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Improving Performance & Profitability
The pandemic has impacted many design firms. Some firms have seen an increase in project opportunities while others have had a reduction in design services based on government restrictions, or clients waiting for market conditions to settle.
One common objective for a majority of firms:
Improving performance and profitability.
While trying to keep current projects on track, and exploring new project opportunities, design firms have had to restructure the way they operate with social distancing, remote work, and client and project meetings.
Based on SmartRisk's analysis of design firms – there are common characteristics of the higher performers and profitable design firms. These firms have incorporated a more enterprise-wide approach to risk management. Benefits include:
- Improved performance
- Higher profitability
- Greater client satisfaction ratings
- Fewer legal problems and claims
- Lower insurance costs
Enterprise-Wide Risk Management Program
Risk management goes well beyond contracts and having insurance in place. A complete enterprise-wide risk management program includes the assessment, and prioritization of risks including; staff, operations, procedures, practices supporting project efforts. Includes applying the appropriate resources for minimizing, monitoring, and controlling the impact of risk when rendering professional services. To be truly effective, a firm has to take a wider view of risk management efforts. Categories of an enterprise-wide risk management program include:
- Experience & Staffing
- Training
- Project & Client
- Project Team
- Design Documents
- Communication and Documentation
- Contracts
- Billing & Invoicing
- Project Closeout
- Risk Management Culture
- Claims
Examples of the practices applied by the higher performing and profitable firms:
- Leaders - selected based on business management, risk management and technical skills.
- Due diligence of Clients - selecting the right clients, understands expectations, well-defined client communication strategy, plan, balanced contract terms.
- Staffing - matches values and culture, maintain core intelligence, address poor performers and stars, recruit carefully – compensate performance, use of retirees
- Training – investment in the firm, curriculum solving problems, rethinking, behavior modification, growth, business practices & risk management essential.
Design Firm Risk Analysis
Every design firm has a different risk profile based on their individual characteristics. Evaluating the operations, practices and risks that could negatively impact a design firms performance and profitability is critical for short and long term success. Having an independent risk analysis conducted is extremely helpful in identifying areas of concerns as well as interrelated risk factors within the firms operations. Based on the results, recommendations are made specific for the firm in mitigating risk and improved performance.
SR Risk Profile - Benefits
SmartRisk provides independent risk assessments, SR Risk Profiles. In addition to helping to improve performance and profitablity, insurance carriers have provided premium credits, and or cost sharing for firms completing the SR Risk Profile process. It has proven to be a great tool for assessing, and improving overall risk management efforts, performance, and profitability, increasing insurance options and lowering premiums for design firms.
You are welcome to forward this newsletter to others who may be interested.
NOTICE: This article is for informational purposes only and should not be construed as legal advice. Please consult with a legal professional in your area for advice reagrding your firms individuals circumstances.
If you are interested in obtaining more information about SmartRisk, and services offered, please contact us. http://smartrisk.biz
Thank you.
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