Project files grow quickly, and you need controls that direct your employees on how to manage project documents as they are generated. Addressing your firm’s internal, organizational inefficiencies can also eliminate needless risk and improve your bottom line. From a risk management perspective, executing a clear document management process strengthens your information security and improves your ability to address a claim. From a profit perspective, a project document protocol mitigates time waste and provides a higher quality of service to your client. As a result, the design firm with these features is more attractive to a prospective external buyer, more likely to survive an internal transition and likely to fare better in any dispute with others.

Profitability and Efficiency 

The implementation of and adherence to document management practices benefit the design firm by reducing re-work that wastes time that could be used elsewhere. Detailed records like project correspondence, schedules, plans, meeting minutes, site observation reports, written responses to submittals, commentary to change orders and payment applications and responses to RFIs, provide all of the must-know information about a project in a centralized, organized location for all team members. 

There are several benefits of consistent document management practices:

• It provides a single/central source of information for all to access internally. 
• It will help keep the services for your projects on time or ahead of schedule.
• It will encourage knowledge sharing allowing the firm to maintain consistency.
• It will reduce duplicative work providing team members with reference points to learn from.
• It will make onboarding of new or replacement team members easier and more efficient.

Moreover, if issues come up during a project, an organized file can help streamline the process of identifying relevant information to resolve issues at the project level before they escalate.

Business Transitions 

Just as it can improve your firm’s balance sheet, so too, can such practices make your firm more attractive to an outside buyer or more likely to pass to the next generation internally. Through secure, organized, and accessible project files, a firm can demonstrate the “backup” that an external buyer may want to see in order to corroborate your firm’s financial documents. This backup increases your negotiating power and secures a more favorable valuation for your company.

Internally, your successors will already understand the benefits of a document management system and as a consequence, be more inclined to assume ownership of a company with a proven process track record. If your firm implements these protocols before an internal transition, its future owners already know the process and appreciate its value. This can minimize any business interruption that might result from change in ownership.  

Information Security

Information security is a vital component to any effective document management or project file management system. And, like a lot of businesses in the professional services sector, design firms allowed their professionals to work from home as a result of the coronavirus pandemic. As the number of design professionals working from home increased, so too, did the rate of phishing and cyber-attack activity.  

While proper document management practices may not reduce attempts to attack your IT infrastructure, such practices dramatically improve your ability to mitigate some risk tied to a cyber-attack:

• Assess the damage in the event of a breach; 
• Protect against unauthorized or inadvertent changes (for example, this might enable you to confirm the integrity of electronic signatures); and 
• Mitigate any damage via automatic, external data backup.

Calibrating your information security to your document management controls might also achieve compliance objectives with respect to these practices that are mandated by your clients. Government contractors, for example, must meet basic information safeguarding requirements required by FAR 52.204-21. 

Be Prepared for a Claim

There are numerous issues that arise on a project that could implicate the design or construction administration services of the design professional. The performance and scope of site visits, review of submittals, RFIs and timeliness of response, change order decisions and payment application approvals are used as avenues by contractors and/or owners for claims against the design professional. If you find yourself on the receiving end of a claim, being able to locate – and provide to your counsel – the key documents relevant to a dispute may allow for a more expeditious review of the claim, and allow for the claim to be resolved prior to litigation. Conversely, if you cannot find the documents needed to refute the claim asserted in an efficient manner, it may take longer to resolve the dispute.

Conclusion

The upside of an effective project file and document management practice extends beyond process optimization, and firms looking to boost their risk management controls and increase their valuation should consider whether such a policy is right for them.

Dalene A. Radcliffe and Daniel M. Eggleston are lawyers at Lee/Shoemaker PLLC, a law firm devoted to the representation of design professionals with offices in Washington, DC and Charlottesville, Virginia. The content of this article was prepared to educate related to potential risks but is not intended to be a substitute for professional legal advice.

(1) Lydia Lee, Architecture Firms Under Threat of Ransomware Attacks, ARCHITECTURAL RECORD, Mar. 26, 2020, https://www.architecturalrecord.com/articles/14524-architecture-firms-under-threat-of-ransomware-attacks.