Construction Risk Management 101

If someone fell on-site, how long would it take to notify a medic? If the site needed to be evacuated, how can you be sure all the workers get out safely? Gilbane’s Risk Management expertise is evident in every area of the job worksite, through the use of safety technology, insurance programs, top of the line liability coverage, and more.

What is construction risk management?

Risk management in construction refers to the process of identifying potential risks of each job and job site and creating a plan to mitigate them. This includes a number of risk types from safety, to legal and environmental. Each of these potential risks must be assessed, and there must be a plan in place to prevent them or, should any of them come to fruition, ensure they have minimal impact. 

Types of construction risks

While the first thing that may come to mind when hearing the word, “risk” when referring to construction sites is physical safety, there are several types of risks prevalent on a construction site. These potential risks include:

• Safety risk: As with any job that involves working with your hands, climbing on roofs, or operating heavy machinery, construction sites pose a risk to the safety of on-site workers.

• Financial risk: Construction projects can be financially unpredictable. They bring the risk of being outbid by another company, lack of funding, or unplanned building costs. 

• Contractual/Legal risk: Client contracts can be problematic for construction companies. Legal risks can come about should a project take longer or cost more than expected or should the quality not be op to par.

• Logistical risk: Scheduling can be difficult to predict on construction projects. Mistakes, nature, material availability, and other logistical matters can pose a risk to a projected timeline or schedule.

• Environmental risk: Construction work can be heavily reliant on the weather. Rain, snow, or natural disasters can hold up a project, damage the site, or make it difficult for workers to complete their jobs.

How does construction risk management work?

A risk management plan for a project or company should be done by a professional Construction Risk Manager. OSHA provides a step by step guide and template for how to complete a risk management plan. The steps these risk managers will take are as follows:

• Project Risk Assessment: Risk management on construction sites starts with an assessment and identification of all potential project risks 

• Put preventative measures in place or eliminate risk: Once risks have been identified, it’s important to put measures in place to prevent the ones that can be prevented or eliminate some risks altogether

• Create a contingency plan: Put a strategy in place for how to deal with any remaining risks

How does Gilbane embrace risk management?

Here at Gilbane, we take risk management seriously. We employ several Risk Managers and require a risk assessment and risk management plan for every project. However, in addition to creating these plans, there are other ways we protect our employees from construction site risk. 

Construction project insurance

Gilbane also provides several in-house insurance plans to help give our employees peace of mind for risks on and off site. These programs include: 

• Contractor Controlled Insurance Program (CCIP)
• Subcontractor Default Insurance (SDI), and
• Builders Risk Insurance (BRI).

Contractor Controlled Insurance Program (CCIP)

CCIP is the preferred wrap-up insurance coverage for projects exceeding $25 million in contract value.  Utilizing an experienced in-house claims and risk management team, Gilbane’s CCIP offers comprehensive coverage while minimizing the amount of time and collateral our client invests in claims.

Subcontractor Default Insurance (SDI)

One of the greatest risks on any project is the risk of subcontractor default.  We manage this risk by engaging in a rigorous subcontractor prequalification process that is required prior to any bidding. Through this effort, and by aggregating the SDI policy company-wide, Gilbane can provide a competitive Default Insurance rate, as well as uniform and adequate coverage across the eligible subcontractors. SDI allows Gilbane to control the actions taken in the event of a default, which minimizes the impact to other trades and the overall project schedule.

Builders Risk Insurance (BRI)

BRI is a coverage that is often overlooked or assumed to be included in General Liability or Property Insurance.  But when something goes wrong during construction and the work itself is compromised, Gilbane’s BRI is the preferred coverage of our clients.  Traditional BRI has numerous problematic exclusions including mold, no coverage for temporary structures, sitework, or work stored offsite. Gilbane’s policy is continuously refined and updated by construction risk management experts to provide the best coverage for both the project and the client, with specific inclusions to get the project up and running as soon as possible with fewer delays or issues.

Benefits of risk management in the construction industry

Risk management can help put companies, clients, stakeholders, and employees at ease and provide a sense of security. While it requires a lot of work from Risk Managers, Prequalification Analysts, and employees themselves, it is well worth the effort. Risk management plans can:

• Increase project efficiency
• Improve safety
• Result in higher profits and more and larger contracts
• Cultivate better client relationships
• Produce higher quality construction sites and end products
• Help avoid expensive legal claims and litigations

Whether it’s the Prequalification Analysts managing subcontractor prequalification months before anyone sees activity onsite, or the claims team working through the night to ensure that developing claims and issues are handled, we are committed to protecting client interests both on the front lines, utilizing technology, such as the Spot-R wearables, and from the office through management of our in-house insurance products.