Architects could face claims that Put them out of business if they don't fully understand their responsibilities.
- Increasingly complex projects demand new skills, including better risk management
- Brokers can add value by helping their clients avoid common pitfalls
As the UK economy grows, architects can look forward to a healthier construction sector. But firms still face intense competition along with pressure to innovate and increase standards.
“Architectural firms need to make sure they have the skills to function at the right level, otherwise, if things go wrong, they risk facing potentially damaging claims, even when they may only be partially to blame,” says Steve Watson, Head of Professional Indemnity at Zurich.
In this environment, a well-informed broker, offering the right risk management advice, can make a real difference to their client.
Take care with contracts
One of the major burdens that architects face is the breadth of responsibilities that they end up bearing.
“For example, a firm could find themselves being sued if the contractor makes a mistake on site but later ends up insolvent at the point a claim arises,” says Watson. “Stringent financial due diligence is essential for firms before they enter into any contracts.
Firms need to be very diligent at the planning stage and ask the right questions… everything needs to be covered
Steve Watson, Head of Professional Indemnity at Zurich
“Firms also need to be very diligent at the planning stage and ask the right questions. Everything needs to be covered. Often what you find is that claims start to crystallise when a project nears completion, and the client says, ‘hang on, I wanted a blue building and this is red’.”
Getting the right planning permission to fully cover ambitious projects – such as basement extensions – can be challenging, while keeping up to date with building regulations and the use of new materials remain perennial hurdles for the profession. In addition, many projects are becoming more complicated. Buildings are expected to be more energy efficient and there are heightened expectations around things such as disability access.
Raise their game
“If an architect isn’t keeping up to date with what these changes mean in practice, they can face allegations of negligence later on,” says Watson.
Architects should also avoid taking on too much work. For some time there has been pressure to reduce architects’ fees and often firms can be tempted to take on more and more work to supplement income levels – making mistakes more likely.
Above all, brokers need to provide robust advice to their clients on both the quality and extent of cover they are purchasing. “They may think that indemnity limits of £1m or £2m are okay, but end up doing work that exposes them to claims much higher than this,” says Watson. “Brokers need to stress to their customers that they aim to get to the heart of what their client wants and they need to ensure that this is expressed clearly in a contract, removing as much subjectivity as possible.
“That’s how to minimise claims and keep premiums as reasonable as possible.”