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CASE RMP: Not your Grandfather’s Risk Management Program!

The management of risk is something that we all do every day as we go about our daily activities. Whether driving 3 miles across town to the grocery store or flying 3000 miles across the country, there is a certain amount of risk involved. We measure the risk and make a decision—conscious or otherwise— to accept it or not. There are many factors to consider as we make these day to day decisions, and prudent individuals will do everything possible to mitigate risks. Before making the trip to the shopping center, you always make sure the car in which you will be traveling is well maintained, and everything is in proper working order. You choose to avoid unnecessary traffic and congestion, and drive defensively. For the trip across country, you might consider the safety record of the airline before purchasing a ticket, evaluate the weather conditions along your route, and submit to the unpleasant but necessary security screening.

But what about the risks we face every day in our professional lives as structural engineers? Statistics from companies that provide professional liability insurance for structural engineers indicate that not only do we have the highest frequency of claims, but also the greatest severity. Are we doing everything possible in our day to day practice to mitigate risk? We live in a complex and litigious society with more lawyers per capita than any country in history and people are taught that nothing is ever their fault- if they are damaged then someone else should pay. Gone are the days of our grandfathers when hard work and good intentions were enough! We have to manage the risks everyday.

CASE (The Council of American Structural Engineers)—celebrating its’ 20th Anniversary this year—was organized in the midst of a liability insurance crisis to deal with risk management and business practice issues. Although the goals remain the same today, the methods have changed. In response to the changing environment, CASE’s new Risk Management Program (RMP) is based on The 10 Foundations of Risk Management.

These ten foundations have been developed to help engineers in private practice focus on avoiding and minimize risk. The first five deal with the process of the engineering business, and the last five deal with project management. They are:

• Culture: Create a culture of risk management and claim prevention. Stress quality control and risk management as a core value of your firm, and come from the top down. It requires both strategic and operational planning, and should involve all levels of staff.

• Prevention and Proactivity: Act proactively, not reactively. Early planning can identify potential risks and early intervention can mitigate potential damages. Identifying risks and establishing priorities and protocols before hand can provide a framework with which to deal with problems as they arise.

• Planning: Plan to be claim free- it does not happen by chance. It begins by planning for staff hiring and retention, client selection, project selection, training and quality assurance programs. A project work plan will reduce risk through proper information flow, communication to other team members, contract negotiations and scope definition.

• Communication: Match expectations with perceptions. It is well documented that communication issues represent a large percentage of claims for design professionals. When all parties communicate their expectations to each other, “disconnects” can be avoided. It is essential to develop tools and procedures to aid the communication process.

• Education: Educate all team members. Proper training is the basis for expecting proper results. The skills gained by experienced professionals during their careers must be passed down to less experienced employees so that all can effectively participate in risk management. Owners who are unfamiliar with the design and construction process also need to be educated.

• Scope: Develop and manage a clearly defined scope of services. It will help avoid misunderstandings, establish a basis for negotiation of compensation, and draws the line between basic and additional services.

• Compensation: Negotiate fees that allow for quality and profit. Always negotiate compensation along with scope of work. Be ready to walk away from a project without sufficient fee, a client that has unrealistic expectations, or a project that poses too much risk for the reward.

• Contracts: Negotiate clear and fair agreements. A good contract can minimize risk on a project, but a poorly worded contract can greatly increase risk. A good contract will proportion risk to the parties in proportion to the benefit each will receive.

• Contract Documents: Produce quality contract documents. Plan the work effort and have the client approve the design criteria. Make the client aware of critical decisions. Take advantage of the available technology, and do not wait until the end of the job to do the quality control- build it into the process.

• Construction Phase: This is the time many claims arise. Do not let your guard down. Perform tasks such a submittal review, response to RFI’s, and site visits in a timely fashion to eliminate reasons for delays. Keep good records. Establish non-adversarial relationships with the contractor. Be sensitive to situations that could lead to potential conflicts.

For additional information about The 10 Foundations for Risk Management, contact Ed Bajer, CASE Executive Director at ebajer@acec.org.

CASE Celebrates 20 Years
2007 marks the 20th anniversary of CASE's existence. In 1987 a small group of structurals led by Richard Williams of Virginia, George Nishimura of Hawaii and Tom Wosser of California met in Dallas to discuss the possibility of expanding ACEC's Structural Committee into a full fledged coalition, a new concept at the time recently recognized by ACEC. That committee had been approached by the then DPIC Insurance Company with the message that liability claims against structurals were getting out of hand and something had to be done. Click here to read remaining document.

BIM, Condos and Pentagon Reconstruction Draw Record Attendance at October 2006 CASE Convocation
More than 150 attendees — an all-time record — addressed important structural engineering issues at the CASE Risk Management Convocation, held in October 2006 at the Fairmont Hotel in San Francisco. At the third, and most successful Convocation ever, attendees heard several compelling presentations including how Building Information Modeling (BIM) will dramatically improve industry efficiency, and how unanswered questions remain about the way the commercial and legal establishments will consider the new approach in regards to compensation, responsibility and risk. "Three-dimensional building modeling is here, and 4-D and 5-D are not far behind," San Francisco Attorney Howard Ashcraft told the audience. CASE Member Allyn Kilsheimer gave an enlightening speech on the challenges he faced in the restoration of the Pentagon after September 11. Kilsheimer was the lead structural engineer for the repair project and one of the first on the scene after the crash. His presentation included rare photos of the carnage and damage. In addition, David Ericksen, of Severson & Werson in San Francisco, shared how many of the historical risk factors associated with condominium projects have been resolved. Convocation Committee Chairman Michael Matsumoto, of SSFM International, said "This was our most successful Convocation ever, a big thanks goes to the Structural Engineers Association of California for their co-sponsorship"

CASE Risk Management Program (RMP)

• Click here for the RMP Webpage.

CASE Business Practices Program (BPP)

• Click here for the BPP Webpage.

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