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Risk Management In Construction

What do you think is the single biggest issue toward success or failure for construction contractors?  You guessed it. Risk management. In any business, you can’t totally eliminate risk, but you can minimize risk and manage it well.  In construction projects, risk management will make you or break you.  Construction contractors face risks of a volatile workforce, on-site accidents, budget problems, liabilities to the environment and surrounding people, and delays in progress, just to name a few.  This article discusses how smart contractors reduce and manage risks wisely.

The Best Contractors Reduce Risk

It may go without saying, but the contractors who have longevity in business and are actively seeking more work are the ones who have a good history of reducing and managing risk better than the struggling contractors.  But, how have they done that? There are several ways in which contractors can apply sound risk management principles to building projects.

Ways to Reduce Risk

One way to reduce risk is not to accept a project that you are not financially prepared for.  You must be fiscally sound and able to do the work on time, even though the inevitable hitches that occur.  If your asset foundation is weak, do the small projects first to establish greater capacity for larger contracts.

Be sure you know enough specialists and subcontractors which the job will require.  Don’t just hope you’ll find someone to do that special ironwork. Delays in the various phases of construction will cost everybody money and cause frustration.

Risk management includes being prepared for inclement weather by having the supplies and knowledge to protect what needs to be protected from rain, hail, and wind, and what does not.

Insurance for Contractors

Buying a healthy amount of property and casualty insurance as well as workers compensation insurance is absolutely necessary for smart risk management.  Property gets damaged or stolen, and people get hurt, so don’t ignore the need for good insurance.

Insurance agents recommend that every contractor do the following three things:

1. Establish formal policies and procedures.

2. Produce an employee handbook.

3. Train your people regularly.

Policies and Procedures

In determining your policies and procedures, be clear about what is expected from everyone on the project, from general laborers to a construction manager.  Policies and procedures give instructions on what the workers may and may not do. This keeps people safer and helps to prevent confusion, ill will, and liabilities.

The employee handbook should contain your policies and procedures (including risk management), be reviewed in a training meeting, and signed by each employee.  It should contain well-written paragraphs with regard to workplace safety, substance abuse, proper clothing, attendance and tardiness, cybersecurity, workplace violence, harassment, and the ADA (Americans with Disabilities Act).

Contractors should conduct training meetings regularly to clarify anything in the employee handbook and give instruction on using technology and how to stay safe at work.  You can review OSHA standards and teach good rules for working with equipment, tools, disaster response training, first-aid, and working at heights, such as on I beams, scaffolds, ladders, etc.

When insurance companies see a contractor who implements these practices of risk management, they are able to offer less expensive premiums.


Article By: Clear Content Marketing