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Responding to an RFP: Risk Management Tools to Guide the Bidding Process

Competition among design professionals can be fierce, so it is critical to be as prepared as possible when trying to win new projects, especially those that are put out for bid.  Just as you have project quality control procedures to review a design, you also should have a similar process for responding to an RFP (Request for Proposal) to assess the appropriateness of the project for your firm, to minimize risk and to insure profitability.

When first considering whether to bid on a project, ask these questions:

  • Does our firm have experience with the project type?
  • Is our staff capable of handling a project of this size and scope?
  • Do we have confidence in our design team, including sub-consultants?
  • Can we turn in a successful project and make a profit?

Once you decide to respond to the RFP, you will take many steps to ensure your firm has a good chance at being awarded the project. You will choose a project manager and team that have the most experience with the project type. You’ll take great care in selecting your sub-consultants. You’ll follow your customary quality control procedures and review every aspect of the design phase; the costs of construction, the construction schedule and most importantly, your fees.

So, what could possibly go wrong when responding to an RFP? The answer may lie within the RFP itself.

Project Owners and Project Expectations

When you assemble your project team, you need to call upon the staff members who are best suited to understand the project and the terms spelled out in the RFP.  Your team should be asking the following questions.  Who is the project owner? Is it a government entity? A school district? Is the project publicly funded? Is the project owner a developer? If it is an LLC, who are the parties that comprise it?  Understanding who the project owner is as well as the expectations set forth in the RFP is as important as delivering the winning bid.

Reading the RFP thoroughly will give you a sense of these expectations.  Can your firm effectively manage them, or are they set too high?  Does the RFP contain provisions that are one-sided, favoring the project owner? Are some provisions uninsurable? Keep in mind: the language from the RFP will also be the language used for the contract for services.

When reading through the terms in the RFP, highlight any potential problem areas, including contract language that could be uninsurable. It is critical that this task be undertaken as soon as your firm decides to respond to the RFP, well in advance of the proposal deadline.  Some of the clauses that could contain problematic language include:

  • Standard of Care
  • Time is of the Essence
  • Termination
  • Ownership of Documents
  • Dispute Resolution
  • Compliance with Law
  • Reliance upon information provided by others
  • CAD and Electronic Media
  • Indemnification
  • Insurance Requirements

Be sure to consult experts to help you to determine if these or other clauses could pose issues for your firm. Your insurance broker and your Professional Liability insurance company are valuable resources – in fact, most specialty brokers and Professional Liability carriers can offer assistance in reviewing the RFP language for insurability.

This has been an excerpt of the April 2012 edition of our ProNetwork News Newsletter. To read more (including details on Insurability and the RFP and Timing Is Everything) download the full PDF version from our website.

About the Author: Debra Christen is Vice President of the Marquis Agency and a member of its professional practice leadership team and risk management committee. Ms. Christen ‘s insurance and risk management career spans over 20 years, concentrated in the design professional liability market. Prior to joining Marquis, she was a professional liability underwriter at a carrier, and a senior executive with one of the nation’s leading design professional brokers.

Ms. Christen has been published in several Architecture and Land Surveying trade magazines. She has also developed and presents risk management seminars for numerous design professional associations. In 2005, Debra was recognized by the New Jersey Society of Professional Land Surveyors for her outstanding contributions and services to the society and was honored as a “Friend of the Society.”