2015 - Page 3 of 4 - a/e ProNet

Boxouse: Young Americans Turn to Alternative Housing

By Lynda

Signs of recovery in the American housing market–in architecture, engineering, construction, real estate–are increasing. Yet, in 2014, the market saw a new, disappointing record:

The number of homeowners under the age of 35 hit its lowest point ever.

Home ownership has long been synonymous with the American Dream. But where are the young people in this game? Some have turned to alternative housing solutions.

Pacific Standard magazine recently blogged the experience of Luke Iseman, a 31-year-old graduate of the Wharton business school, who lives in a white shipping container on a small lot in West Oakland. Driven from the traditional urban housing market as a renter by exorbitant rates in San Francisco, and holding more than $60,000 of student loan debt, Iseman is putting his burgeoning business savvy to good use for himself and others with the establishment of an alternative housing start-up called Boxouse. Continue reading “Boxouse: Young Americans Turn to Alternative Housing”

Document Retention: Rules of Thumb for Design Professionals

By Lynda

In this age of terabyte-sized digital memory banks and the seemingly infinite storage possibilities of “the cloud,” understanding how long a design professional should retain project documents can be tricky. More and longer aren’t always better, but there are legalities to consider before any kind of purge takes place. For architects and engineers, basing a firm-wide retention policy on consideration of the relevant statute of repose is usually a good start. For latent defect claims in California, for example, that’s ten years from the date of substantial completion.

According to attorney Jennifer Suzuki at Long & Levit LLP in California:

There is no statute of repose for personal injury claims arising from alleged construction defects. (Such claims must be brought within two years from date of injury regardless of completion date.) Although it is much less expensive these days to retain records in a digital form rather than in hard copy, most firms do not find it feasible to retain all their records in perpetuity. It’s always a judgment call based on a cost/benefit analysis.

In the absence of notice of a pending or threatened claim, I believe many of our clients retain their records for ten or twelve years. (The additional two years allows extra time for Doe amendments and delayed service of process.) Some clients designate different retention periods based on the type of project record, e.g., correspondence, drawings, etc. In the event of a pending or threatened claim, clients should adopt a litigation hold so that no potentially relevant records are inadvertently destroyed as part of a normal destruction policy.

The following is an excerpt from the Small Businesses & Self-Employed page on the IRS website. Just a few rules of thumb on tax-related documents:

The length of time you should keep a document depends on the action, expense, or event the document records. Generally, you must keep your records that support an item of income or deductions on a tax return until the period of limitations for that return runs out.

The period of limitations is the period of time in which you can amend your tax return to claim a credit or refund, or that the IRS can assess additional tax. The below information contains the periods of limitations that apply to income tax returns. Unless otherwise stated, the years refer to the period after the return was filed. Returns filed before the due date are treated as filed on the due date.

Note: Keep copies of your filed tax returns. They help in preparing future tax returns and making computations if you file an amended return.

1. You owe additional tax and situations (2), (3), and (4), below, do not apply to you; keep records for 3 years.

2. You do not report income that you should report, and it is more than 25% of the gross income shown on your return; keep records for 6 years.

3. You file a fraudulent return; keep records indefinitely.

4. You do not file a return; keep records indefinitely.

5. You file a claim for credit or refund* after you file your return; keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later.

6. You file a claim for a loss from worthless securities or bad debt deduction; keep records for 7 years.

7. Keep all employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.

We’ve also published a ProNetwork News issue on this topic, titled Document Retention and Disposition: A Key Element of a Design Professional Quality Control Manual. If you have questions about document retention or other risk management-related issues, don’t hesitate to call on your local a/e ProNet broker!

Disclaimer: As with all posts on The ProNet Blog, this post is not intended to convey legal advice. Readers in all cases should engage competent legal counsel with respect to particular issues, contracts, and disputes.

a/e ProNet Holds Spring Meeting in Trendy Austin

By Lynda

Every spring, our members gather to network with one another, as well as to meet with representatives from the top-tier professional liability insurance providers. While our fall meeting is always held in Chicago, our spring meeting changes locations each year. For 2015, the choice was clear: trendy Austin, Texas!

10167978_10206206928070756_4679841597472695152_n — Above: Our crew enjoys the southern cuisine and atmosphere at Threadgill’s

The three-day meeting wraps up today, and our members will scatter back to their respective states, ready to assist their clients, newly equipped with the latest industry intelligence.

Are you a design professional with an insurance-related question? Get in touch with your local a/e ProNet broker today!

To Report or Not To Report? A Potential Claims Question…

By Lynda

Before a design professional decides whether or not to report a professional liability claim, or circumstance out of which a claim might arise, he or she must understand the definition of a claim, circumstance and what is required of them under their policy. The pros and cons of reporting or not reporting a claim are more fully explored in this Practice Notes.

Why Firms Neglect to Report Claims

From an insurance provider’s point of view, it seems that design firms faced with a claim (or a potential claim) too often come close to jeopardizing their professional liability insurance (PLI) coverage. Many firms resist calling their insurance provider to report the matter or ask for advice. Their reasons tend to fall within one of four categories:

Ignorance. They do not realize what their policy requires of them when they are presented with a claim or possible claim.

Fear. They fear the black mark on their claim history more than they fear the claimant.

Denial. They believe that ignoring the problem will produce the best result.

Resolve. They have read their policies, understand the risks, embraced that the issue exists andafter this careful analysis, choose not to report.

Know Your Terminology

Claims

It is critical that insurance policyholders understand their duties, responsibilities, and benefits under their PLI contract. One of the duties is to report all claims promptly.

What defines a claim? Most policies refer to it as a “demand for money or services.” So the telephone call from the angry client asking you to pay for damages they believe they have suffered as a result of your professional services would rise to the definition of “claim” under most policies.

Why is this definition important? Remember, you must report claims promptly. Failure to meet your obligations under the insurance policy may jeopardize your coverage.

Possible claims

It is important to know how your insurance policy defines a “claim” versus a “possible claim.” Possible claims typically do not rise to the definition of “claim” but could become one. Policies generally define possible claims as “a circumstance from which you reasonably expect that a claim could be made.”

Are you required to report these instances to your insurance company? Maybe. Most policies read, “if you report a circumstance,” but some state, “you must give written notice.” The circumstance provision in most policies goes on to say that if you follow the reporting requirements, “then any claim that may subsequently be made against you arising out of such circumstance shall be deemed to have been made on the date the insurance company received written notice of the circumstance.”

With some policy forms, firms have a fair amount of discretion on whether to report a “circumstance,” unlike the requirement that you promptly report all claims. Keep in mind that most PLI policies for design firms are claims-made, which means that insurance cove rage is not retroactive to an unreported occurrence. Continue reading “To Report or Not To Report? A Potential Claims Question…”

A Couple Celebrity Homes in Architectural Digest

By Lynda

When Hollywood celebrities shop for real estate, they seem to congregate in and around Los Angeles, where the famous hillside neighborhoods offer spectacular views of sunny Southern California. Once a big, beautiful house has been purchased, though, everyone likes to put his or her own stamp on the property. That’s when folks like Michael Bay (Transformers, Pearl Harbor) and Brian Grazer (Splash, Apollo 13) call on Rios Clementi Hale Studios.

Michael Bay residence, Los Angeles hills

“Miami architect Chad Oppenheim came up with the original concept for the 30,000-square-foot, three-story dwelling, modeling its sculptural massing of rectilinear forms and astonishing cantilevers after an unrealized proposal he had for a group of Caribbean villas. ‘I wanted the house to have the feel of a resort,’ recalls Bay, who is based in Miami but uses the residence for parties and relaxation during trips to L.A. ‘I looked at the first sketch Chad showed me and said, ‘That’s the house I want!” Architect Mark Rios of the L.A. firm Rios Clementi Hale Studios, in turn, translated that vision into nuts-and-bolts reality, collaborating closely with decorator Lorraine Letendre, who created the main living and bedroom spaces. Designer Lynda Murray, meanwhile, tackled the spa, gym, and lower-level guest quarters. Add to this formidable roster of talent a battalion of contractors, engineers, artisans, and consultants, and one  begins to fully grasp the ambition of the undertaking.” Excerpt from AD.com; read full article here.

Brian Grazer residence, Pacific Palisades neighborhood

‘A 12,000-square-foot behemoth in Santa Monica initially seemed anything but promising… Grazer’s friend Brad Grey, chairman of Paramount Pictures, introduced him to architect Mark Rios, founding principal of the L.A. firm Rios Clementi Hale Studios, who saw in the long, central volume at the heart of the existing hodgepodge the makings of a sleek contemporary barn. That design conceit, however, wasn’t an easy sell. ‘To Brian, the word barn wasn’t positive,’ Rios recalls. ‘It sounded too country. Then I showed him some Swiss houses that are tied to that vernacular but are very modern, and gradually he came around.’ Rios streamlined the main body of the house, removing a number of unnecessary and visually disruptive architectural protuberances, skimming dormers and clerestories, and staining the cedar façade a color that matched the slate roof to achieve a crisp, harmonious whole. “I wanted the house to have a tailored quality,” says the architect. ‘Self-assured without being grand.’ Excerpt from AD.com; read full article here.

Pick up the Celebrity Homes edition of Architectural Digest next month to read the full profiles of these two gorgeous projects. Congratulations to Mark Rios on this success!

Shout-out Credit:

Alicia K. Igram, AAI, VP & Branch Rep
Design & Consulting Liability Specialist
IOA Insurance Services – Aliso Viejo, CA
Email: Alicia.Igram@ioausa.com / Phone: 949-680-1789

Blog Love: ArchNewsNow – Nuts & Bolts

By Lynda

Nuts+Bolts is a “an exclusive ArchNewsNow monthly series to provide A/E professionals with practical tips for a more successful, profitable practice.” All ten articles currently listed are worth a read, and we hope the series is slated to continue. The authors are architects, consultants, insurance professionals, and financial advisers, all of whom offer a timely perspective on the state of the design industry. After perusing the library, here are four posts with the potential to help you and your firm in a risk management capacity:

#1 Nuts + Bolts: Mission Possible: Increase Your Value Without Lowering Your Fees

In this economic climate – or even in a good market – it may be tempting to lower your fees to stay competitive. However, lowering your price is not something you should immediately consider when faced with reduced revenue. As an alternative, you should seek to inject as much value into your services as possible. This will allow you to increase the intrinsic worth of your services, encouraging your clients to pay an appropriate fee for quality, not just quantity. But if you’re convinced that lowering your fees is a solid strategy that will boost your bottom line, think again. Here are a few reasons not to.

#2 You Can’t SELL If You Can’t TELL

You went to architecture school to become a good communicator…right? I’ll take a risk and say that chances are you probably didn’t. But if you want to be a great architect, engineer – or any other kind of professional – you need to know how to communicate clearly and effectively. You simply can’t avoid it. You communicate every day, whether you are meeting with colleagues in your office, talking to a client on your cell phone, e-mailing a consultant, or tweeting your followers. While we live in the digital age, and communication may seem to flow easily, there’s a lot more room for error. We’ve all had that gut-wrenching feeling of hitting the “send” button on an e-mail that had the wrong content or went to the wrong person.

#6 Changing Habits: The Secret to Successful Time Management

No time to grow your business? Learn to set aside time, clearly identify goals, and change bad habits, and you’ll transform your business development efforts from a waste of time into a productive enterprise. Most budding architects are initially attracted to the design side, rather than the business side, of their profession. As a result, many architects never develop the skills necessary to build their businesses. But just as design and project management are part of your daily routine, you should set aside time for business development as well. How do you make time for business development when you’ve been avoiding it or aren’t sure how to fit it into your day-to-day practice? The trick is to fundamentally and permanently change your habits. This sounds daunting, but you can achieve it if you follow these practical steps.

#8 Best Friends Don’t Make the Best Partners

In popular culture (and at most architecture schools) the architect is often portrayed as a lone figure, from Howard Rourke in Ayn Rand’s seminal work, The Fountainhead, to Frank Lloyd Wright, to Frank Gehry. Most people perceive architects to be creators working alone in the dark. Contrary to popular belief, it takes more than a single artist to make a great building. Most architects know that. What’s less obvious is that, in reality, most successful architectural practices are not sole practitioners but partnerships.

About the Authors of the Nuts+Bolts Series:

Michael S. Bernard, AIA, Principal, Virtual Practice Consulting

Mary Breuer leads Breuer Consulting Group

Founder of integrated communications firm Hausman LLC, Tami Hausman

Donna L. Maltzan is a business development trainer, facilitator, consultant and coach

Michael M. Samuelian, AIA, AICP, vice president at Related Companies

Stanley Stark, FAIA, LEED AP, a New York City-based architect who has held senior leadership positions with major firms including HLW, HDR, and Francis Cauffman

Steve Whitehorn, managing principal of Whitehorn Financial Group, Inc., the creator of The A/E Empowerment Program®

California Supreme Court Rules Against California’s Architects in the Beacon v. Skidmore Owings Case

By Lynda

The closely watched California Supreme Court case of Beacon Residential Community Association v. Skidmore Owings and Merrill et. al. has been decided, and the opinion is bad news for California Architects. The Court held that architects owe a duty of care to future homeowners in the design of residential buildings where the architect is a principal architect on the project, meaning that the architect is not a subordinate to other design professionals.

Case background and procedural history

As a refresher, this case involved the design and construction of residential units in the Bay Area of California. Originally held as apartments, the units were converted by one of the developers into condominium units. After completion, the condominium association filed a lawsuit against the original developers, contractors, and designers alleging a long list of construction and design defects. Among the issues was a complaint that the individual units did not include air conditioning and that the quality of the windows used was so deficient that the individual units experienced excessive heat gain, making them unlivable.

Skidmore Owings and Merrill (“SOM”) and HKS, Inc. (“HKS”) were the architects for the project. In reliance on past case law in California, SOM and HKS filed a motion in the trial court arguing that they did not owe any duty of care to the condominium association because neither SOM nor HKS had contracted with that entity. The trial court granted that motion. The intermediate appellate court reversed that ruling, holding that under other California law, SOM and HKS in fact did owe a duty to subsequent owners who were foreseeable even though SOM or HKS did not contract with them. This created an arguable conflict between cases, and thus the California Supreme Court accepted the case for resolution.

Our firm was privileged to file an amicus brief on behalf of the American Institute of Architects and the American Institute of Architects, California Council, arguing that architects should not be held to owe a duty to downstream owners with whom the architect did not contract. Continue reading “California Supreme Court Rules Against California’s Architects in the Beacon v. Skidmore Owings Case”

Blog Love: Mistakes in Architecture with a Silver Lining

By Lynda

In high-stakes professions like Architecture or Engineering, mistakes can be devastating. This is why professional liability insurance is so important! But to keep today’s post on the lighter side, we’ll point you to something happier in this vein. a/e ProNet member Professional Design Insurance Management Corporation recently shared this post, 5 Mistakes in Architecture with a Silver Lining, on their company blog:

Mistakes are part of life. Mistakes in architecture are part of many lives. However, failures lead to learning – and sometimes it leads to great discoveries.

Improvements in Design

Much of what we know today about technology, architecture, and almost every other subject imaginable comes from past failures. Some were discovered in a lab, but many others were discovered in the field. Any time a failure happens, professionals in that industry make concerted efforts to learn what caused it in order to improve future works.

Fidenae Amphitheater is one example of a structure that collapsed due to inadequate design. As people piled in to watch gladiator fights, the building collapsed due to the collective weight, teaching future engineers to account for the weight that a structure can accommodate.

Thinking Long-Term

Durability is very difficult to determine without experience. Developers can conduct numerous tests to determine whether a design will hold up for months, even years, but what about decades? Over time, we’ve all learned that certain materials aren’t ideal for a building’s design, for instance, and we’ve had to tear down multiple buildings and reconstruct them with materials that have proven durable over time.

Before an earthquake destroyed it in 1303, the Lighthouse of Alexandria was considered one of the Seven Wonders of the World. A more recent example is the John Hancock Tower, which had structural problems that led to windows falling and extreme swaying. This helped engineers learn the unique needs of extremely large buildings like skyscrapers.

Considering External Factors

Testing is almost always conducted in a closed environment, without factoring in things like weather conditions and user error. Once a product or design leaves the lab, though, those conditions become all too clear. Often it is only by actually letting the world see your handiwork that you can find its flaws and fix them.

The world learned this lesson through projects like the Tacoma Narrows Bridge, which didn’t survive a windstorm, going down in history as one of the biggest bridge design failures.

Out of Sight Shouldn’t Be Out of Mind

Often the most important elements in a design are those that can’t be seen. This is clear in the fact that the supporting foundation of a building must be carefully checked for structural integrity. Failure to be extremely cautious during the development phase could become a public safety issue later.

One of the best examples of this is the Leaning Tower of Pisa, which shifted due to being built on marshy land, emphasizing the importance of ensuring a structure’s foundation is reliable. In 1928, the collapse of the St. Francis Dam highlighted the importance of continual inspections of dams and similar structures to keep the public safe.

Consider Other Disciplines

One of the most important lessons that can be learned from history is that there is no limit to learning. One industry can learn from the mistakes of those in another industry. Even basic building design concepts can provide valuable physics insight that can be used in a wide variety of applications.

Many of the successes we have today are thanks to our past failures. Through a process of trial and error, we find out what works and what doesn’t. If we can simply learn to see small setbacks for exactly what they are, we’ll find the courage to keep moving forward despite our mistakes.

PDI has lots of other great blog posts. We suggest you pop over there and read up today.

Construction Phase Services: Considerations for a Successful Outcome

By Lynda

The construction phase is a dynamic time of a project and a design professional’s involvement is significant from a risk management perspective since it allows the design professional the opportunity to provide input during the construction of the project. Since no designs are perfect (and, moreover, are not expected to be perfect to still meet the standard of professional skill and care), all designs require some level of interpretation that is best done by the design professional who created them. During construction, the design professional can visit the jobsite to determine if construction is proceeding in general accordance with the plans and specifications and clarify the design intent when necessary. This article addresses issues design professionals should consider if they provide services during this phase.

Do you have the resources?

The firm must have sufficient staff to devote to this important phase of the project. The services during this phase require experienced professionals who know how to handle themselves on the jobsite and how to successfully complete tasks in the office. If junior professionals perform construction phase services, the firm must ensure senior professionals are available to (and actually do) mentor the junior staff. A successful mentoring program requires regular and meaningful communication between junior and senior staff who need to be proactive to nurture the mentoring relationship. Mentoring is a two-way street: it will not be effective if busy senior professionals do not devote time to advance junior professionals’ development and junior staff must take the initiative to seek out senior staff for guidance.

What does your contract say?

Industry standard documents have relatively balanced language regarding the construction phase. However, design professionals are often faced with a client-

proposed document that may not include appropriate language for the design professional’s involvement in the construction phase. Continue reading “Construction Phase Services: Considerations for a Successful Outcome”