The Art of Designing in the Rain
It is more difficult to do anything in the rain. A good
friend gave me a book recently titled “The Art of Racing in The Rain” by Garth Stein
that provided the idea for this article and title. It is an insightful book about
a racecar driver Denny Swift and his family and life told through the eyes of
his dog, Enzo a lab terrier mix. The story describes how drivers do not like racing
in the rain. A racecar becomes unpredictably with water on the track,
amplifying a driver’s mistake where overreactions lead to spinouts and crashes.
Denny learned early in his career how to manage a racecar’s behavior in wet
conditions and outperforms other drivers. The strategy Denny learned from an experienced
veteran -“We are the creators of our destiny.” We have only two options 1) Wait until something happens to us, or 2) Create and control the
outcome.
Design Professionals: The Economy is Our Rain
The slow economic climate has created a challenging work environment
for many firms, causing A/E’s to make difficult decisions including staff
reductions, service offerings and changes in business and operational
practices. During slow economic conditions, claims rise with frequency and/or
severity with parties more willing to litigate, and filing claims sooner and
for smaller amounts. Firms must not just react to these conditions - A/E’s must
be the creators of a successful path forward. Firms overreacting to economic
conditions may inadvertently be increasing their risk and liability exposures. In
racing terms, these actions are causing firms to spinout and crash.
How to Handle the Wet Track
Leadership Faith
Principals and leaders – first and foremost, demonstrate
faith and confidence to employees that they, and the company will prevail.
Obtain reliable and vital information confronting the reality of the situation
with brutal facts and navigate a course forward. Clearly communicate this
strategy to the organization on a regular basis describing how all employees
will play a part in the company’s current and future success.
Market Conditions
Have your finger on the pulse of market conditions obtaining
the information needed for making appropriate adjustments before being forced
too by market drivers. Construction runs in cycles. Know the contracting and
expanding markets before they happen staying ahead of the down cycle. Invest in
new technology and communications systems to keep the firm competitive.
Bench Strength
Firms are reaching deep into their internal talent pools to
find and create new paths forward. Experienced and proper staffing levels are
critical for the success of any firm and project. The key - balance of
knowledgeable employees for services and project segments, developing design
documents, providing oversight along with mentoring junior staff on the proper
methods and practices used. Almost 60% of all staff should be at the technical staff
level, with 30% at the management position.
Knowledge of Risk
Every employee should learn how everyday decisions can impact a projects
success or possible failure. Have regular training sessions conducted on the
topics of risk management, claim trends, relationship of risk to business
practices and industry claim examples for market segments. Ensure employees are
aware of the risk management practices the firm has implemented and how each
employee plays a role.
Quality and Performance
Productivity and performance increases as quality improves.
Why? Less rework, fewer requests for information (RFI) and change orders (C/O)
along reducing the potential for project delays, disputes and claims. Ensure a consistent,
systematic approach is applied in the development of design documents along
with peer review of plans, specifications and calculations by senior representatives
of the firm.
Client Satisfaction
Once a firm has obtained a good client, do everything you
can to keep them happy. Client satisfaction is essential to the financial
performance, reputation and growth of the firm. High performing firms
have a higher percentage of repeat customers that in return lowers marketing
effort expenses along with reducing risk and liability exposures. Establish a
communication strategy ensuring an experienced and qualified Project Manager
(PM) is assigned and communicating with the client on a regular basis.
Contract Provisions
Successful firms realize the most effective method for
managing a project along with client expectations is through a well-written
contract. Contracts that express clarity of services, responsibilities,
schedules and compensations are the best methods for managing a project as well
as the best defense against professional liability claims.
Key Provisions:
- Scope of services
- Payment terms
- Responsibilities clearly defined
- Suspension and termination
- Warranty or guarantees
- Indemnity and duty to defend
- Dispute resolution
- Limitation of liability (LOL)
Communication and Documentation
Improper communication and documentation efforts are the
main cause of many claims for A/E firms. Effective oral and written
communication efforts have many benefits and are necessary for any project
fostering an environment of teamwork and consensus to manage a projects
progress and change effectively. The development and execution of an effective
communication and documentation program improves performance as well as reduces
risk by documenting actions taken, decisions made and on whose authority.
Billing & Invoicing
Cash flow is the lifeblood of every A/E firm. Based on
recent surveys 80% of firms are having difficulty getting paid for services in
this economic climate. Higher performing firms realize the liquidity of this
asset is extremely important to their financial well-being converting accounts
receivable to cash in a consistent and timely manner. Payment terms should be discussed
and specified in contracts, including billing cycle and documentation
requirements defined. How quickly payments are processed and incentives for
early payments indicated. Follow-up strategies should be clearly defined
including when PM’s become involved.
Risk Management Plan
Have a broad view and understanding that risk pertains to
every decision made and aspect of a firms’ operations. Realize there is a
correlation between risk and performance and there are “interrelated” risk
factors throughout the organization. Develop a Risk Management Plan outlining the
firms understanding of exposures and strategies for mitigating risk.
Communicate to every employee how he or she plays an important role in the firm’s
risk management plan. An effective risk management strategy starts from the top
down through words and actions. A Risk Management Plan makes for an excellent
training program.
Conclusion
This is a challenges period, however, any firm can implement
strategies and practices to improve their performance and mitigate risk. Successful
firms are rethinking strategically, making appropriate adjustments, and
positioning themselves addressing market needs. Successful firms have
found an effective approach for long-term performance and profitability is
through implementing an effective risk management strategy.
As
Denny Swift the racecar driver shared with us - We have two options.1)
We can wait until something happens to us, or 2) We can create and control the
outcome. Lets create a successful path forward.
Please feel free to forward this newsletter to others who may be interested.
Thank you.