Easing the Burden that Puts Construction Management at Risk

As a broker, you have a tough assignment when it comes to fulfilling the needs of the construction management industry. Every year it seems the landscape for the construction industry becomes even more complicated. They face a lot of challenges and concerns related to contractual requirements and the possibility of litigation, both of which are primary challenges that today’s contractors often face. This puts those in charge of construction management at risk in the course of doing their jobs.

While managing risk can be an arduous task when it comes to the construction industry, there are actually many areas in which to effectively manage these exposures. One way is by transferring risk to a responsible third party, such as a subcontractor, and the other is by reducing loss through added safety procedures and controlling job-site hazards. Helping general contractors (GCs) to implement risk management practices goes a long ways towards:

  • Controlling insurance costs
  • Protecting their assets
  • Reducing protracted legal disputes, and
  • Preserving current limits of insurance

Risk transference offers solid protection to GCs

By transferring risk to subcontractors they use on certain projects, GCs can better protect themselves. This includes indemnification, along with provisions that holds them harmless, as well as enforcing additional insured requirements in their construction contracts.

Having written contracts promote quality control, and the agreement between the general contractor and the subcontractor becomes a critical document in the event of a dispute. It should reflect the GCs own construction standards, as well as any construction standards that the GC has agreed to with the owner and each of the subcontractor’s warranties.

Since many liability exposures are present both during the construction process and often for a considerable time thereafter, the GC must also reduce potential liability losses by controlling construction job-site hazards and any other exposures.

Construction site safety practices should include, but are not limited to, perimeter security fencing and warning signs, limiting job-site visitors to authorized persons only, properly assembling scaffolding, implementing hazard communication standards between workers, implementing slip and fall protection standards, and having designated delivery areas along with requiring delivery personnel to follow all safety practices. This is a solid strategy for reducing the likelihood of putting construction management at risk.