Abstract
Architecture and engineering (A/E) firms are project-based organizations that deliver unique projects for a network of clients and partners. Law and accounting firms work under long-term retainers, whereas A/E firms must compete for each new project, even with established clients. Each pursuit requires significant upfront effort with uncertain results, and once contracted, the firm remains exposed to execution and liability risk. This paper examines how these firms manage uncertainty through formal processes of review and approval. Go/No-Go reviews, change-order approvals, and a matrix of delegated authority govern how risks, pricing, and commitments are evaluated through the organization. The level of approval depends on the firm’s role, whether acting as an advisor, a design consultant of record, a program manager, or a design-builder bearing contractual and delivery risk. A lower-risk advisory role may require approval only at the project level, while a joint venture or design-build contract may need executive authorization. Together, these mechanisms show how accountability and risk are built into the organization. The analysis explains why firms adopt tiered approval structures to balance professional judgment, financial limits, and client control. Ownership and capital structures limit how much risk a firm can absorb and how quickly it must convert work-in-progress into revenue. The analysis reframes uncertainty as an inherent condition of project-based practice. A/E firms stay resilient by managing commitments, authority, and cash flow within the limits of professional liability and financial risk.
Presenters
Julius ChangSenior Lecturer, Civil Engineering and Engineering Mechanics, Columbia University, New York, United States
Details
Presentation Type
Paper Presentation in a Themed Session
Theme
KEYWORDS
PROJECT-BASED ORGANIZATIONS, ORGANIZATIONAL DESIGN, RISK MANAGEMENT, GOVERNANCE, ARCHITECTURE AND ENGINEERING FIRMS, FINANCIAL RESILIENCE
