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The culture of managing risk

April 2006 » Columns » RISK MANAGEMENT

Claims occur when people get hurt or killed; clients, contractors, or owners lose money; property is damaged; and we are involved. Can we reduce claim frequency? No question, we can.

By John G. Tawresey, S.E.

As structural engineers, we should have a sense of pride.We have unique knowledge and skills that are recognized by our clients. Each workday is different. There are new problems to be solved, innovative ideas to explore, and—most importantly—when we finish our design there is usually something on the land that is real and lasting. It is a wonderful profession.

However, it is not perfect. There are claims. Claims occur when people get hurt or killed; clients, contractors, or owners lose money; property is damaged; and we are involved. On average, once per $5 million in fees, the firm and its structural engineer face a major claim.

Can we reduce this claim frequency? No question, we can. One method is to create a culture within the firm that reduces risk. The culture of a firm is a complex combination of business and professional issues.

Most risk-reduction education centers on business issues such as selecting good clients, writing good contracts with a detailed scope of services, and being proactive when problems occur. But, managing your exposure to claims is more than a business practice issue; most importantly, it is a professional practice issue.

We are sued for malpractice, or practicing below the standard of care (see inset box for definition). It is the individual engineer’s performance and behavior that has the greatest impact on claims. A firm culture that improves professional practice is a culture that will reduce claims.

Each day, the practicing engineer applies knowledge and skills to service the client. But knowledge and skills are not sufficient to limit claims. The engineer also must practice with the right attitudes or culture necessary to minimize risk. Managing our behavior and understanding the risk is as basic to practicing engineering as the concept of static equilibrium.

It is not only the owners of the firm that need to avoid claims—it is all of us.

What culture or attitudes are most important? There are many of them and not enough space to include them all.

But, at the top of the list of a favorable culture or attitudes is thoroughness. The unfavorable counterparts would be sloppiness, carelessness, and imprudence.

When the job is out the door unfinished because of insufficient time to do the work or because we are out of budget, or worse, unfinished because we are tired of working on it, the risk of a loss is large.

First, the chances of a claim are increased because the contractor’s costs are less predictable. Second, the cost of the claim will be much higher because of the difficulty of defending incomplete work.

Defending our work should always be on the structural engineer’s mind. Can you defend what you did? Was it the best you could do under the circumstances? As professionals, we should strive for a culture of thoroughness. Being thorough and disciplined will prevent claims.

Curiosity also is on the top of the list.

I know structural engineers who would like to practice by creating processes that can be re-used, over and over to reproduce their design.What could be wrong with such behavior? The business side of the firm may rejoice, because in the short term, repetitive processes are more efficient and profits will rise.

But before long, our clients’ desires and objectives become compromised to fit the process developed to fit the single answer previously formatted. Our structural engineering practice will morph into providing the client with a commodity, a fungible result that can be reproduced by many and is of limited value. Structural engineering is a learned profession. The world of construction, materials, and methods is constantly changing. Today’s solution will not be tomorrow’s solution.We need to be curious and then flexible to see the changes.

We need this culture to meet our clients’ expectations, and in turn, meeting clients’ expectations will reduce claims.

Thoroughness and curiosity are only two cultural attitudes that can be encouraged to exist within the practice of structural engineering to reduce claims. These are not accomplished by corporate policy; they are accomplished by every day practice and attention to our responsibilities to society as structural engineers. And, like many other risk management messages, a thorough and curious culture is a win for our clients and for us.

Standard of Care

What is required of a design professional is that they render their services with the ordinary degree of skill and care that would be used by other reasonably competent practitioners of the same discipline under similar circumstances, taking into consideration geographic and contemporary state-of-the-art issues.

The Risk Management Program (RMP) is organized as a program of the American Council of Engineering Companies’ (ACEC) Coalition of American Structural Engineers (CASE).The group’s mission is to enhance risk management, loss prevention, and claims management techniques of the structural engineering profession. To learn more, visit www.acec.org/RMP.

John G. Tawresey, S.E., is vice president at KPFF Consulting Engineers in Seattle. He can be reached at 1-206-622-5822 or johntaw@aol.com

 
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