act primarily in their own interest
  • contractors are considered to be vendors
5
Q

Duties

A

The law defines what one person “owes” another in particular relationships, including contracts, by applying this to a set of terms or requirements.

6
Q

What are 3 ways duty is established for the architect?

A
  1. By the terms of the contract, whether written or oral.
  2. By legislative enactment, such as building codes and architectural licensing laws.
  3. By the architect’s conduct, such as implied duties
7
Q

Implied duties

A

In situations arise that are not covered by contracts or general conditions, architects may not act unilaterally without consulting the client and may be liable for their action or inaction.

8
Q

What are 6 examples of implied duties?

A
  1. Cooperating with contractors
    - not all actions related to this duty are clearly stated in contracts
  2. Not interfering with the contractor’s work
    - actions that delay
    - actions that add cost
    - actions that cause the contractor to modify standard methods of construction
  3. Giving relevant information to contractors
    - anything that may affect job progress
    - any problems architect has observed
  4. Assisting the owner in coordination
    - helping owners coordinate the schedules and requirements of other contractors and vendors who are not under the general contractor’s control
  5. Ensure that the plans and drawings comply with the requirements of the building code
  6. Comply with the standard of care
9
Q

Liability

A

the legal responsibility for injury to another person or damage to a property

10
Q

Negligence

A

the failure to use due care to avoid harming another person or damaging property

11
Q

What is an important way in which architects can be held liable?

A

negligence

12
Q

What are the 4 conditions that must be met for an architect to be found negligent?

A
  1. Must establish a legal duty between the parties
  2. Must show that the architect has breached that duty
  3. Must show that the breach of duty caused the damage or injury suffered by the other party
  4. Must show that there was actual damage or harm to the second party
13
Q

What are 3 common defenses to claims against the architect?

A
  1. Betterment
  2. Statute of Limitation
  3. Statute of Repose
14
Q

Betterment

A

A legal concept that says if the architect has omitted something, if the owner would have had to pay for that missing item despite the architect’s omission, they cannot make the architect pay for it.

  • A way an architect can defend themselves against claims made against them.
  • Often applies to claims of omission by the architect
15
Q

Statute of Limitation

A

Sets a time limit (typically 2-3 years) within which a construction claim can be made against an architect, after which the claim is permanently barred, starting from the date of discovery of the construction defect.

16
Q

Statute of Repose

A

Sets a time limit (typically 5-10 years) within which a construction claim can be made against an architect, after which the claim is permanently barred, starting from the date of substantial completion or another fixed date.

17
Q

What are ways that architects can use good project management to limit their exposure to liability?

A

About the client:

  • know the client
  • use well-written contracts and follow them thoroughly (AIA contracts)

About the project team:

  • make sure the appropriate employees are assigned to each project
  • maintain an active quality control program
  • maintain through documentation
  • be careful of last minute changes or substitutions

About the office:
- carry liability insurance

18
Q

What are 2 main ways that architects can limit their exposure to liability?

A
  1. good project management

2. preventing problems from starting in the first place through conflict resolution

19
Q

Who is responsible for conflict that involves broad office issues?

A

the principal

20
Q

Who is responsible for conflict that involves members of the project team?

A

the project manager

21
Q

Who is responsible for conflict that involves construction or others involved with construction activities?

A

the project manager or construction administrator

22
Q

What is the first thing you should do if a conflict occurs during design or construction?

A

Look to any applicable contracts and let contract language provide the path to resolution.

23
Q

What are 7 important elements of conflict resolution?

A
  1. recognize the problem
  2. define the problem / root causes of conflict
  3. gather the required facts and information
  4. gather the affected participants
  5. Look at alternatives
  6. Select best alternative
  7. Implement the solution
24
Q

Privity

A

legal concept in which architects are (in theory) protected from legal claims by parties with whom they have no direct contractual relationship

25
Q

In which AIA document is privity clearly stated as an indemnification clause?

A

A201 General Conditions for the Contract for Construction

26
Q

Indemnification clause

A

Holds harmless both owner and architects for any damages, claims, or losses resulting from the performance of any work on the project, whether by contractors or others with whom the architect has no contractual relationship.

Make sure this is included in contracts.

27
Q

What are 3 ways to minimize third-party claims?

A
  • Do not include language in contract that states or implies responsibility, management, supervision, coordination, planning of construction
  • Do not give directions concerning methods of construction
  • Do point out obvious construction safety problems to contractors and follow up in writing with both contractors and owners
28
Q

What are 2 categories of copyright protection for architectural work?

A
  1. Copyrights for drawings, specifications, and other pictorial or graphic representations of architect’s work.
  2. Copyrights for the building itself.
29
Q

How do copyrights protect the architect?

A
  • owner cannot construct buildings based on unauthorized copies of the architect’s design
  • derivative works cannot be made, including modifications to the original building design
  • if either owner or architect terminates the owner-architect agreement, the owner cannot continue to make use of architect’s instruments of service without paying a licensing fee to the architect
30
Q

The Architectural Works Copyright Protection Act

A

In buildings built after December 1, 1990, rights are retained by the copyright holder including the graphic representation of the building, overall form, arrangement, and composition of space an elements in its design

31
Q

Who owns the copyright be default? What 2 steps should that party do to protect their ownership of the copyrights?

A

Architect, unless:

  • architect is employee of building owner
  • architect specifically assigns copyright to the owner

Architect should:

  • clearly state copyright in the Owner-Architect Agreement and contracts.
  • register the work with the US Copyright Office within 3 months of building completion
32
Q

AIA Document B101

A

Standard Form of Agreement Between Owner and Architect

33
Q

What does AIA Document B101 say about copyrights?

A

The Standard form of Agreement between Owner and Architect states that the architect is the owner of the instruments of service and retains all common law, statutory, and other reserved rights, including copy rights.

34
Q

What are 4 strategies to manage risk?

A
  1. Avoid Risk
    - marketing selects projects types that fit with prior experience
    - work with clients with excellent reputations
  2. Transfer Risk
    - contracts transfer risk appropriate to the client, or downward to a consultant
    - insurance transfers risk to a business financial partner
  3. Assume Risk
    - accept appropriate work, but maintain enough cash to responsibly satisfy insurance deductibles
  4. Control Risk
    - adopt best practices and educate staff
    - seek good counsel to prevent to reduce losses when claims emerge
35
Q

What are 9 categories of measured liability losses that form quantifiable basis for decoding areas of greatest risk? What 4 address most causes of risk to architects?

A
  1. Communication
  2. Project team capabilities
  3. Client selection
  4. Negotiation and contracts
  5. Budget control
  6. Schedule control
  7. Loss prevention issues
  8. Construction phase services
  9. Billing procedures
36
Q

What are the 2 top deal breakers in contract negation?

A
  1. profitability (client won’t agree to your fee)

2. insurability

37
Q

What should you never start work without?

A

A signed, written contract or agreement.

38
Q

What are indemnities that actually benefit the architect?

A
  • Client indemnity to the architect for claims arising from the presence of hazardous materials on the job site.
  • Client indemnity to the architect for claims from the client’s misuse of the architect’s drawings.
  • Mutual indemnities between the architect and consultants, making each party legally responsible for their own mistakes and NOT for the mistakes of others.
39
Q

What is the only guarantee that the law typically requires, and that professional liabilities insurances cover?

A

guarantee to perform the standard of care.

40
Q

What are characteristics of a good scope of service?

What is a result of badly written scopes of service?

What is a result of unclear scope?

What is a result of over broad scopes?

A

Set forth with precision the services that the architect will provide, and exclude those they won’t.

They lead to claims and loss of revenue. They can ruin a firm and damage its relationship with the client.

Make the architect responsible for the performance of someone not under their direct control.

Rob architects of the ability invoice for extra services.

41
Q

What is a risk of not providing construction administration services? Insurance-wise?

A

The architect cannot protect the design, and in doing so cannot protect their own reputation and liability.

Some professional liability insurance providers will not insure firms that do not provide CA services.

42
Q

What is a limitation of liability?

A

An agreement not to seek damages in excess of a pre-established and agreed-upon amount.

43
Q

What is a reasonable target to set the LOL to ensure that the firm never has to pay out of pocket? What should the LOL be applied to?

A

Set the LOL at the ‘proceeds of available insurance’ to ensure never having to pay out of pocket.

LOLs should apply to the full sum of any and all claims on the project.

44
Q

What are 4 standard in-house practices for making better agreements/contracts?

A
  1. Appoint a single person or, for larger firms, a team of individuals to review and negotiate all contract terms and conditions.
  2. PM should review their own contracts, but never be the only one to do so.
  3. Provide access to signed agreements for review by the entire project team.
  4. Save electronic copies of every agreement with the electronic project records..
45
Q

Which standard agreement form is most frequently used?

A

Full services agreements

46
Q

Which standard agreement should be used for short-form terms and conditions for projects where there is no construction involved, such as feasibility studies, programming, and planning services.

A

Small or limited-scope agreements.

47
Q

Which standard agreement is a brief letter agreement used to get a project going until the final agreement is executed? Which limited items should be included to agree on quickly?

A

Notice to proceed

  • definition of limited scope and payment
  • intent to execute the final agreement
  • rules to terminate or extend
48
Q

Which type of standard agreement should always be tied to the terms and conditions of the prime agreement between the architect and the client? What should the architect avoid doing?

A

Consultant agreements

  • never sign the consultant’s proposal
  • avoid attaching consultant’s proposal to a consultant’s agreement form where its terms and conditions might conflict
49
Q

Which type of standard agreement should be used for rate schedules, reimbursable expenses schedules, sample invoices, standard scopes of services for each type of consultant regularly hired, consultant standards?

A

Common exhibits

50
Q

Common exhibits

A

A type of standard agreement should used for rate schedules, reimbursable expenses schedules, sample invoices, standard scopes of services for each type of consultant regularly hired, consultant standards.

51
Q

Notice to proceed

A

A type of standard agreement that is a brief letter agreement used to get a project going until the final agreement is execute. Such notices include limited items to agree on quickly: definition of limited scope and payment, intent to execute the final agreement, and rules to terminate or extend.

52
Q

Full services agreements

A

The standard agreement form is most frequently used.

53
Q

Small or limited-scope agreements.

A

A type of standard agreement used for short-form terms and conditions for projects where there is no construction involved, such as feasibility studies, programming, and planning services.

54
Q

Standard agreement forms

A

AIA documents/forms that have been tested by the courts. Recognized and respected by clients. Insurance providers often offer discounts to clients who use these.

55
Q

What are the top 3 red flags when selecting a client?

A
  1. Client is inexperienced in design issues
  2. Client has history of claims or litigation
  3. Client is in poor financial conditions or has a reputation for being behind in fee payments
56
Q

What are the top 3 reasons for negotiation or contract issues?

A
  1. Unclear or inappropriate scope of services
  2. Did not formally evaluate projects risks
  3. Contract was not in place before work started.
57
Q

Project delivery method

A

How the project is contracted for construction

58
Q

Hard Bid

A

The most traditional project delivery method, also known as design-bid-build.

  • architect completes plans and specs (CDs) and puts them out to bid
  • the lowest bid wins the project
59
Q

What are the main issues with hard bid/design-bid-build?

A
  • no set of documents is ever fully completed or perfectly coordinated, leaving room for estimators to achieve low bids by leaving out missing info in the drawing set
  • quality in construction is not a priority for those bidders planning to win
60
Q

Negotiated contracts

A

A project delivery method in which the owner interviews and selects the building independent of a bid process.

61
Q

What project delivery method is said to produce the best quality for the lowest price?

A

Negotiated contracts

62
Q

Fast-track

A

A project delivery method involving phasing of design activities to overlap the construction process. Biggest (highest cost) decisions are made first, and the smallest (lowest cost) decisions are made last.

63
Q

What is the main risk of a fast-track project delivery method? How can architects manage this risk?

A

Decisions are always made and implemented without complete information and may need to be later changed at some expense (change orders).

It is key to clarify expectations with owner in advance and attempt to highlight the risk in the contract.

64
Q

What are the top 3 types of claims resulting from project team capabilities?

A
  1. Inexperienced design staff
  2. Inexperienced project manager
  3. Inexperienced on-site staff
65
Q

What are the top three types of claims resulting from communication issues?

A
  1. Lack of procedures to identify conflicts, errors, and omissions
  2. Project issues and potential disputes not handled correctly
  3. Scope of services not explained to the client
66
Q

What are 4 practice ways to manage quality / quality control?

A
  1. Self-checking
    - each member responsible for own quality of work
  2. In-house third-party reviews
    - experienced reviews
    - should occur at the conclusion of every major project phase, BEFORE deliverables are issued
  3. Peer reviews
    - independent, outside consultant ‘peer’ reviews
  4. BIM
    - using add-ons and reports to QC
    - still important to be reviewed by humans
67
Q

mediation

A

A form of alternative dispute resolution where a third, impartial, independent party is consulted in effort to coach two or more disputing parties into a settlement. The resolution is not binding.

68
Q

arbitration

A

A form of alternative dispute resolution where an arbitrator or panel of arbitrators reviews a dispute between two or more parties and renders a decision. The decision is binding unlike mediation; it is not elective or negotiable, but avoids costly court battles.

69
Q

litigation

A

A form of dispute resolution where parties engage in costly pre-trial and court trial appearances where one party petitions a claim against the other for damages. The decision is binding and often the most costly.