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Risk Management, Legal Structures, and Contracts [Exercise B]
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Question 7000571
The firm is reviewing its in-house practices to strengthen contract management and reduce future claims.
Which of the following is the most effective practice to minimize contractual risk?
The correct response Reviewing all contracts with legal counsel is literally mentioned as outside counsel on page 996 of the architect’s handbook. So how can this be the “in-house” practices?
Can someone please explain why Saving signed contracts in a shared drive for staff reference is not the correct response?
Thank you
Welcome to the Black Spectacles Community @nlundstrom! Thanks for writing in with your question.
This is a great example of a tricky ARE question that requires you to select the most correct answer choice amongst a few that are also seemingly correct in other circumstances. Focus on key words and what the question is asking. The question asks which in-house practice is the most effective to minimize contractual risk. That means the other answer choices could also be effective, but we need to select the one that is most effective.
Let’s first eliminate any answer choices that are easily incorrect:
Having project managers review only the portions of contracts that apply to their projects is clearly grounds for missing key information in a contract. Contracts should be reviewed in full and you never want to shortcut anything.
Now, let’s look at the remaining answer choices:
Saving signed contracts in a shared drive for staff reference is good practice; however, as mentioned in the answer explanation, storing in itself does not prevent errors or dispute.
Assigning one principal to review every contract for consistency could be potential answer (as noted in AHPP page 995); however, as the answer explanation states, this limits perspective and increases the change of oversight.
This section in AHPP goes on to explain that appointing a single person or team of individuals to review/negotiate contracts should be with the intent of someone who does this regularly and has the skills, training, and experience to do so. That likely won’t be the firm’s principal - it should be someone with a legal background or licensed attorney.
Therefore, the most effective in-house practice to minimize contractual risk would be Reviewing all contracts with legal counsel.
Hope this helps!
Kiara Galicinao, AIA, NCARB
Product Coordinator
Black Spectacles