Engineering Inc. - September/October 2008 - 20

W hen you’re doing bridge work, the processes are well known and the people are well trained. Facing the Challenges jack BeeMer DavID evans anD assocIates “Exposure comes from every angle of our business,” says John Magliano, chairman of Syska Hennessy Group, a M/E/P firm in New York City. “And every one of them presents a significant risk in this market today.” Risk lurks in unexpected places. Jack Beemer, corporate risk officer at David Evans and Associates, Inc., in Portland, Ore., says that engineering firms face less risk designing a bridge, for example, than staking a construction site. “When you’re doing bridge work, the processes are well known and the people are well trained,” says Beemer. “You have state and federal design requirements that are well defined and you have to meet those standards. “Construction staking, on the other hand, tends to be fast-moving. You don’t have a lot of time to understand the problems and consider the situation. It’s a segment that’s prone to errors. And if something gets built wrong, you have to pay for the actual construction correction. Some of our biggest claims have been in low-fee construction staking jobs.” On top of these discipline-specific risks, firms face the challenges of operating across diverse markets and through widely dispersed offices. As a result, Tim Corbett, president of SmartRisk, a Pasadena, Calif.–based risk management consulting firm, says, “Multidiscipline firms are often inconsistent in developing their risk management practices. They really need to establish a consistent practice across the whole firm.” 20 eNGINeerING INc. september / october 2008 Several factors combine to prohibit multidiscipline firms from establishing a consistent risk management strategy. At their inception, most engineering firms focus on one discipline. The founders build the firm around their expertise, such as structural or civil engineering. “In smaller firms, the principals can get involved in every project and they can manage risk as they want to,” says Bob Fogle, corporate risk officer for HNTB, a national multidisciplinary firm that works in transportation, bridges, aviation, architecture, urban design and planning, environmental engineering, water and construction services. “As you get larger and have offices all over the country, however, the people who are managing the risks every day are farther removed. You don’t have a senior leader of the firm engaged in every project.” This distance creates disconnects where mistakes can arise. “Management may understand the risks inherent in a particular discipline, but a lot of times the field employees may not,” says Dave Collings, an Atlanta-based partner at the insurance brokerage firm Ames & Gough. “Creating risk management awareness across a widespread firm can be a significant challenge.” Expansion creates its own problems. As firms enter new fields, there might be a lag before they acquire the knowledge and experience to recognize and understand the risks of the discipline. “Some disciplines, such as structural or geo-tech, carry a higher risk than others, such as electrical,” says Collings. “We’ve been surprised at how often a firm’s perception of a discipline’s risk doesn’t match the reality.” Conversely, a firm might make an acquisition to gain immediate knowledge and experience in the new discipline, yet must then inculcate the corporate culture to new staffers. Finally, firms sometimes make questionable expansion decisions in a slow market. “When a firm goes looking for revenue in new disciplines or with new clients,” says Corbett, “risk increases dramatically.” Another problem area, says Corbett, arises from the relationship of the various disciplines within the firm. “In some firms, each discipline becomes like a firm within the firm,” he says. “Each one works independently, with its own way of doing things.” And disciplines within firms don’t always work together coherently. “There is a ubiquitous communication problem,” says I n smaller firms, the principals can get involved in every project and they can manage risk as they want to. BoB foGLe hntB

Engineering Inc. - September/October 2008

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