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Stemming the Tide of Construction Management Risk

Stemming the Tide of Construction Management Risk

It’s a sad fact that those in the business of construction management face a slew of litigation concerns, all of which makes the job of your insureds operating in the construction industry more complicated. There are contractual requirements that must be met and this exemplifies some of the primary challenges that today’s contractors face with more regularity.

Construction management firms must work to reduce loss through implementing safety activities such as controlling any existing job-site hazards that can lead to construction management risk. One of the primary issues is not having perimeter security fencing in place and warning signs posted, and another area of exposure lies in not limiting job-site visitors to authorized persons only.

In order for your clients to be successful and avoid litigious situations they need to make risk management an important part of their business operations and there are many areas in which to effectively manage risk exposures. This is often accomplished through the transferring of risk to a responsible third party, such as an architect, engineer, or subcontractor.

The benefits of risk management planning

Implementing risk management practices helps general contractors to control their insurance costs, protect their company and personal assets, reduce the number of protracted legal disputes, and hopefully reserve current limits of insurance. As mentioned earlier, general contractors (GC’s) can better protect themselves by transferring risk to subcontractors they hire to work on projects, by including indemnification and provisions aimed at holding then harmless in the event of errors or delays, as well as enforcing additional insured requirements in their construction contracts.

One way to help stem the tide of lawsuits is to provide written contracts that promote quality control, ensuring that the agreement between the GC and the subcontractor becomes crucial. This should be reflective of the GC’s own construction standards, as well as the construction standards agreed to with the owner of the project and each of the subcontractor’s warranties.

Because many liability exposures are present both during the construction process and often for a considerable time thereafter, the GC must also reduce construction management risk by controlling common construction job-site hazard exposures. Construction site safety practices should include, but are not limited to:

  • Properly assembling scaffolding
  • Implementing hazard communication standards
  • Designating delivery areas and requiring delivery personnel to follow safety practices
  • Implementing slip and fall protection standards, and
  • Having controlled entry logs for arrival and departure of vehicles

Help your clients meet their challenges head on with comprehensive errors and omissions insurance and a solid, risk management program.