Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

College of Architecture and Build Environment
Department of Architecture

Course Code:
ARCH 30383
Subject:
PROFESSIONAL PRACTICE 3
Global practice for the 21st century

Professor:
AR. Maynard M. Muhi
Student:
Arce, Zendrick Merville B.

Date Submitted:
May 27, 2023
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

Architectural risk management

Because of these principles, there is an understanding that teams do not
need the architect role in the agile world and all architectural decisions
should be decentralized and under the teams' responsibility. Despite
agreeing 100% with these principles and their interpretation, we cannot
deny the existence of a gap between the theory and practice. As a result,
most architectural decisions are misaligned with business. So, how can the
organization ensure that technical decisions made by teams are in
accordance with the business goals?

In the Agile Architecture Risk Management (AARM) methodology, the

architect is responsible for evangelizing the teams and training new
architects. It comprises four phases:
Product/business strategy: identify the product's strategic goals.
Prioritizing architectural characteristics: define architectural
characteristics to support business needs.
Risk storming: identify the risks associated with the architecture.
Architectural stories: create architectural stories to be developed by
the teams.
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

The product/business strategy consists of collecting strategic plans for the

products. The PO (Product Owner) is required to answer these questions:
 What is the product's vision?
 What is the product's mission?
 Among the features below, choose five that should be priorities:

Here is an example:

What is the product's mission?

To create conditions that allow the Payment Gateway to capture every
opportunity, scaling the business faster, maximizing results while valuing
clients and protecting the core business.

What is the product vision?

To ensure a fluid payment experience focused on the user experience,
generating new revenue streams for the company and increasing order
conversion through a global and scalable transactional platform.

What are the main strategic goals for the product at this time?
 Increase profit
 Improve customer retention
 Improve security
 Improve time to market
 Diversify or create new revenue streams
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

Prioritizing architectural characteristics consists in mapping

architectural characteristics from the answers. Involving the most
experienced people in architectural practices is crucial, as trade-offs can
be complex and subtle at the same time. Properly defining key
architectural characteristics is critical to the product's success.

For the Payment Gateway example, the following characteristics have

been mapped:

The next step is to prioritize the architectural characteristics. A meeting

is held with product leaders to discuss which are the most important
features at the moment, given the context and strategic direction of the
product.

The goal is to identify the main architectural characteristics that drive

decisions, following the following steps:
1. Identify the first seven main architectural characteristics;
2. Among these seven, choose the top three;
3. Then, identify implicit characteristics, meaning characteristics not
specified or determined by business goals. It is important to map
them since they can become guiding characteristics depending on
the moment of the product or changes in business goals;
4. Finally, highlight the architectural characteristics that were mapped
and are not considered priorities at the moment.
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

For the Payment Gateway, the prioritization is illustrated in the figure

below.

Once the architectural characteristics are mapped and prioritized, it is time

to identify the risks within the architecture. To do so, we use Risk Storming,
which is a collaborative exercise to determine architectural/system risks
within a specific characteristic. Here, it is essential to note that each risk
storming session should analyze a single architectural characteristic at a
time, allowing participants to focus on a particular dimension and avoiding
confusion with multiple risks identified in the same area. With the risk
storming results, the team can create the architectural stories and add to
the team's backlog in the architecture coding phase.

It is crucial to note that Agile Architecture Risk Management connects the

strategic goals of the product/business to the most relevant technical
decisions of the product within the team's daily routine. This way, we
ensure that all decisions made by the technical team are directly related to
strategic goals.

Additionally, the risk management vision allows us not only to manage the
adherence of our architecture to the business goals in a collaborative,
structured and prioritized way but also to identify and communicate
important risks in advance. As a result, the business gains better visibility
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

into technology and architecture, while the product team earns autonomy
and technical excellence.

The top risk management threats for architects

Design and construction errors can create major problems for architects,
but they aren’t the only risks that can impact your business.
Architects have inherently risky jobs. A design flaw can have catastrophic
safety and financial implications. But dealing with contractors, clients, and
finances can also create uncertainties that impact your livelihood.

Learn about the major risks that architects might encounter, get tips for
managing them, and find out what insurance policies you need to protect
your business.

Construction problems
Even though you’ve drafted detailed architectural blueprints and specified
the exact building materials to use, there’s no guarantee that construction
project managers will follow your instructions to the letter. For example, a
contractor may skip a crucial building reinforcement step or use cheaper
insulation than you recommended.
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

If there are flaws in the finished structure due to construction mistakes, the
owner could sue the architect for negligence and hold them liable for
damages.

To protect against expensive lawsuits, most architecture and design

businesses carry professional liability insurance, also known as errors and
omissions insurance. These policies cover you if a client accuses you of
negligence, you make a mistake that costs a client money, or you miss
deadlines or fail to complete projects.

Contractor liability
Architects often hire contractors to help them complete projects, which adds
exposure to risks. Depending on the contract you sign with a client, you can
be legally responsible for any work mistakes that your contractors make.

To help manage contractor risks, verify the licenses of all third parties that
you hire, and make sure that they all carry their own professional liability
insurance. If you want to further reduce your exposure to risk, you could
ask to be added to their policy as an additional insured, which means that
the contractor’s insurance carrier would defend you if you were sued for
negligence because of their actions.

Client miscommunications and shifting project scopes.

When a project doesn't go according to plan, clients can file lawsuits
against the architect, and miscommunication is often a factor. Many
architects point to shifting project scopes as sources of disputes with
clients, which can lead to lost wages, hard feelings, and eventually
lawsuits.

Make sure that the contract you sign with the client details all the terms of
your work – including deliverables, deadlines, and pay rate – so both
parties have everything in writing. If a project’s scope changes or you take
on more responsibilities, it’s a good idea to modify and re-sign the contract.
Regularly check in with the client throughout the project so that you can
manage expectations and stay aware of new or shifting priorities.

Again, professional liability insurance will cover you from lawsuits caused
by poor communication, changing project requirements, and budget
overruns.
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

Variable income
Architects are more likely to operate as sole proprietors than professionals
in other industries. As a sole proprietor, you’ll need to spend time pursuing

new clients, which can strain your business’s finances when you’re between
projects.

There is no insurance policy to protect you from cash-flow problems, but

you can take steps to keep your business in good financial health. For
example, you might save a percentage of each check in an emergency fund,
charge clients on a monthly basis instead of by the project or require an up-
front deposit or payments by milestone.

While architects on tight budgets may be tempted to forgo professional

liability insurance, their business will have much larger financial problems if
they have to pay for the costs of a lawsuit out of pocket.

Other insurance policies for architects and designers

While professional liability insurance is a must for architecture and design
businesses, it only protects you from lawsuits caused by work mistakes or
negligence. Depending on other aspects of your business, you might
consider purchasing some or all of the following policies:

 General liability insurance. A general liability insurance policy will

protect you if a client suffers an injury at your office or you damage
their property.
 Commercial property insurance. If your architecture business has
invested a substantial amount of money in high-end computers for
designing building plans or other equipment that is necessary for
work, commercial property insurance will reimburse you if gear is
stolen or damaged.
 Business owner’s insurance: Depending on your business’s situation,
you may be able to save money by purchasing a business owner’s
insurance policy, which bundles general liability and commercial
property insurance.
 Commercial auto insurance. Your personal automobile insurance may
not cover you if you have an accident while driving for work, so some
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

architects might add commercial auto insurance or hired and non-

owned auto insurance.
 Workers’ compensation insurance. Most states require businesses
with even one employee to carry workers’ comp insurance, which
covers workers who are injured or become ill on the job.
 Cyber liability insurance. If you store confidential building plans or
sensitive client data on your computers, you could be sued in the case
of a data breach, which would be covered by your cyber liability
insurance policy.

Risk Management for Architects

Architects Risk Management Guide

Guide to Understanding Risk Management for Architects

When heading up a development project, whether it’s the redesign of a

home or a massive commercial property in need of construction or
renovation, any architect has the responsibility of ensuring that the project
goes smoothly from planning through to completion. Whether metaphorical
or literal, the foundations laid down by an architect must be sound.

A paper by Rob Imrie and Emma Street from 2009 involved interviews with
leading architectural figures and suggests that “a new focus for the
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

understanding of architecture…ought to be consideration of the

interrelationships between creativity, risk and regulation.” While respecting
the creative ways of our forebears, it’s worth keeping in mind that the
increasing intensity of the “compensation culture” we live in could mean
compromising safety in order to get the more architecturally impressive
results, with severe consequences. Safety should be the number one
priority of any building project, even if it means ‘playing safe’ with building
design.
Any project is not without its risks, however; it’s in the best professional
interest of architects to take precautions against the following – failing to
do

so could result in reputational damage, financial penalties and, in the most

negligent cases, possibly even prison.

A Welsh architecture practice was recently heavily fined by the HSE after it
found evidence that asbestos had been found at a development site; the
information had not been passed on by the architects running the project
despite a routine check turning up the presence of the dangerous material.
Aside from the fine handed down – causing them financial damage – the
firm also suffered a heavy blow to its reputation by acting negligently.

The negative consequences of any such incident – though the example

above is rather extreme – can be mitigated by taking precautions such as
professional indemnity insurance. This type of architect insurance exists to
give any business peace of mind that any advice given or actions took –
from small decisions to large-scale projects – can be covered in the event
that the company’s client suffers reputational or financial damage as a
result of your actions.

Architects should also consider other types of insurance to have in case the
worst should happen. Liability cover protects a firm from actions by a third
party, such as a contractor. If someone is injured on the job then liability
cover will help to ease the impact of an award or payment.
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

Any member of the RIBA is required to have this cover in place at the
amount of a quarter of a million pounds – although a business of any
sizable influence and growth should consider a policy of at least £1 million.
Architects are not alone in requiring this cover, although the nature of this

business means that having such a policy in place will play favourably with
prospective clients. It’s important to understand and assess all possible
risks of undertaking a project before you commit to one though, which is
why all the monetary protection in the world can’t beat some common
sense.

The Importance of Risk Management for Architects, Engineers, and

Design Firms

One of the most important things an architecture, engineering or design firm

can do to keep themselves free of unwanted claims is to have a strong risk
management program in place. With the complex services provided,
coupled with the often-challenging projects, an architecture or engineering
firm’s success depends on being able to not only provide the services they
are hired to perform, but also being able to manage their risk. Simply put,
even just one professional liability claim can put a small firm at risk of
financial disaster. However, there are several risk management practices
and procedures a firm can follow to decrease their risk. Open
communication, strong commitment to quality, clear documentation, and a
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

solid professional liability policy can help a firm decrease their chances of
a potential claim.

Risk can arise out of miscommunication and unrealistic expectations. It is

important to discuss expectations ahead of time with clients and provide a
realistic time frame for completion as well as potential costs for services
and materials in the process. This is accomplished by having a strong
contract in place that describes the scope of services. It is important to be
as clear as possible about what a project entails before it begins. Being
able to describe what your firm will do and what your firm won’t do prior to
the start of a project will ultimately provide a strong outline of what is to be
expected. Many claims result from the gap between what the client expects
and what the firm was hired to do.

Another important factor to consider toward general risk management and

the avoidance of potential claims is a strong commitment to quality. It is
important to note however that even with a strong commitment to quality,
poor communication or promising more than you can deliver can often lead
to unrealistic expectations. These unrealistic expectations, whether they
are related to costs or timing can lead to an unwanted claim.

Documentation is a very important step in managing risk. Clear

documentation of daily project activities will be a benefit to the firm in the
long run in the event a claim does arise. If there are delays for any reason,
be sure to note the reason for the delay and when it was discussed with the
client. Being able to provide proof of good recordkeeping will go a long
way.

Purchasing a solid Architects & Engineers professional liability policy is a

great way to help cushion the possibility of financial struggles as a result of
a claim. Additionally, many insurance companies offer risk management
services to all of their insureds and they are usually complimentary. One
such service is free contract review. The insurance carrier will either use
in-house risk management consultants or attorneys, or have a third-party
risk management firm to handle these services. In either case, the risk
management consultant will review and suggest changes to the contract or
how to improve on the wording to further detail what the architect or
engineering firm will or will not be responsible for. The risk management
consultant will also be reviewing contract language to be sure the firm is
not agreeing to something not typically covered by insurance and are not
agreeing to a higher standard of care than typically expected. Some other
types of complimentary services provided may include pre-claims
assistance, basic risk management consultation services and webinars
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

pertaining to different issues a firm might face in the current litigious

environment.

In conclusion, while some risk is out of the control of the firm (Mother
Nature for example), most of the risks that a firm might encounter can be
managed and reduced with open communication between the firm and the
client, a strong contract in place and a desire to perform quality work.

References:
https://www.thoughtworks.com/insights/blog/architecture/architectural-risk-
management

Rodrigo Pinheiro  and Cristiano Gomes. (2022, March 7). Architectural Risk Management.
Thoughtworks. https://www.thoughtworks.com/insights/blog/architecture/architectural-risk-
management

https://www.insureon.com/blog/top-risk-management-threats-for-architects

Insureon Staff. (2019, December 3). The top risk management threats for architects. Insureon.
https://www.insureon.com/blog/top-risk-management-threats-for-architects

https://www.e-architect.com/articles/risk-management-guide-for-architects

Welch, A. (2021, June 23). Risk management for architects guide - e-architect. e-architect.
https://www.e-architect.com/articles/risk-management-guide-for-architects

https://www.founderspro.com/2018/03/02/the-importance-of-risk-
management-for-architects-engineers-and-design-firms/
 Republic of the Philippines
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Architecture and Build Environment
Department of Architecture

Miller, H., Golightly, A., Clark, G., & David, V. (2018, March 2). The importance of risk
management for architects, engineers and design firms. Founders Professional.
https://www.founderspro.com/2018/03/02/the-importance-of-risk-management-for-architects-
engineers-and-design-firms/