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Four Building Blocks of Risk Management

Many contractors are so focused on the bidding process that the building blocks of a great foundation for profits and winning jobs are forgotten.

While building processes and the costs of goods and labor are very important and well-calculated by the construction industry, the following four items are often overlooked:

  1. safety culture throughout the organization;
  2. light-duty program;
  3. pre-bid job exposure review; and
  4. contractual risk transfer.

Safety Culture

Many construction companies say they have a safety culture, but too often it’s not embraced by the entire company. Upper management has to firmly adhere to and promote a culture of safety as a part of the corporate vision. This focus prevents accidents and saves future costs related to investigating losses and dealing with OSHA inspections.

Light-Duty Program

A strong and vibrant return-to-work (RTW) program can increase employee morale, lower loss reserves and reduce training costs. It is much better for the employee, his or her family and the construction company if the worker returns to work more quickly through an established RTW light-duty program and feels that the employer is interested in his or her well-being.

Pre-bid Job Exposure Review

When it comes to safety, one size does not fit all. Every job poses different exposures. It is important to review exposures that exist on a potential job with the company’s risk management partner to ensure they are properly covered. Exposures that may exist are pollution liability, railroad protective liability, professional liability and marine exposures.

Contractual Risk Review

It is vital for contractors to use every tool available to make sure all liability that can be transferred by contract is properly structured and that the proper contracts are signed before work begins. Unfortunately, it is common to discover after a loss that a contract has not been signed.

If these four items are followed, contractors can lower their risk management costs and boost their competitiveness in the long run, which will result in more winning bids and better bottom-line profitability.

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