Practice considerations: Manage your architecture firm’s risk in response to COVID-19
In the past few weeks, the world has reacted in incredible ways to the COVID-19 pandemic. Most architecture firms are working remotely, either at their own decision or at the direction of local authorities. It would be reasonable to assume that most construction projects might be significantly impacted – if they haven’t been already. Architecture firms are undoubtedly facing difficult decisions as they deal with the impact of COVID-19. Often, those decisions will require firms to balance competing interests and obligations without a clear “right” answer. Daunting as it may seem, with mounting uncertainty, a proactive, systematic, and reasoned approach to answering the plethora of questions facing firms will be the best way forward1.
This document is intended to be a resource for architects and architecture firms in developing a firm-specific response to the COVID-19 pandemic. It provides a non-exhaustive list of issues to identify and consider in an effort to help shape firm discussions and decision-making. It is not, however, intended to provide guidance as to how architects and architecture firms should resolve these issues, as those decisions will need to be made in consultation with legal, insurance, and other professionals, and based upon a multitude of factors, to include the firm’s size, location, clientele, project types, project statuses, etc.
This document begins with a resource list and suggestions for dealing with federal, state, and local guidance and restrictions. The document next addresses your current work, providing a set of relevant considerations for projects that will continue during the pandemic, as well as those that will not. Finally, the document concludes with some factors related to work you either have not yet started or are in the process of pursuing.
Guidance and restrictions from local, state, and federal government
1. This issue is changing rapidly. You will need to check updates regularly from reliable sources. Some potential sources of information include:
- The Center for Disease Control, World Health Organization, or National Institutes of Health
- The Department of Labor
- Your local health department, and county and city governments
- The Small Business Administration
- Your health system and benefits insurer
2. Because these issues are changing rapidly, consider appointing a person or group within your firm to keep track of governmental actions. This will allow for efficient monitoring of changes and dissemination of information to your employees.
3. Be fully aware of the regulatory and governmental realities applicable to each project and each office of your firm, as they will impact virtually every decision you must make.
Evaluation of your firm's current work
It will be necessary for your firm to evaluate the status of each project in your firm’s portfolio, regardless of their stage of completion. Most likely, a number of your projects will move forward, however, given the various restrictions being applied to large portions of the country, your firm may need to adapt how it continues working on this projects. The following section is intended to help you identify some of the salient issues that you will need to tackle as you figure out how to continue serving your client’s needs.
PROJECTS THAT WILL CONTINUE THROUGH THE COVID-19 PANDEMIC
Concerns related to persons
For your ongoing projects, you will need to be mindful of your obligations to the people impacted by your firm, this includes both your employees and the public in general.
1. Your focus should be on keeping your employees and consultants safe and assuring them that you have their safety in mind. You should keep an open line of communication with your employees and consultants to convey honest and helpful information. Provide employees with information regarding how they can continue to perform their job.
2. You will want to consider communicating decisions regarding, among others:
- Teleworking policies,
- “Snail mail” protocols,
- Package and overnight mail protocols, and
- Security protocols (both physical and electronic).
3. Understand that there are practical realities regarding employees’ teleworking logistics. You will want to discuss policies and potential workarounds for unique situations with employees. Remember, just as your firm is dealing with unexpected logistical challenges, your employees are also facing numerous challenges. Similar considerations should be given to your consultants as well.
1. Architects should continue to focus on public health, safety, and welfare.
2. Adherence to CDC and government guidelines will help keep the public, including your clients, consultants, and contractors, safe.
3. Monitor and update your information as circumstances change quickly and existing approaches may need to adapt. Accordingly, be prepared with contingency plans to prepare for increased (or decreased) restrictions.
Concerns related to clients
Your clients are dealing with this situation as well, and you will need to take client circumstances in to consideration as you figure out a path forward. While you should plan on how to move forward on each project, it will be of utmost importance to communicate frequently and openly with your client.
1. Communicate clearly with clients to obtain guidance with respect to the client’s instructions, and to convey your intentions with respect to ongoing work. Proactive communication is likely better than reactive communication in this situation. Your insurance carrier and legal counsel may have language you can use if you have questions. If your situation changes, you will want to keep your clients appropriately informed.
2. For each project on which your firm intends to continue to provide services (if practicable), it may be advisable to let each client know you intend to keep working in accordance with CDC guidance and requirements imposed by local government. You might include specific descriptions on how you intend to complete their project work using remote capabilities and other work-arounds that allow you to both continue providing services and comply with CDC guidance and other governmental requirements.
3. If, at any time, you are unable to fulfill your contractual obligations due to regulations or restrictions in place, depleted work force due to illness, or for any other reason beyond your control, you should explain this limitation to your client as soon as possible. This approach could invite the owner to respond as they have the authority to suspend your work on the project or agree that continued work is inappropriate. Document any decision to alter the agreement’s schedule, services, or compensation.
4. Review your contract terms regarding client response, responsibilities, and response times, recognizing that they, too, are likely to be working remotely. If you do not receive a response, or receive an unclear response to your communications, you will need to determine how to proceed.
Concerns related to your firm
The concerns related to your firm are undoubtedly plentiful, and with all the uncertainty surrounding COVID-19, many of these decisions will be difficult to make. However, early consideration and planning around how your firm can proceed will give you the most options.
1. Develop a feasible telework policy, if you don’t already have one. The telework policy will need to take into consideration the new normal, which will require adjustments from the employer and employee. In developing your telework policy, identify areas of your practice that will be impacted by a move to remote working (e.g. engagement with clients and project stakeholders during the design process, meetings with other project participants, site visits, etc.). To the extent possible, discuss and develop strategies to counter any negative impact.
2. Protocols for dealing with paper-based billing and mailings may need to be addressed and, if possible, switched to e-billing.
3. If you need to vacate your office, you will want to ensure the office can be vacant for a substantial period of time (take out the trash, change HEPA filters, set thermostats, etc.). You will also want to communicate with building owners and other tenants in your building. Make sure employees are informed of restrictions related to office access.
4. Austerity measures
A focus should be on emerging from this issue in the best, realistic position possible. In that regard:
- Consider measures to preserve capital,
- Engage in a proactive approach by conducting conversations with employees,
- Track unproductive time, as it may be reimbursable in the future depending on government programs,
- Reach out to banks to ensure lines of credit are and will be available, and
- Stay up to date on developments at the Federal Small Business Administration (and similar state agencies) with regard to loans and other relevant programs your firm may be able to tap in to.
5. Analyze potential HR issues
- HR issues you may need to consider could include, among others, furloughs, layoffs, reduced hours and/or benefits, and OSHA requirements to keep employees safe. OSHA and the EEOC have published guidance articles addressing various matters related to employers' obligations under the ADA and Rehabilitation Act as well as duties for employee safety.
- Assess and adapt “normal” operating processes such as telework resulting from lessons learned.
- Regularly monitor legislative changes enacted in response to COVID-19 at the federal, state, and local level. The Families First Coronavirus Response Act impacts Emergency Family and Medical Leave as well as Emergency Paid Sick Leave.
- Understand your obligations when you learn that an employee has tested positive for, or is considered presumptive positive, for COVID-19. Be prepared to balance employee privacy rights with your obligation to notify those potentially exposed.
- When you can return to “normal” work, you might need to have conversations with employees who may be apprehensive about returning to work. Your office policies should take into consideration various levels of comfort with a request to return to the office.
6. Clear and regular communications to your employees will be necessary to keep everyone accurately informed of office policies.
- Consider establishing a designated time to send out updates to employees. In the initial weeks, while events are quite fluid, bi-weekly updates may be necessary.
7. Develop and prepare contingency plans to deal with different likely/foreseeable potentialities.
- Strategically thinking about how your firm can respond under different circumstances will allow for more nimble reactions to changes when/if they occur.
- Consider potential options based on different periods of government imposed limitations (e.g. 3-month plan, 6-month plan, etc.). Also, be prepared to modify those plans as new information becomes available.
8. CARES Act
- On March 27, 2020 the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed. You should consult promptly with legal, tax, and accounting professionals, as well as your bank, to determine if CARES Act funds are available to your design firm and how to obtain such funds.
- The AIA has published many helpful resources related to the CARES Act, which can be found here. A video about how the CARES Act could impact design firms can also be found here.
Concerns related to projects
In some respects, the concerns related to the project will be similar to those related to your client. This section, however, will focus much more on the practical impact on your various projects, requiring you to objectively evaluate each project’s status. For all your projects, as mentioned above, active and transparent communication with your client and other project participants will be paramount. Normal project flow will be significantly interrupted. Therefore, you should plan for uncertainty, which could include such events as project suspension, delay, termination (for convenience or cause), inability to proceed due to government restrictions/recommendations, acceleration, restart, and repurposing. In preparing for all this uncertainty, it is vital that you systematically and objectively evaluate your projects.
1. Evaluate your agreements and project circumstances for each active project to fully understand your options (consider questions such as “Is there a force majeure clause?” “What are our site visit duties?” “Can we suspend services?” “Can we terminate services?” etc.). Because each client and project is different, you may need to prepare different action plans for each project.
- Interruptions may occur at different times for each project (or not at all), so be sure to document the results of these evaluations so they can be easily referenced at a later date if the need arises.
- Create a master list (if you don’t have one already) of all projects on which your firm is working, and then classify the projects based upon status during COVID-19. Consider adding information in such a list identifying contract clauses that could be triggered by this pandemic, and identifying any requirements (for example, notice) resulting from those clauses.
- As part of this process, do not ignore a determination regarding potential exposure to claims from clients in light of their circumstances changing as well.
2. Evaluate consultant and other team member capacity to meet project needs. As is the case with your own firm, they may have serious limitations on their ability proceed with a project.
3. Consider discussing additional cleaning and sanitizing requirements for on-going projects as well as your office if you are still permitted to access it.
4. Determine and communicate office policies regarding client meetings. This will be of particular importance for projects in early design phases when client and stakeholder meetings are frequent.
5. Determine and communicate office polices regarding project site-visits. Consider work-arounds to avoid site visits in situations contrary to relevant CDC guidance and other applicable restrictions.
- Limited site visits, less personnel on each site visit, conduct site visits at non-working hours, conduct virtual site visits, etc.
- Be prepared to discuss site visit requirements with affected employees.
- Document agreed to changes in site visit protocols as a change to the relevant agreement(s), including any limitations on the breath, depth, quality of the site visits resulting from the change (so that, if there is a problem with the construction down the road, you can limit the argument that the architect is responsible because the client did not know the shortcomings brought about by agreeing the change in protocols). Ideally these modifications should be reflected in both the owner/architect and owner/contractor agreements.
- Revisit the site visit question regularly to identify and anticipate problems or shortcomings that need to be addressed with the owner, contractor, or your consultants and so you can return to regular protocols as swiftly as possible.
- For more information, please review the article “Architect standard of care relative to site visits during the COVID-19 pandemic."
6. Creative re-staffing of projects
- You should anticipate that a certain percentage of projects will be terminated or suspended and plan accordingly with regard to staffing projects. You may need to consider creative ways to temporarily re-staff projects. As an example, if one project is suspended but another is accelerated, you can consider shuffling around employees to meet the short-term needs of those accelerated projects.
- Despite the industry-wide slowdown, certain sectors of the industry are predicted to overperform the overall market for 2020, (e.g. healthcare and public safety projects) creating a likely scenario that some firms will see their workloads increase (or at least not decrease) depending on the nature of their practice. In some cases that workload may even outpace a firm’s capabilities. Given the uncertain economic times, however, those fortunate firms may be reluctant to add additional employees. As a result, there is a potential opportunity for firms looking to keep their underused staff if they can connect with firms that have excess work. In response, the AIA is leveraging its existing AIA Career Center Jobs Board to provide a free platform for firms in need of additional capacity to fulfill increased workload to connect with those firms experiencing a decreased workload. To access the Career Center, please go to AIA Career Center2. To the extent firms are able to connect, AIA Contract Documents publishes a number of documents that may be useful in structuring the firms’ relationship with one another.
7. Project-type specific analysis
- Health care projects, for example, might be accelerated – you will need to evaluate how to balance government guidelines and safety protocols with productivity requirements in these situations.
- For bigger, more complicated projects where your client has a large team of decision makers, it may be difficult to collect all the decision makers together during this pandemic. Therefore, you might consider asking whether it is possible to communicate with a limited subset of contacts to minimize response time.
- If you need plans reviewed or inspections performed and your local building department is slow to respond or is closed and nonresponsive, then you should look to see if your jurisdiction has any statutes allowing for alternative plan review and inspection services. Along these lines the State of Georgia issued executive orders on March 20 and 30, 2020 on this topic, doing away with the statutorily required waiting period and allowing for the immediate use of “private professional providers” for plan review and inspections. The executive orders can be found here.
8. Non-compliant jobsites
- You may need to consider how to communicate with, and provide instructions to, your employees and consultants if a jobsite is not complying with guidelines or regulations.
- If you are aware of violations of government regulations or guidelines, you will need to determine whether and to whom you report such issues.
PROJECTS THAT WILL NOT CONTINUE THROUGH THE COVID-19 PANDEMIC
Unfortunately, not every project in your portfolio will continue through this crisis, whether because your client or another project participant is unable to continue or due to limitations on your firm’s ability to continue. Therefore, you must be prepared on how to proceed if a project must be suspended or terminated.
Potential contract issues3
1. Provide notice and document everything
- Almost every design and construction contract requires a party who asserts a right or claim to provide notice to the other party. Prudent architects should review all their contracts for all projects to determine all circumstances when notice is required to be given, to whom it must be given, and the form it must take.
- Proper documentation is also prudent in this situation. You should document all decisions your firm makes, and all decisions made by all project participants. In this situation, it may be better to err on the side of too much communication.
2. Owner/Contractor agreements
- Be aware of the role, if any, the architect may have in the owner/contractor agreement if the project is suspended or terminated.
- For projects utilizing AIA A201-2017 General Conditions of the Contract for Construction, the document contains various provisions that might apply to projects affected by the COVID-19 pandemic, to include section 22.214.171.124 4 and section 126.96.36.199,6 The owner may also have the right to suspend and terminate the contract for convenience, as set forth in A201-2017 Sections 14.3 and 14.4, respectively.
- For a more detailed discussion of these sections, please review a recent article titled “How the AIA Contracts Address Issues Arising Due To the COVID-19 Pandemic.”
3. Owner/Architect agreements
- Be fully aware of the rights and responsibilities of the owner and architect in the circumstances of a project suspension or termination. Construction contracts anticipate and have mechanisms in place to apportion risk, and potentially adjust project schedules, if a party is unable to complete contract obligations due to circumstances out of their control. In this regard, you should understand the government guidelines and restrictions in place as they potentially relate to your contract. If you are unable to perform your contractual duties due to government restrictions, your contract may provide protection. If you can perform your contractual duties but need to adhere to guidelines, then you will need to communicate such limitations with your client.
- For projects utilizing AIA B101-2017 Standard Form of Agreement Between Owner and Architect, the agreement contains general statements regarding the architect’s responsibilities and timeliness of professional services. The owner and architect should evaluate section 3.1.3 requirements for the project schedule as it might be applicable to delay issues arising from COVID-197.
- The standard of care language in B101 section 2.2 speaks in general terms about the timing of architect’s services8.
- For a more detailed discussion of these sections, please review a recent article titled “How the AIA Contracts Address Issues Arising Due To the COVID-19 Pandemic.”
In the absence of, or in addition to, a force majeure clause, consider discussions with counsel related to the common law defenses of impossibility, impracticability, frustration of purpose, etc. Generally, they provide defenses to claims for breach of contract if you are unable to perform your work due to circumstances out of your control. However, it should be noted that these defenses have a relatively high threshold in order to be invoked. Accordingly, you must consult with an attorney as they can explain each of these defenses and determine whether they apply to your situation as they require a very fact-specific analyses.
1. Most construction contracts require the parties to obtain multiple types and levels of insurance. section A.2 of Exhibit A (“Insurance and Bonds”) to AIA Document A101-2017 gives the owner the option to purchase various types of insurance that may be analyzed to see if coverage exists for issues related to COVID-19. For example, the owner can purchase “Loss of Use, Business Interruption, and Delay in Completion Insurance,” (Section A.2.4.1) which can reimburse an owner for “loss of use of the Owner’s property, or the inability to conduct normal operations due to a covered cause of loss.” This type of insurance can, however, exclude claims if not based upon physical property damage or can even exclude claims when based upon business interruption due to disease, epidemic, etc.
2. The owner can also purchase “Other Insurance,” (Section A.2.5.2) which might include policies designed to provide coverage in this instance.
3. Regardless, it may be prudent to check with any insurance advisors to see if your company or project has coverage for any business losses resulting from these events or if you have any coverage questions.
4. You are encouraged to seek input from your insurance carrier. They will be able to provide specific guidance with regard to the applicability of your professional liability policy to various project circumstances and are likely to have additional suggestions on how to best proceed in the face of COVID-19.
5. Be sure to comply with notice requirements to your carrier for any potential claims.
6. If you are performing services that are arguably outside of your basic scope of services and related to COVID-19, you should consider discussing with your broker whether or not such activities are covered in your Professional Liability policy and, if they are not, acquire relevant coverage.
Your firm’s upcoming and potential future work
ANTICIPATE A POTENTIAL RESTART OF SUSPENDED PROJECTS
Even with the evolving nature of this pandemic, there is reason to believe any restart will occur quickly. To the greatest extent possible, you should position your firm to be ready to restart promptly.
For projects just starting out, you would normally travel to the project site to perform various analyses and surveys. If you can’t travel to the site but need to perform a site survey, you will need to consider how to handle a client who is giving instructions to, for example, travel to the site, contrary to government protocols.
For conversion projects, or any projects in the near future, architects may want to specifically address how the unique circumstances of the COVID-19 pandemic may impact the type and degree of the services they are able to provide and how an architect’s adherence to the standard of care might be evaluated in light of these unique circumstances. One way to do this might be to include an addendum with a proposal that sets forth the unique challenges that a particular project might present and how those unique challenges will inform the standard of care.
For additional information related to submitting proposals for, and negotiating, contracts during COVID-19, you can watch this video.
POTENTIAL BUSINESS CONTINUITY ISSUE
Analyze your pipeline of work. Determine which projects are likely to start on time (and may perhaps be accelerated), which are likely to be suspended, and which may be terminated so you can perform a portfolio risk assessment.
CONTINUE TO LOOK FOR WORK
Remember, a quick rebound is possible, so be ready to take on new projects. You should continue to look for new work and staff to grow your firm when this pandemic subsides.
Consider diversifying your portfolio to include multiple types of projects, if you are able.
AIA has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice. The Risk Management Program posts new materials and resources periodically.
 This document is the product of a one-and-a-half day virtual meeting of the AIA’s Risk Management Committee followed up with further development by AIA Staff.
 The use of the Career Center platform does not create an agreement between the AIA and any other party, or between third parties who use the platform. Firms should contact a competent legal professional for advice related to federal and state employment laws, internal human resources policies, any tax and professional liability insurance implications, and other potential issues, relating to the use of this staff sharing platform. Firms should also discuss any contemplated arrangements with their Professional Liability Insurance representative.
 If you have questions regarding how the COVID-19 pandemic might affect your projects or your contracts, then you should review any applicable contracts in their entirety – not just the clauses discussed below – and consult legal counsel.
 “The Contractor may terminate the Contract if the Work is stopped for a period of 30 consecutive days through no act or fault of the Contractor, a Subcontractor, a Sub-subcontractor, their agents or employees, or any other persons or entities performing portions of the Work, for any of the following reasons: .1 Issuance of an order of a court or other public authority having jurisdiction that requires all Work to be stopped; .2 An act of government, such as a declaration of national emergency, that requires all Work to be stopped...”
The AIA A401- 2017 Standard Form of Agreement Between Contractor and Subcontractor incorporates the A201-2017 and further provides in Article 2 (the “flow-down” clause) that the contractor is to assume “all obligations and responsibilities” toward the subcontractor that the owner assumed toward it and the subcontractor is to assume “all obligations and responsibilities” toward the contractor that the contractor assumed toward the owner. Therefore, Section 8.3.1 from the A201-2017 (quoted above) might apply to the A401 contractor/subcontractor agreement. Both the contractor and subcontractor should review their agreement carefully with competent counsel to make sure they’re adhering to all contract requirements related to, among others, providing timely notice.
The AIA A401- 2017 Standard Form of Agreement Between Contractor and Subcontractor incorporates the A201-2017 and further provides in Article 2 (the “flow-down” clause) that the contractor is to assume “all obligations and responsibilities” toward the Subcontractor that the Owner assumed toward it and the Subcontractor is to assume “all obligations and responsibilities” toward the Contractor that the Contractor assumed toward the Owner. Therefore, Section 8.3.1 from the A201-2017 (quoted above) might apply to the A401 Contractor/Subcontractor Agreement. Both the Contractor and Subcontractor should review their agreement carefully with competent counsel to make sure they’re adhering to all contract requirements related to, among others, providing timely notice.
 “As soon as practicable after the date of this Agreement, the Architect shall submit for the Owner’s approval a schedule for the performance of the Architect’s services. The schedule initially shall include anticipated dates for the commencement of construction and for Substantial Completion of the Work as set forth in the Initial Information. The schedule shall include allowances for periods of time required for the Owner’s review, for the performance of the Owner’s consultants, and for approval of submissions by authorities having jurisdiction over the Project. Once approved by the Owner, time limits established by the schedule shall not, except for reasonable cause, be exceeded by the Architect or Owner. With the Owner’s approval, the Architect shall adjust the schedule, if necessary, as the Project proceeds until the commencement of construction.” (emphasis added)
“The Architect shall perform its services consistent with the professional skill and care ordinarily provided by architects practicing in the same or similar locality under the same or similar circumstances. The Architect shall perform its services as expeditiously as is consistent with such professional skill and care and the orderly progress of the Project.” (emphasis added)