Focusing on Quality in Business Can Cut Claims, Designers Advised
That's the word from the DPIC Companies, a Monterey, CA-based provider of professional liability insurance programs and risk management services for architectural firms and related companies.
According to a recent analysis by DPIC, the increase in claims against design professionals is largely a reflection of an increase in professional liability claims overall in the U.S. However, design firms are often the target of claims even when the specific problem might have been caused by a subcontractor, according to DIPC's chief claims officer Steve Mauck.
"So, in times when claims [in general] are on the increase, architects [and other design professionals] take a larger-than-average hit," he stated.
Mauck believes that the robust economy of the late nineties was a major contributing factor in the rise in claims activity.
"Since our last study in 1995, the design industry has evolved in ways that make [design professionals] more vulnerable to disputes and claims," he observed.
"The growth in available projects [needing to be done] far outpaced the growth in the number of firms and the number of experienced professionals [available to do them]. As resources were stretched by increased workloads, inexperienced staff was assigned to tougher challenges, and details were missed," he further noted.
Mauck added that the most recent DPIC study revealed that problems with non-technical aspects of projects such as communications, client selection and contract negotiations contributed to the vast majority of claims made.
The findings, according to Mauck, "reinforce our longstanding belief that paying attention to the quality of business practices is [another way of] paying attention to loss prevention.
"And, the level of success a firm has with risk management," he added, "has a direct bearing on a company's bottom line."
So, what's the best way to avoid ending up in expensive disputes?
First and foremost is communication. Legal action tends to occur when communication breaks down.
Addressing problems quickly and in person will help to prevent things from getting out of control.
Be sure your contract spells out what you are and aren't responsible for. Explain your policies to potential clients verbally, as well as in writing, before the project begins. Don't spring surprises on them after the fact.
Take responsibility for getting the job done right. If you subcontract out work, find reliable subs and stick with them.
Don't cut corners. Set and maintain high standards for quality and integrity, and hold your employees to these.
Finally, don't take on more work than you can handle. Stretching your resources may seem like a good way to boost your bottom line, but it can be more expensive in the long run if things go wrong.