AHPP 16.1 Flashcards
(31 cards)
What is an example of avoiding risk in architecture practice?
Marketing selects project types that align with prior experience and reputable clients.
Section 2: Finances, Risk & Development of Practice
How is risk transferred through contracts?
By transferring appropriate risks to the client or downward to consultants.
Section 2: Finances, Risk & Development of Practice
How does insurance play a role in transferring risk?
It transfers financial risk to a business financial partner.
Section 2: Finances, Risk & Development of Practice
What is an example of assuming risk responsibly?
Accept appropriate projects and maintain enough cash to cover insurance deductibles.
Section 2: Finances, Risk & Development of Practice
What is a key method of controlling risk internally?
Adopt best practices and educate staff.
Section 2: Finances, Risk & Development of Practice
What should a firm do when claims emerge to control or reduce risk?
Seek good legal or professional counsel to prevent or reduce losses.
Section 2: Finances, Risk & Development of Practice
What is the origin of the word ‘risk’?
Risk derives from the archaic Italian word ‘riscare,’ meaning ‘to run into danger.’
What is the core approach architects should take to risk?
Know the risks, then manage them.
What are the four classic strategies firms use to manage risk?
Avoid, Transfer, Mitigate, and Assume risk.
Why do professional liability insurance companies track claims?
To determine risk levels, which influence insurance premiums.
What are the nine risk categories identified by XL Group?
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.
According to XL Group, what four risk areas are present in 93% of all claims?
Communication, Project team capabilities, Client selection, Negotiation and contracts.
Why focus on the top four risk categories?
They represent the majority of causes for claims and help determine best practices to avoid, transfer, or control risk.
Who is Peter Gifford Longley, and what is his role in risk management?
An architect with over 35 years of experience; he developed firm standards for documentation and quality control and leads risk management and QA/QC at Tsoi/Kobus & Associates.
What does ‘reasonable to assume’ risk mean?
It refers to risks that can be accepted with proper understanding and control because they’re manageable or expected within a project’s scope.
How can insurance claims data help in risk management?
It helps identify high-risk areas by category, frequency, and cost, allowing firms to focus on mitigation strategies where needed most.
Why do most claims against architects appear in legal form?
Because they are usually tied to a perceived failure to meet terms in the design services agreement.
Section 2: Finances, Risk & Development of Practice
What document is most often referenced first when a claim is made?
The signed design services contract.
Section 2: Finances, Risk & Development of Practice
Why do architects and lawyers ‘scour the contract’ when a claim arises?
To find language that either supports or refutes the basis of the claim.
Section 2: Finances, Risk & Development of Practice
What is a major reason projects begin without a contract?
Main project stakeholders often lose interest when it’s time to discuss legal fine print.
Section 2: Finances, Risk & Development of Practice
Why is the early excitement in a project potentially risky?
Because critical legal details are often overlooked or delayed in favor of starting work quickly.
Section 2: Finances, Risk & Development of Practice
What percentage of claims in 2012 involved negotiation and contracts, according to XL Group data?
Approximately 27%.
Section 2: Finances, Risk & Development of Practice
What elements are typically addressed first in contract discussions?
Project scope, site, program, schedule, and budget.
Section 2: Finances, Risk & Development of Practice
