Risk: Taking on Liability

5m 10s

In this ARE 5.0 Practice Management Exam Prep course you will learn about the topics covered in the ARE 5.0 PcM exam division. A complete and comprehensive curriculum, this course will touch on each of the NCARB objectives for the ARE 5.0 Practice Management Exam.

Instructor Mike Newman will discuss issues related to pre-contract tasks including negotiation, human resource management and consultant development.

When you are done with this course, you will have a thorough understanding of the content covered in the ARE 5.0 Practice Management Exam including business structure, business development, and asset development and protection.

We're talking about trying to reduce risk. Clearly, one of the main things you want to be careful of is not accidentally taking on other people's risk. This is a big deal for architects, and the reason for that is that there are a lot of people with a lot of risks all around the process, and if you accidentally absorb their risks, that's a lot of liability potentially coming down on a small architecture firm. Let's talk about the roles for a second. Architects, in the classic sense of design, bid, build project delivery type are about the idea of design intent.

So this is an interesting idea. What we're saying here is that what the architect is talking about is an intent. It's not a thing, it's an idea. It's an idea about design. It's an idea that the intent is also about being code compliant, and about providing a certain aesthetic, and about being efficient, or whatever, but it's about an idea and those are decisions. It's about decision making and concepts and ideas and that's the role of the architect.

Now, it's important because you can have a great deal of liability about certain decisions if you make a decision that is one that leads to people being hurt, like a building burning down or something, well, obviously, that's a very, very important thing. It's not that it's not important, it's that it's about decisions and ideas. Contractors is a term that you should definitely feel comfortable with is materials and methods. That's the old school way of talking about what a contractor does.

The contractor isn't about ideas. They're not about concepts. They're about what materials and how are we going to do it in order to fulfill that design intent that the architects produce? The architects are producing the ideas, the design intent, and then the contractor is making that manifest. They're fulfilling the materials and the process to make that manifest, to make it real. Everything on the construction site is about the materials and methods.

It's about the physical materials and how concrete A is going in first, and then steel B is going in second, and then siding materials, and C is going in after that. There's a whole process and a timeline and a coordination of trades and all of those things that are going to happen. That's all about the materials and the method of putting it together. Where that concrete goes, how thick the concrete wall is, all of that, that's about an idea about understanding the structural capacity.

That's an idea about meeting the fire ratings. That's an idea about a design aesthetic. The architects are putting together their design intent, and then the contractors are figuring out a way to, in time and through real materials, put together an actual thing. Because of those differences, I have different sets of liability and different sets of rules that I live by.

The contractor's rules are going to be very different from an architect's rules. The contractor's contracts are going to be very different from an architect's contracts. Owners will have their own set of rules and regulations that come from these things, and they'll be slightly different in terms of their relationship to the architect and their relationship to the contractor. Everybody has their position in this, and it's very important that you don't accidentally take on other people's liabilities.

The classic example here is that I have a contractor and they're doing some work on the job site and, as that job site work is being done, there's a great, big pit being dug for something and there's a bunch of contractors and they're all walking along the edge of that pit and there's no guardrail, and you go to that job site and you think, "Oh, this is crazy! Somebody's gonna get hurt here. "Somebody's gonna just start tumbling into that." That's somebody tumbling, going, "Help!" Somebody's going to tumble into that pit and it's going to be a real problem, so you stand there and you say, "Wait! Stop! Don't do that. Put up a guardrail first." Well, by sheer fact of doing that you have now absorbed the liability of the materials and methods on the job site.

You've absorbed the liability of the sequence of process and so if something goes wrong later on, whether it's that issue, or a completely different issue, you now actually have a certain amount of liability that you've taken on, but your insurance company wasn't planning on taking on that liability.

This is a huge issue, you want to be really careful about it. Understand what the role of the architect is, and what the role of the contractor is. Those are the two main ones, but other roles as well, and make sure that you're not accidentally taking on other people's liability. There'll be a few points where this issue comes up and we'll talk about it in more detail as it goes along, cause it shows up in various exams, but that's assuredly something that will show up on this exam.

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From the course:
ARE 5.0 Practice Management Exam Prep

Duration: 11h 28m

Author: Mike Newman