One of the many value added resources a/e ProNet brokers offer is access to our ProNet Practice Notes, in-depth white papers prepared by members of a wide variety of professions related to the design industry. They offer insight and advice on topics like risk management, practice management, and litigation issues for Architects, Engineers, and other Design Professionals.

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Our most recent edition is titled  The Collections-Claim Connection: Getting Paid Without Getting Sued, authored by attorney David A. Ericksen of Severson & Werson in San Francisco, CA. The full PDF version of this excellent paper, including several helpful attachments, is available for download at our website. The following is an excerpt for your review. We hope you find it helpful!

Introduction

While money isn’t everything, it is the measure and fuel of any business, including a design firm. Without payment for services firms suffer, starve, and even die. Payment issues are also often the single greatest warning sign of a project in trouble.

Perhaps there is no greater indicator of the correlation between unpaid fees and troubled projects and relationships than the remarkable frequency with which efforts of design professionals to collect unpaid fees through litigation result in even larger responsive counter-claims from clients alleging professional negligence. 2011 gave the entire industry the most dramatic and alarming example of this pattern. Having already received over $8.2M in fees, the engineering firm Carter & Burgess sued its client the City of Victorville in Southern California for the final $106,196 on a power plant project that the City had been forced to partially abandon mid-project due to cost overruns. The City responded with a counter-claim for professional negligence. When the verdict came in 2011, it was devastating financially and professionally as news, industry, and internet sources widely reported and publicized the award of $52.1M in damages against the engineering firm.

The results of such a counter-claim need not be as dramatic in terms of publicity or financial losses to be devastating to the firm. In addition to the unpaid fees, there are many other impacts of even a “defensive” counter-claim. They frequently include:

  • Deductible payments for legal fees and costs, which may even include the involvement of a second “defense” attorney.
  • Insurance impacts for rating, pricing, and loss history.
  • Lost internal time and resources for purposes of participation in defense.
  • Publicity and required disclosures in future responses to RFPs for claims history.
  • Potential uninsured exposure for prevailing party attorneys’ fees if negligence claims exceed fee claims.
  • Ultimate discounted or waived fees for expediency of resolving and closing claim.

Obviously, avoiding such collection challenges and the potential for responsive claims is critical to good business and project success.

In reality, a proper approach to collections closely resembles a proper regimen for personal health. Firms which get paid become and remain healthy and strong. Firms which do not get paid regularly and on time become malnourished and increasingly susceptible to disease. Just as health is a life-long process, financial success is a project-long process. The following discussion tracks the relevant phases and provides analyses and strategies for those various phases. Those phases are: Continue reading “{ProNet Practice Note} The Collections-Claim Connection: Getting Paid Without Getting Sued”

awardWe’re proud to announce that two architecture students have received the David W. Lakamp AIA Scholarship offered each year through a/e ProNet’s partnership with the AIA.

The American Institute of Architects (AIA) have selected William Hood and Jake DeNeui to receive the 2012 a/e ProNet scholarship. The program, initiated by a/e ProNet, a national association of insurance brokers who are committed to providing liability insurance and loss prevention to architects, is awarded to architecture students who demonstrate a particular interest in the principles of management in architecture practice. Hood and DeNeui will both receive $2,500 to use towards their tuition.

The a/e ProNet scholarship was initiated in 1990 by a/e ProNet and is open to third and fourth year undergraduates, as well as graduate students of architecture enrolled in a NAAB- accredited professional degree program. Submissions are reviewed by jury members of the AIA Practice Management Knowledge Community. Candidates were graded on their transcripts, letters of recommendations, and an essay on how they would resolve a project management dilemma.

To read their case study topic responses, please click here.

William Hood – The Cooper Union

Hood is currently pursuing a Bachelor of Architecture at the Irwin S. Chanin School of Architecture of The Cooper Union in New York City. He has worked as a model-maker with the architects Moorhead & Moorhead and Andrew Berman Architect, and as a marketing and communications manager for Van Alen Institute and Thomas Balsley Associates. In 2007, he graduated with Honors from the College of Social Studies at Wesleyan University in Middletown, Connecticut.

Jake DeNeui – Montana State University

DeNeui is a 22-year-old graduate student at Montana State University. His primary interests include martial arts, rock climbing, hiking and art. Jake’s other skills and interests include speaking Spanish, teaching and practicing martial arts, and actively sharing his faith in Jesus. He plans on working in civic architecture and someday owning his own firm.

You can learn more about the a/e ProNet Scholarship and eligibility here. A full list of past winners can be found on the a/e ProNet Scholarship page at our website. The next deadline for application submissions will be in November of 2013. Follow us on Twitter for scholarship alerts!

certwars_geThe following is an excerpt of the February 2013 a/e ProNet Guest Essay, Calling a Cease Fire in the Certificate of Insurance Wars. You may download the full PDF version of the newsletter on our website.

In war, events of importance are the result of trivial causes. – Julius Caesar

Battles about certificates of insurance can sour relationships and sow the seeds of discord with clients at the very beginning of a project. And they are becoming more and more common.

Here is a short history of a typical certificate war: The design firm is awarded a new project. Corks pop. The team assembles. Spirits and expectations are high. The first sign of trouble is a call or an email from the project owner’s certificate checker: Your certificate of insurance is not in compliance with the insurance requirements set forth in our contract. Please reissue. The design firm calls its broker, confident that this little paperwork glitch will be simple to fix.  But there is bad news. This is not a case of a misspelled name or a typo. The certificate checker is correct: The design firm’s insurance program does not, in fact, comply with the contract requirements.

This is never a good moment, but the design firm rallies and asks how much it will cost to purchase compliant coverage. But then comes an even worse moment, when the broker explains that the contract requirements are impossible to satisfy. The coverage the owner wants is no longer available, is not available from a stable and financially-sound carrier, or, all too often, never was available at all.  The design firm tries to make the owner see reason, but sometimes this drama ends with calls and emails to the design firm, its broker, or both, threatening to award the job to another firm if a compliant certificate is not produced today.

Even if the problem is eventually resolved, the bad impression created by this conflict can tarnish a design firm’s relationship with the owner before it ever gets a chance to shine.

How did we get here? How did a one-page summary of insurance coverage that, by its very terms, does not “amend, extend or alter” any insurance policy become the source of so much trouble? And what can design professionals do to avoid certificate rejections and the problems they cause? Continue reading “Calling a Ceasefire in the Certificate of Insurance Wars”

pronetworknews_nov2012If you have ever gone car or shoe shopping with and for someone else (teenagers and significant others, in particular), you know the difficulty and frustration that usually follows efforts to fit and style those with strong opinions and feelings on the subject. Such shopping is more an effort in very personal comfort, feel and perception than utility. The same can be true for design professionals’ scope of services. The most recent economy has left design professionals to suffer earliest, longest and hardest, particularly those that rely on residential development. To keep busy, some A/Es are marketing a broader scope of services, including services historically reserved for construction contractors. The comfort, feel and perception of such expanded scopes of services are highly personal but come with distinct and practical liabilities and risks. Like finding the right shoe size or vehicle type, A/Es can manage expanded risks with properly fitting contracts, insurance and professional structure.

SUV v. Sedan and Dress Shoe v. Cleats

In annual magazine reviews, sedans are compared to sedans and SUVs are compared to SUVs. The same is true of legal standards by which different roles are judged. A/Es provide a professional service and are compared to other A/Es by a standard of care – what others in the same profession are doing or would have done for a similar project. A/E contracts typically take care to adhere to recitations of the baseline standard of care and avoid or disclaim responsibility for means and methods, safety, warranties and the contractor’s timely or proper performance.

Contractors provide a finished product which is judged by a good and workmanlike standard: a warranty of quality, timeliness and, usually, safe performance of the work. Contractor agreements therefore give the contractor control over and responsibility for means and methods, safety, warranties, schedule and performance.

Crossovers and Hybrids

There is a line between trucks and cars, but there are luxury SUVs and crossovers to blur the line and offer compromises of varying degree.  The line between A/E services and contractor services has become equally fuzzy.  Try to explain in words the difference between the scope of services of a Construction Manager/Advisor, a Program Manager and an Owner’s Representative. For example:  The label is less important than the intended division of responsibility, control and money, and how that is expressed in a contract.  Continue reading “Architects Step Into Contractors Liability, Size XXL”

Our Mission Statement

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a/e ProNet was established in 1988 by a group of insurance brokers specializing in professional liability insurance and risk management services for the design community. The organization has grown to 36 member brokers, representing more than 16,000 design firms nationwide. We meet twice annually to exchange ideas and information, as well as to analyze and communicate with insurance companies. At our most recent meeting (October 2012), our Board of Directors updated the a/e ProNet Mission Statement:

  • ​To establish an internal information and resource sharing network that enhances services to the design professional community and their societies.
  • To provide a forum for strengthening communications with the professional liability insurance markets serving the design community.
  • To maintain an independent source of professional liability information, risk management, loss prevention and continuing education services for design professionals and their professional societies.
  • To maintain the highest ethical industry standards among our members.

Contact a/e ProNet today to see how our substantial experience advocating for the design community can benefit you!

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The MLK Memorial – Designed by ROMA Design Group – Photo via Smithsonian.com

“Out of a mountain of despair, a stone of hope.”

The Martin Luther King, Jr. Memorial opened to the public in August 2011. It features a 30-foot high relief of the man himself. He stands boldly, arms crossed, rising from a chunk of stone which appears to have pulled out from between two similar pieces of granite behind him.

San Francisco-based architecture firm ROMA Design Group, an a/e ProNet client, came up with this dynamic design. Visitors pass through the Mountain of Despair to reach King, and a crescent-shaped wall of granite, 450 feet long, is covered in “excerpts from many of King’s sermons and speeches… the earliest from the time of the 1955 Montgomery Bus Boycott in Alabama, and the latest from his final sermon, delivered in 1968 at Washington, D.C.’s National Cathedral, just four days before his assassination.”

The Martin Luther King, Jr. National Memorial Foundation “reviewed over 900 designs, submitted by architects, designers and students from 52 countries.” So, congratulations to ROMA!

And please join us in celebrating the profound work of Dr. King, the man who led a generation to and through the first, most painful steps of the Civil Rights Movement, and did it in the name of peace. Happy MLK Day!

As the world rings in 2013, The ProNet Blog is celebrating its one year anniversary. We had high hopes for the blog at the start of 2012, but those expectations have been exceeded in every way. In the last 12 months, we’ve posted 68 articles on architecture and architects, engineering and engineers, and the insurance industry that backs them up. This has allowed several thousand visitors to find the information they wanted and needed.

Burj Khalifa 2012 Fireworks. Photo via arabianbusiness.com.
Burj Khalifa 2012 Fireworks. Photo via arabianbusiness.com.

In the spirit of hopefulness that should belie the eve of any new year, we turn now to what got us off to such a great start last year, Burj Khalifa, the tallest building in the world, and one which is dominating headlines this New Year’s Eve.

For starters, tonight’s fireworks display is highly anticipated. One Lebanese businessman is reported to have shelled out almost $20,000 to spend New Year’s Eve in a 7,000 sq-ft penthouse apartment in downtown Dubai with an excellent view of Burj Khalifa. He’s just one of the more than one million people expected to party-in the new year Dubai-style. Good news! For those of us who can’t quite make it downtown by midnight, we can watch the Burj Khalifa fireworks live on YouTube!

Besides, squeezing in close to the overwhelming structure might be better in theory than in fact, especially given Kate Ascher’s recent  interview with NPR’s Terry Gross. The author of The Heights: Anatomy of a Skyscraper revealed that, as Gather.com put it, “Yes, the tallest structure built by man could also be considered to be the smelliest.”

GROSS: Well, it really illustrates one of the paradoxes of modern life, that we have these just incredible structures that reach, you know, that seem to reach to the sky and then in a place like Dubai you have a 24 hour long line of trucks waiting to dispose of the waste from those buildings.

ASCHER: Right. Well, you know, you have to remember that a place like Dubai really emerged in the last 50 years. It was a sleepy, you know, Bedouin town half a century ago. And what you do is when you bring in the world’s, you know, most sophisticated architects and engineers, you can literally build anything, including a building of 140 or 150 stories. But designing a municipal network of sewage treatment is in some ways more complex.

Supermodel & Superskyscraper. Photo via Emirates 24/7.
Supermodel & Superskyscraper. Photo via Emirates 24/7.

Maybe the smell explains why, earlier this month, supermodel Heidi Klum tweeted a picture of herself with the superskyscraper far, far, far off in the distance. “If you can see past my loud outfit….that is the worlds tallest building!”

Some people remain undeterred, however. An Emirati mountaineer, Saeed Al Memari, has been given the green light to climb the side of Burj Khalifa and perform a base jump from the top on January 1. Al Memari had originally wanted to make the jump on New Year’s Eve, but the fireworks spectacular would, apparently, have made the stunt “too dangerous.” Once the fireworks are done, it should be no problem. Call me crazy, but this sounds… crazy.

Meanwhile, last week, a 32-year-old Commando in the Royal Navy, fueled more by charity than by adrenaline, climbed more than 3,000 feet of rope to raise money for the Children’s Happy Hospital Fund. Sergeant Rob Garthland began the Burj Khalifa Rope Climb Challenge at 7:00 a.m. and “completed 110 climbs of a 30 foot rope in HMS Raleigh’s gymnasium” by 4:00 p.m. He hopes to raise about 1,000 GBP for the charity. Help him reach his goal by donating today!

We wish all of our readers a safe, celebratory New Year! And we hope you’ll visit us for more design industry resources, updates, and information in 2013.

This week, 46 a/e ProNet members from 27 member agencies are expected to attend our annual meeting in Chicago, Illinois. Over the course of two and half days, twelve top-tier Professional Liability insurance companies will present to our membership. Each company will take this opportunity to announce policy form changes, new endorsements, and pricing expectations for the coming year; as well, they will alert us to industry trends surrounding claims and risk management.

Because a/e ProNet brokers are independent, that-is, not tied to any single insurance company, the insurance companies sending representatives to this event know that they are in competition for our business. It is in their best interest to make their programs as comprehensive and beneficial  to our clients as possible. The companies attending this event include: RLITravelersVictor O. SchinnererLibertyBeazleyCatlinHCCHanover, Navigators, Insight, All Risks, and AXIS.

Our Thursday night reception for members and insurance company representatives will be held at a new venue this year: The Grand Army of the Republic (GAR) Rotunda at the Chicago Cultural Center.

Our clients are architects and engineers, and we appreciate what they do today, as well as what they have created in the past. We chose the Chicago Cultural Center, opened in 1897, because it is “one of the city’s most popular attractions and is considered one of the most comprehensive arts showcases in the United States.” In other words, it’s beautiful! A Chicago landmark, located in the Loop, across Michigan Avenue from Millennium Park, the GAR Memorial consists of a large hall and rotunda in the north wing of the building. The hall is “faced with deep green Vermont marble, broken by a series of arches for windows and mahogany doors. The rotunda features 30-foot walls of Knoxville pink marble, mosaic floor, and a fine, stained-glass dome in Renaissance pattern by the firm of Healy and Millet.”

If you have questions about this meeting, or a question about a/e ProNet, don’t hesitate to contact us. You can also find your local a/e ProNet broker through our website.

Attention, Architecture students! We know how hard you’re working toward your dream career, and we also know the cost of your education is high. Have you applied for the David W. Lakamp AIA Scholarship?

The David W. Lakamp AIA Scholarship was established in 1990 by a/e ProNet, a group of insurance professionals providing risk management services to architects and engineers. It was renamed in 1999 for David W. Lakamp, one of our founding members, and a widely-trusted advisor to the design industry. Mr. Lakamp left behind a legacy of professionalism and integrity that set new standards in the field of insurance services.

Today, the scholarship provides two $2,500 awards each year, and these are bestowed upon the two students who best demonstrate strong interest in practice management.

The scholarship is open to fourth-year undergraduates and graduate students of architecture enrolled in an NAAB-accredited professional degree program. Submissions are reviewed by a jury panel consisting of members of the AIA Practice Management Knowledge Community (PMKC) and the a/e ProNet organization. Candidates must submit a copy of their transcripts, two letters of recommendation, and an essay on how they would resolve a project management dilemma.

The current application deadline is November 19, 2012.

Visit the education section of the AIA website for more information, as well as to download a PDF of the 2012 a/e ProNet David W. Lakamp AIA Scholarship application.

In 2011, two recipients were awarded the a/e ProNet David W. Lakamp Scholarship. To read their case study topic responses, please click here.

Questions? Please send inquiries to: scholarships@aia.org