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. 

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Thank you.