Consulting architects of alberta

1. Consulting architects of alberta Annual General Meeting October 29, 2013 Jill Eagleson Executive Claims Consultant XL Insurance, Design Professional

2. Classification of Causes • The XL Insurance Risk Drivers research highlights the interrelationship between technical and non-technical factors that contribute to an A/E firm’s risk exposure

3. Classification of Causes • Technical Error and/or omission of a technical nature which resulted in a loss prevention file or claim • Non-technical Breakdown in project or practice management processes which contribute to a loss prevention file or claim being made

4. Top 4 Non-Technical Risk Drivers Percentage of Claims Affected – 2001 (beige) v 2012 (blue)

5. ARCHITECTSWho Sues Architects?

6. JILL’S TOP TEN TRENDS

7. 1. Delays/Extras/overruns – WHO IS TO BLAME • These claims might be made by owner or contactor • Will often be substantial; multi million dollar claims not unusual. • Tighter margins; higher expectations Typical allegations: • Errors and omissions in design • Late responses to shop drawings and RFI’s

8. Loss Prevention Tips • Client Selection and Education • Budget is adequate • Project Selection • Adequate Fees • Set Realistic Expecations

9. Trend 1 ½ IT’S NOT EASY BEING GREEN Loss Prevention Tips • Are owner‘s expecations realistic? • Appropriate contract language • Your firm‘s expertise

10. 2. More technical mistakes being made WHY IS THIS? POSSIBLE ANSWERS • Too much work • Not enough time • Sense of urgency • Insufficient training and continuing education opportunities • New techology • Bottom line impact on fees

11. 3. CONTRACT ISSUES • Unreasonable terms and conditions being imposed. Examples: • Indemnity and hold harmless • Standard of Care; fiduciary • Set off & withholding of fees • Absence of Limitation of Liability; no waiver of consequential damage

12. Contracts – Tips • Use your firm standard form agreement; failing that, professional association • Consult with insurance advisors and legal counsel • Create awareness within your firm and always carefully review agreements prior to execution

13. 4. WRITTEN COMMUNICATIONS Good & bad • Exercise caution; formalize communication when necessary • Your RFP; friend or foe?

14. 5. Small projects/fees generating large claims Remember! Risk vs. Reward • Due diligence • Client selection

15. Small Projects – Loss Prevention • Same level of due diligence required • Always have a written agreement • Be aware of scope creep and doing things for free.

16. 6. Design Build and P3 Projects • These non traditional project delivery methods are becoming more common • Different risks, different risk management • As always due diligence is critical • Careful review of contracts required

17. 7. Fee Issues; Accounts receivable • Client Selection (consider retainer) • Procedure to collect • Contract provisions re: payment

18. 8. Condominiums • Continue to be risky projects in terms of liability claims • Highly leveraged • Low fees for design • Low bidder • Unsophisticated purchasers/owners • Developer and contractors likely judgement proof when the claim is made

19. Condominiums – Loss Prevention • Project and Client Selection • Quality contractor in place? • Appropriate contract • Appropriate fee

20. 9. Field Observation Services • This should always be part of your scope of service • Appropriate intervals • Done by the right people • Appropriately documented

21. 10. Consolidation and Competition • Jumbo firms • More competition

22. QUIZ – 6 QUESTIONS – TRUE OR FALSE? • Requesting financial information from a potential client is unprofessional and almost a guarantee to lose the account • One of the best things about doing projects for public agencies is their creditworthiness. They always pay their bills • Virtually all professional liability insurance policies cover the indemnifications clients commonly request.

23. Questions – continued 4. Condominiums are relatively low risk projects because a simple design can be repeated throughout the project. 5. Most claims against architects and engineers are filed w-i 6 months of project completion. 6. Threatening to sue a client for overdue fees is a good way of getting paid

24. THANK YOU Questions?

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