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Risk Management Threats for Architects

Jan 13, 2023 · 5 minutes to read

Two architects checking blueprint by window in modern studio

There are many challenges to being an architect. Design flaws and project delays are two major architect business risks, but there are many more that can impact your firm. From handling client expectations to dealing with ups and downs in cash flow, there are many potential hazards lurking for professional architects!

While architect business risks may sound scary, they don’t have to be. There are steps you might take to help prevent mistakes, accidents, and other events that may negatively impact your architecture firm.

Here are four common risk management threats for architects and tips for handling them.

1. Client expectations

Working with clients is a large part of being an architect, but this is also a major source of risk. Miscommunications are often to blame. If the client misunderstands part of the project, isn’t made aware of delays, or somehow misunderstands the work to be done, they might accuse you of negligence.

Meeting client expectations is key for architects. Getting everyone on the same page from day one could help you avoid expensive lawsuits down the track.

Tips for managing client expectations:

  • Put important project details (including services to be provided, timelines, and fees) in the business contract.
  • Modify and re-sign the contract if the project scope changes.
  • Provide updates as you hit project milestones.
  • Inform clients of potential problems or delays as soon as possible.

2. Construction problems

You’ve drafted meticulous blueprints and specified the exact materials to use. While this helps construction projects stay on track, it isn’t a guarantee that the project will go exactly to plan. Construction contractors make mistakes, and accidents happen. You may also come across contractors who cut corners or use cheaper materials to lower their costs.

Accounting for construction problems is also part of an architect’s job. Ensuring that a build goes to plan (to the best of your ability) may help you avoid becoming part of a lawsuit if the final result is somehow flawed.

Tips for managing construction problems:

  • Include a buffer in project timelines to account for unexpected delays.
  • Recommend trusted construction contractors that you’ve worked with before to the client.
  • Ask contractors if they have a construction business risk plan for preventing and handling issues during a project.
  • Visit construction sites regularly and make yourself available to the construction project manager so you can answer questions about your design and recommendations.

3. Working with contractors

Architects often hire contractors to help them complete projects. This adds a layer of risk to your architecture firm’s operations. Even if you are carefully reviewing the work a contractor does on your behalf, mistakes may still slip through. A client may hold you liable for a contractor’s work, and depending on the project contract’s wording, you could be legally responsible for their errors.

Working with contractors may be necessary to get a job done. However, it’s wise to take steps to help prevent mistakes and avoid lawsuits caused by their work.

Tips for managing contractors:

  • Verify contractors’ licenses before hiring them.
  • Require the contractors you hire to have their own Professional Liability insurance and consider asking them to add you as an additional insured to their policy.
  • Review work submitted by contractors before it is shared with clients, construction clients, or other project stakeholders.

4. Variable cash flow

An architect’s work is often irregular. It may be impacted by seasonal changes, economic downturns, and other external events. Plus, lining up new work might constantly be on your mind. Few architects have the luxury of focusing solely on a single project. You will likely want to be pursuing new clients while working for your current one.

These and other factors may influence how often you are paid. Without a steady cash flow, you might find it hard to keep your firm up and running.

Tips for managing variable cash flow:

  • Create an emergency fund and save a percentage of each paycheck to it.
  • Require deposits before a project begins and milestone payments throughout.
  • Charge clients each month rather than asking for full payment at the end of the project.
  • Set aside time every week for prospecting clients and professional networking.

5. How BizInsure helps Architects

Taking steps to manage threats to your architecture firm could help you avoid many claims and lawsuits. But every problem may not be unavoidable. That’s where BizInsure can help.

Many architects buy Professional Liability insurance and other types of architect insurance to protect themselves and their firms. These policies help shield you against expensive claims caused by events such as mistakes in your work, unplanned business interruptions, or damaging a client’s property. Architect insurance helps cover the cost of claims and lawsuits, so you can focus on running your firm.

BizInsure makes it simple to find, compare, and buy architect insurance online. You’ll even be covered instantly, with policy documents sent right to your inbox.

Compare architect insurance quotes today! It takes as little as 10 minutes to protect your architecture firm.

As with any insurance, coverage will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained on this guide is general only and should not be relied upon as advice.
The number of quotes provided varies between products, occupations and other underwriting factors determined by the insurers.
This information is a general guide only and does not take into account your objectives, financial situation or needs. Always check with your local licensing board when getting or renewing your trade or professional license to ensure you are meeting their current licensing requirements.
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