Risk Management for Construction Sites

March 23, 2021

Risk management can be a difficult task for construction industry stakeholders, and the associated costs can be daunting. Currently, the global insurance market is experiencing what is known as a “hard market,” which is driving insurance prices up and placing additional pressure on contractors, builders and developers.

It might feel as though you are at the mercy of the insurance industry, with little control over your insurance costs. But there are strategies you can implement to reduce the impact of these insurance marketplace conditions on your finances.

The insurance premiums you pay are based in part on your claims history. Therefore, understanding the top losses in your past insurance claims history and working to mitigate those losses is key in reducing insurance costs. From there, consider any other threats faced by your business and what risk controls you could implement to prevent those losses. These are important first steps in the development of a risk management plan.

While creating a risk management strategy can seem intimidating, the good news is you don’t have to go it alone. Your suppliers and subcontractors could (and in fact, should) support your risk control efforts. Given our background in site containment, we’ll explore how your temporary fence supplier could fit into your risk management plan.

Risk Management Techniques

Most risk management techniques can be grouped into four key strategies:

  • Avoid the risk
  • Transfer the risk
  • Mitigate the risk
  • Accept the risk

“Transferring the risk” and “mitigating the risk” are two strategies that provide opportunities to involve other project stakeholders, like subcontractors and suppliers.

Transferring the Risk

An obvious example of “transferring the risk” is your insurance coverage. In this way, you are transferring some of the risks or potential losses of your construction project to the insurance provider.

Alternatively, your subs or suppliers may be willing to shoulder some of the risk through their contractual obligations. Essentially, contractual risk transfers work to assign the responsibility for associated risk exposures to one party or the other. This would be considered a contractual risk control.

Other contractual risk controls include:

  • Greater collaboration between stakeholders to mitigate risks
  • Properly assessing and prequalifying project stakeholders

While contractual risk transfers are an example of “transferring the risk”, these other controls fall into the category of “mitigating the risk”.

Mitigating the Risk

Collaborating with and prequalifying other project stakeholders are considered contractual risk controls because they help ensure that you can meet the commitments of your contract. Ensuring your subcontractors are organized, responsive, and reliable can prevent cost overruns and project delays that could impact your ability to complete the project on time and on budget. This is one way your subcontractors and suppliers can help to mitigate risk.

Of course, there are other ways your subs and suppliers can support your risk mitigation strategies. For instance, professional advice and new technologies and methods are both good resources to help you manage your risk.

Sources for advice can include legal firms and risk management consultants, some of whom specialize in construction risk. Those are great resources for any construction company looking to understand their potential risks and develop a risk management plan.

But you shouldn’t discount the expertise that your subcontractors and suppliers bring to the table, as their narrow focus often means that they can identify risks that may otherwise be overlooked. For instance, Modu-Loc is challenging the common practice of hanging banners and screening on unsecured temporary fencing.

As well, their experience often leads to the development of new solutions or methods that can help mitigate risks which were previously just accepted. Again, their ability to recognize the risks inherent in their work gives them a clear advantage when it comes to process improvement and product development.

Leveraging the expertise of your subs, suppliers, and legal advisors could be considered an operational risk control. Using peer review as much as possible through the design, pre-construction and build phases can uncover risks you otherwise may not have noticed.

Another example of an operational risk control is implementing quality assurance and quality control protocols. Again, to effectively manage risks, these protocols should be applied to other project stakeholders.

Applying Risk Management Techniques to Your Temporary Fence Supplier

Temporary fence is one of those aspects of construction that is often overlooked during risk assessment. With all of the safety hazards present on the construction site, as well as the other risks faced by a typical project, it’s easy to dismiss your hoarding as a non-issue.

At Modu-Loc, we know that’s a mistake. We are aware of the frequency of trip-and-fall claims within the construction industry. We are also intimately familiar with all of the ways temporary fencing can fail – especially if improperly installed.

Knowing what we know, we have implemented key processes and introduced new services to help our clients manage risk on their construction sites. Here is how we can support your overall risk management strategy:

Expert Recommendations

Whether you’re looking for full-service installation or you plan to install yourself, we will recommend the right products for your unique site requirements. During your initial call to request a quote or place an order, we will ask questions about the site location and characteristics to help identify any potential risks. We then recommend products to mitigate those hazards and ensure a safe and secure site.

Proper Installation

Having the right product makes little difference if it isn’t implemented correctly. Often, when we see temporary fence fail on site, it’s due to incorrect or inadequate installation methods. Temporary fencing is rarely installed on a perfect surface and in a perfect location. We’re often dealing with tight spaces, uneven terrain, and close proximity to pedestrian areas or roadways.

Our installers use a Site Quality Checklist to ensure that every site is installed to Modu-Loc standards. It captures things like fence line stability and possible trip hazards, and helps to mitigate risk of liability. When assessing temporary fence suppliers, it’s a good idea to ask about their training processes and best practices for installation. If their installation methods are subpar, they could be increasing your risk instead of reducing it.

Site Quality Assurance Plan

Even with the right temporary fence system and proper installation, the integrity of your site containment system can suffer over time. That’s because today’s construction projects are increasingly more complex. This means that requirements on site are shifting frequently, with tools, equipment, and even the footprint of the site changing according to the phase of the project.

Even if your temporary fence was professionally installed, it may be dismantled, moved, or damaged by your workers or subcontractors over the duration of the project. Over time, your site containment system may no longer be as stable or secure as the day it was installed. This poses some obvious risks to your project and your business.

You should walk the perimeter of your site regularly – be that weekly or monthly – to check that all access points are secured, no panels have been removed, and no fence lines have shifted. As mentioned, quality assurance protocols are a great example of an operational risk control. Essentially, you want to make sure that nobody can gain unauthorized access to your site, and that the fence itself isn’t posing a risk to passersby.

Contractors who don’t have the time to dedicate to these regular checks may opt into our Site Quality Assurance Plan. The Site Quality Assurance Plan is a monthly inspection and service package for your site containment system. It can support your risk management plan and form part of your overall construction site maintenance strategy. While it isn’t necessarily a “transfer the risk” measure, it is an example of a “mitigate the risk” strategy and demonstrates due diligence.

For more information about the Site Quality Assurance Plan, please download the brochure:

Working with Your Suppliers to Manage Risk

To recap, here are the key points for working with your suppliers to manage risk on your next construction project:

  • Where possible, share the risk with other project stakeholders through contractual risk transfers
  • Properly assess and prequalify your subcontractors and suppliers to ensure they can help you deliver on your contractual obligations
  • Leverage the expertise of advisors, consultants, subcontractors and suppliers to identify hard-to-spot risks
  • Make use of the new tools or methods your partners have developed to challenge what used to be “accepted” risks
  • Implement quality assurance and quality control protocols and ensure that all project stakeholders adhere to them

We hope this has shown you how your subcontractors and suppliers can help rather than hinder your risk management plan. Implementing some of the risk controls above will help you mitigate threats to your project and business, and potentially minimize your insurance costs.

Author: Joanna Bieda

Joanna Bieda is the Director of Marketing and Communications at Modu-Loc Fence Rentals, and has been with the company since 2014. She loves writing and is a self-professed data nerd. She thoroughly enjoys teaching customers about all things fence via Modu-Loc's blog.

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