Elevating Your Construction Business: From Minimum Standards to Comprehensive Practices

Amid the challenges of running a construction company, effective risk management is essential to navigate today's complex landscape.

Over the last 40 years, I have seen firsthand how the relationships between construction and insurance companies have changed and developed. Many contractors view their insurance company as a vital part of their risk management team. Acuity helps contracting policyholders by developing specialized coverages, providing a 24/7 nurse helpline, offering OSHA 10-hour training, employing loss control professionals who work directly with policyholders to improve safety, and providing many other tools and resources.

For contractors, it is imperative to continually evaluate and improve business practices, especially in areas where merely meeting minimum standards has been the norm. Elevating these practices to a more comprehensive and proactive approach is essential for long-term success and risk management. Let's delve into three critical areas where this transformation can significantly impact results.

1. Protect Jobsites from Vandalism

Construction sites have always been a target for thieves. With the demand for quality construction tools and equipment, it can be easy for opportunistic thieves to break in and quickly sell stolen goods.

Depending on the project and its location, a comprehensive jobsite security program may include:

Security fencing: A security fence around the site perimeter should be a priority. Chain-link fencing is a solid first line of security to keep thieves out and prevent wandering children from entering the site.

Signage: Attaching no-trespassing signage to all sides of a chain-linked fence is standard protocol. Signs show you are serious about jobsite security.

Lighting: Thieves hate lighting. Light the jobsite as early as possible using interior and site lighting to deter break-ins. Installing temporary lighting can be well worth the effort.

Placement of equipment and tools: Parking heavy equipment and machines in plain view can keep people from tampering with them. Use heavy-duty chains, cables, and locks to secure trailers, equipment, scaffolding, and ladders. If there is a lockable room in the building, that could be another layer of security. Use portable storage containers to secure tools, equipment, and materials.

Video surveillance: Battery- and solar-powered security cameras can help prevent jobsite theft and vandalism. With night vision technology, you can watch the live feed anytime. Mobile security cameras running on cellular data networks can be used for video surveillance when internet access is unavailable. Security cameras are especially essential at jobsites in high-risk areas.

On-site security: Hiring a security company to provide on-site security is another approach used in high-risk areas. Some projects staff a security guard 24/7 to check in all employees and visitors at the site entrance to ensure a focus on security.

GPS tracking: GPS tracking systems have come a long way over the years, and many contractors see the value in tracking their equipment for theft recovery purposes.

Talk to the local police: I maintained contact with the local police and asked if the night-duty officer on patrol could drive by the site. In my experience, they were always willing to accommodate my request, which gave me another level of comfort.

2. Document Your Work

Unfortunately, construction defects can surface months or years after a construction project is complete. A construction defect is a design, material, or workmanship defect that affects mechanical systems, building components, or structural integrity. Putting some comprehensive procedures in place today may help avoid a future insurance claim:

• Photograph and record all stages of work in progress, including before, during, and when complete.

• Save all communications electronically.

• Develop a companywide document retention policy.

• Store signed reports so a third party may testify to its unaltered authenticity.

3. Work With a Construction Attorney

At some point, a contractor may need the assistance of a construction attorney. Proactively protecting your business is always better than reactively defending it. A comprehensive legal strategy may look something like this:

• Request a legal review of business practices each year and prioritize what to address.

• Identify exposure to risk in contracts.

• Create solid construction administration documents like purchase orders and change orders.

• Develop strong contracts with downstream subcontractors and suppliers.

• Set aside a budget each year for legal review.

As a contractor, a proactive approach to risk management can set you apart from those who continue to do the minimum.

Additional Blog Resources: 
How Insurance Risk Management Programs Can Help Protect Your Business 
Minimizing Risk for the Contractor