The construction business is fraught with risks. Having a solid risk management plan helps you to identify the potential risks that can negatively impact the progress of the project and also your business reputation. A good plan enables you to find optimum solutions to reduce the chances of the risks turning into reality.
In this blog, we will familiarize you with the four most common risk factors that construction projects are exposed to and how to successfully manage the risks.
Major Risks That Construction Projects Face
Here are some of the major risks your construction project may face:
- Manpower and productivity issue:
The scarcity of skilled workers on your construction project can affect its progress and subsequently hamper the project’s output goals. It may lead to delayed projects which translates to overspending and can prove to be detrimental for those projects that run on tight budgets.The labor shortage is a grim reality that the construction business has been dealing with for a long time. According to the latest Bureau of Labor Statistics, Job Openings, and Labor Turnover Summary (JOLTS) report, there were 413,000 job openings in the industry in December 2022.Many contractors are forced to hire unskilled or inexperienced workers or those with minimal relevant experience. Besides affecting productivity, these workers can also pose a hazardous threat as they do not have the requisite safety training and need constant supervision.
Offering good salaries, benefits, and perks, rewarding them for excellence, and providing them with growth potential can help you build your team and earn their loyalty. Also, providing them with opportunities to enhance their skills and further their training can go a long way to creating a strong workforce.
- Potential on-site safety risks:
Accidents on construction sites are not uncommon. Besides resulting in injuries and sometimes deaths, such incidents may lead to delays and losses. To prevent one from happening on your project, you must take measures such as:
- Provide safety training to your employees, including basic first aid
- Invest in high-quality engineering controls
- Provide them with PPE for enhanced protection
- Convene a safety meeting before the start of the project where they can be instructed about the safety guidelines and the potential on-site hazards
- Ensure that your sub-contractors adhere to your safety procedures
- Conduct safety meetings and toolbox talks regularly
- Subcontractor issues:
A defaulting subcontractor can cause you financial loss and delays. Adopting a proactive approach and helping them to solve the issues that are affecting their performance can work to your advantage in the long term.The most common indications that suggest that you have subcontractor issues are:
- Considerable decrease in their manpower
- Delays in material delivery
- Delayed payments to their suppliers and subcontractors for their services
- Mismanagement of change orders:
Change orders are amendments or addendums to the original contract that can be introduced by either party, the owner, the general contractor, or the subcontractors. They involve additional work and expenses, and if the process is not managed well, you may experience severe financial setbacks and inordinate delays in project completion.
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For more details on contractor insurance for your business, contact us today. Our team of insurance experts at CDF-Artisan Insurance Solutions can help you get the right insurance for your specific needs.
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