By BEN NOVAK, P.Eng.
PEGG Contributor

Over the last few years most engineers have become conversant with the term “risk management.” They have realized that it refers to much more than being careful with their investments.

In fact, risk management is all around us, and has become a very important and now structured part of our work.

It starts with a well thought-out proposal, a tight contract, well-defined client expectations, and proper financial terms and conditions. It continues with work well managed and controlled.

Of course we have always exercised risk control in a manner, by observing codes, designing with safety factors and generally trying to be proactive. But issues, which can now bite us, more often than not originate in the “soft side” of a consulting practice.

This is in running the firm, managing projects and relating to clients. Insurance companies offering professional liability insurance have long recognized this and offer seminars on risk reduction. In addition they encourage firms to avail themselves of peer review services.

They even contribute to the relatively small costs, often by issuing a discount in the premiums for the year in which the review has been completed.

In Canada and the U.S., the two national associations dealing with the business practices of consulting firms (Association of Consulting Engineers of Canada, and the American Council of Engineering Companies) offer a well organized and active peer review program. The accredited reviewers are themselves senior engineering executives with many years of accumulated experience. They have trained for this activity and are obliged to attend refresher sessions at regular intervals.

Based on information from the ACEC (U.S.), a peer review covers areas such as general management, organization of the firm, business continuity and succession plans, human resources, project management, quality management, computer systems management, financial management and business development. From a list of approved individuals, a firm can choose reviewers and decide if the review team should emphasize any of the above-mentioned areas over any others.

The purpose of a peer review is to give the firm a means to improve its professional practice. A peer review does this by identifying the firm’s objectives, policies and procedures, and then examining how these policies and procedures are implemented.

Voluntary, Confidential
The review team does not evaluate the firm against national or regional standards. A peer review is voluntary. The firm asks for a review and voluntarily gives the reviewers access to those materials that allow the team to successfully complete the review.

The review focuses on practices and procedures. Reviewers do not check for the correctness of calculations or design.

Similarly, the review team examines deliverable documents only from the standpoint of apparent conformance with the firm’s policies on work planning, production and quality management, and not for compliance with the firm’s contracts with clients.

A peer review is confidential. Members of the review team execute statements of non-disclosure before they arrive at the site, and this statement of non-disclosure also covers all discussions.

After the review, all materials provided to the reviewers are returned or destroyed, as are any notes taken by the reviewers. A peer review may also include a survey of client’s opinions of the firm’s performance.

A typical review can take anywhere from two to four days, depending on the size of a firm. To conclude a review, the reviewers, in most cases two or more individuals, report to the management of the firm during a debriefing session at the end of the site visit. Strengths and issues are identified in each of the areas covered.

A peer review is cost effective and short, because the reviewers are generally in practice themselves and need not go through a learning curve about the business. Design firms get the opportunity to review their management practices through the eyes of objective, experienced colleagues.

The team provides verbal feedback and usually provides a written report in outline format. Reviewers are available for a reasonable period after a review, to provide clarification or elaboration. In general the peer review is designed to help reduce the firm’s liability exposure.

Firms wishing to engage in the process need only contact their national association, which will guide them through the process. In Canada, the ACEC operates through the U.S. counterpart and will act as agent only.
For more information, you may want to visit the site of ACEC (U.S.) at
www.acec.org/education/peerreview.cfm.

Ben Novak, P.Eng., has a degree in engineering, town planning, as well as a diploma in business administration and over 35 years experience in the design consulting industries. He has held various positions including project engineer, project manager, vice-president, senior vice-president and member of the board of various engineering concerns, ranging in size from 50 employees to over 3,000.
His most recent operating position was senior vice-president, industrial, for Stantec. He has since given courses both at Stantec and to other consulting organizations.

Mr. Novak is an accredited peer reviewer for North American engineering and architectural firms. He has been active in training and quality management for over 15 years, both in firms and for various professional associations, including FIDIC.