Are You Managing Your Construction Risk?

Every construction project poses unique challenges and risks. Managing these risks is vital for a construction company to survive and thrive. Hoping a risk does not become a reality or outright ignoring it is a recipe for financial disaster. However, businesses cannot begin to manage their risks without knowing the possible sources as well as how to handle them. Below is a breakdown of common threats within the construction industry and ways to keep those risks in check.

Sources of Construction Risk

Knowing what to expect is a major part of managing construction risk. Below are the various risk factors construction businesses face.

  • Competitors: Rival companies are impossible to avoid. However, they can present a major risk to profitability. Business owners may feel pressure to match competitor prices or project completion guarantees, but this can result in slim profitability margins or create problems sourcing materials in time.
  • Contractual risk: Continuing with the above, failing to deliver a project on time can result in fees and penalties. Contracts that demand unrealistic timelines are rife with risk.
  • Cyber liability: A successful cyber attack can damage a construction company’s reputation as well as finances. As construction businesses digitize more and more of their data, they need the appropriate corresponding cyber liability coverage.
  • Fiscal risk: Several elements are a threat to a construction company’s bottom line. For example, unchecked growth, increasing interest rates, decreasing sales, and the economy can all spell financial ruin for a construction company.
  • Natural disasters: Earthquakes and floods are among the most common natural disasters that can jeopardize a construction business. Extreme weather can damage project sites or delay work.
  • Project management risk: Failing to manage a project properly can result in injuries, damages, and delays—all of which affect a business’ bottom line. Poor project management includes inadequate guidelines and policies, failing to enforce said policies, and misjudging time and materials needed to complete a project.
  • Work-related risk: Workers not taking the proper precautions on the jobsite, misusing equipment, and so on can result in job-related injuries and claims.

Managing Construction Risks

There are four schools of thought regarding managing construction risk. These are avoid, transfer, mitigate, or accept the risk.

  • Avoid: Companies can avoid certain risks altogether. For example, if the company knows an area is prone to flooding, they may decline construction projects for that area.
  • Transfer: Most companies transfer their risk by investing in various insurance policies.
  • Mitigate: While some risks are unavoidable, construction companies can reduce their effect. For instance, creating and enforcing safety procedures can reduce safety hazards and incidents on job sites.
  • Accept: Some risks are not controllable, such as unexpected weather conditions delaying a project. Most construction companies accept these risks, but there are ways to reduce the likelihood. For example, businesses can plan construction projects for when weather is usually mild.

Most construction companies determine which method of risk management they will take based on a reward to risk ratio. If a project will net a small profit, it is not worth taking on a high level of risk. However, if the profit margin is large, a company may choose to take on more risk. To learn more about construction risk management, contact The Reilly Company.

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Wearable Technology to Reduce Construction Incidents and Claims

Every construction company needs insurance. Investing in coverage is a smart business practice and can protect a company in the event of costly claims. However, many employers want to reduce workplace accidents or prevent them altogether. Because of this, many within the construction industry are turning to wearable technology to manage risks. Reducing workplace hazards has the added bonus of reducing insurance costs as well.

How the Tech Works

There are a few options for wearable tech available on the market. One such example is a product construction workers can wear on their belt. The product contains sensors that keep track of all workers. The system alerts the supervisor of any trips or falls on the site.  It also has a locator button for emergencies such as injuries. This allows employers to find and assist their injured employee in a rapid manner. Reducing the time to treatment can improve the outcome of the injury by decreasing the severity of the damage as well as recovery time.

The product uses a mesh internet system to stay connected with all workers across the construction site. Such a system allows construction managers to know how far an employee fell, where they fell, and what other employees were in the vicinity. This information is invaluable from a claims perspective, as the data is not subjective.

Similar products exist in vest form, but they serve the same purpose. The primary benefit of wearable technology is its ability to improve workplace safety as well as reduce the response time for injuries. This allows contractors to maximize their project management and employee productivity. Employees can learn from the devices as well. For example, a worker who receives frequent warnings about lifting too much weight may change his workplace habits to avoid injuries due to strain.

The Reilly Company understands that managing risks on construction sites can be difficult. That is why we strive to help businesses mitigate their risk by investing in proper insurance coverage. To learn more about reducing risk for your construction company, contact us today.

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