Marketing & Business Development Coordinator
BAM Architecture Studio
At the October 24th Leadership Lunch, a group of contract specialists in the design and construction industry discussed risk management best practices. Moderating the panel was Kyle Fisher of Arup. The panel included three speakers involved in the risk-based portions of the A/E/C industry: Joseph Dennis, Arup’s General Counsel, Dewberry’s Vice President and Executive Director of Contracts Karolyn Gardner, and Michael De Chiara, Co-Founding Partner of Zetlin & De Chiara. The mix of an A/E/C’s firm’s general counsel, external counsel, and an internal executive director of contracts provided helpful risk insights from varied perspectives.
Each panelist agreed that the marketing and business development teams are the first line of defense to protect firms against risk. Often, early correspondence and materials sent to a client are marketing materials, both promotional and RFP responses. Arup’s Joseph Dennis identified proposals as the first opportunity to set the ground rules for risk, especially in regard to uninsured risk. Supporting this point, Dewberry’s Karolyn Gardner notes that analyzing risk is critical during the business development phase. She advises her teams to have proposal meetings with her to review the RFP terms and the portfolio of risk, including contractual, technical, and compliance risk. It is important to outline exclusions in the proposal process and in the contract, as it identifies that certain items out of scope will be an additional charge. For smaller firms that do not have an internal legal counsel, helpful resources may be found on the AIA website. However, it is recommended that firms retain an attorney to review and develop terms and conditions.
As general counsel for multiple A/E/C firms, Michael de Chiara highlighted the potential during the RFPs to both frame issues the client has not considered and the importance of commenting on the contract during the RFP process. In the same vein, Karolyn Gardner advises reviewing the terms and conditions and approaching the client with questions early in the process, such as “Have you considered …?” She explained that the structure of proposals and terms and conditions provide insight into how the client works. While all agreed it is important to have difficult client conversations upfront, Arup’s Joseph Dennis did note that one may be taking a chance when asking a contracting officer about modifications early on in the selection process. Firms should consider if client proposals are okay as-is, in case the client does not want to entertain changes or comments. A helpful tactic for the panelists was to reduce the firm’s terms and conditions to one page, even if tiny font, and to send it out with every proposal.
During the Q&A portion of the panel, one marketer addressed the point that marketers may be the only ones to actually read the RFP, as the technical team either does not have the time nor interest in reviewing the client proposal. Understanding it may be a difficult item to tackle, all three panelists stressed the importance of the project manager having an understanding of the contract. A good project manager was identified as one who marks up the contract with comments and questions for the legal counsel or contract director, giving the project manager the power to negotiate with the client.
Arup’s Joseph Dennis identified the three phases of risk: avoidance of not pursuing a project, allocation for outlining contracts, and management of summarizing a contract. In line with the avoidance phase, Michael De Chiara advises firms to consider why they are going after a project, how a firm will benefit from the project, what the firm thinks of the client, and what the potential risks are. Dewberry’s Karolyn Gardner shared that she has created a checklist to review RFPs to serve as a helpful tool to come to a Go/No Go RFP decision.
A final helpful takeaway on managing risk is to clearly mark the division between promotional materials and the official contract. As the first line of defense, marketing and business development teams can assist in contracting successful projects by prioritizing projects and navigating risk early on in the selection process.