Involve the Project Manager - ASAP

While design firm principals, and perhaps a select group of other individuals, such as a business development executive, are normally charged with reeling in the next project, it also makes sense to involve the intended project manager as early in the process as possible.

You might counter that your project managers' hours are billable and you don't want them to get involved until there's a signed contract. But consider the choice - do you want to absorb some of a project manager's hours within your sales and marketing budget and make sure that what you promise the client is actually deliverable, or do you want to save the money now and have to spend a much greater amount later, when it turns out that something promised during initial client meetings just can't be delivered within the budget, on time, or both?

Insurers see plenty of claims related to projects in which firm principals select the client, sign the contract, and drop the project in the project manager's lap. When told to "get it done," the PM's usual response is, "What is it?" Claim post-mortems often reveal that if the PM had been brought into the process much earlier - for instance, as the contract negotiations began - there would have been much less likelihood and/or severity of the claims.

Involving the project manager early on only stands to reason. During construction, the PM is going to be the A/E firm's most valuable risk-management asset. The PM is in a unique position, very likely being the one person who, in the view of the client, represents the design team. The more the project manager knows about the project from the opening discussions and the more face time the PM enjoys with the client, the more likely the project will proceed in harmony.

The PM often represents the A/E firm's first line of defense against the client's unrealistic expectations. A client's constant requests to "do it cheaply" or "use X in order to save money" must be met with the proper response. "A good PM," says Randy Lewis, Vice President of Loss Prevention and Client Education for the Design Professional group of the XL Insurance companies, "can explain to the client, who is often a business-oriented person, the choices and possible outcomes in terms of economic value. Then, naturally, the good PM will also communicate the client's decisions to the A/E firm, particularly when amendments to the contract are required."

Document, Document, Document

Now that you have a project manager involved, you can assign the PM the responsibility for one of your firm's best defenses against unrealistic client expectations - documentation. While the command "document everything" has practically become a mantra for those in the design professions, more A/Es should actually practice it. Poor or missing documentation can expose a firm to a host of legal issues.

While A/Es should document decisions that come up during the normal course of business, it's also important to document any decisions that take place outside of the meeting environment. Meeting minutes or a simple memorandum can be sufficient to document a change. At other times, it might be better to get a formal letter describing the change and its impact - and to request the client's signed approval.

The best bet is to establish an internal documentation policy and stick to it. "We recommend developing a set of letter templates that address out-of-scope work, client-driven changes, and information requests and approvals sought and granted," Lewis says. "Templates allow for ease of documentation and consistency in the communication."

Terri Buckley says there's another good reason for documentation. "One of the biggest challenges an insurance company faces when defending a claim made against a design firm is getting good-quality documentation. Any change that affects the scope, schedule, or cost of a project should be put in writing - its approval secured by a signature - and filed carefully."

The sequence of e-mails, drawings, and letters should demonstrate reasonably well how the scope has changed and/or grown over time.

Thorough recordkeeping should be common practice for all of the reasons covered above; those who have experienced difficulties with client expectations or, worse, litigation know precisely why. "When faced with an unhappy or litigious client, the best documentation practices will give the A/E firm and its insurer a leg up," Buckley says.