General contractors have a lot of responsibility.
They oversee crews who perform demanding tasks, such as lifting heavy objects and using hazardous tools and equipment. There is also a risk of falling from heights and being exposed to chemicals and pollutants.
Proper construction risk management can help prevent and protect your people from these perils on the job. Not only that, but you’ll be better prepared to help them should an accident or dangerous situation arise.
Let’s uncover the strategies, tools, and insights that empower you to safeguard your projects, your team, and your future. Whether you’re a seasoned contractor or still learning the skills of the trade, this article will arm you with the knowledge you need to build your foundation in construction risk management.
What Is Risk Management in Construction?
An estimated 2,500 fatalities occurred due to construction-related risks in Ontario in 2022. Early identification of risks is the best way to keep people safe while also ensuring construction projects won’t get delayed and cost you more resources.
Risk management in construction is about being proactive. It involves effective planning and risk monitoring to prevent or reduce safety risks. By creating a construction risk management plan, contractors can identify and mitigate hazards in their projects.
A construction risk management process should be developed well before any of the work actually starts on a project. Those working on a project should be made aware of any risks they could encounter on the job and how to avoid them.
The Most Common Construction Risks
Risks are multi-dimensional. Some are more obvious—such as on-site safety hazards—and others are more conceptual. While some can be controlled, others are completely unavoidable. All you can do is be aware and plan accordingly.
Some of the most common construction risks include:
- Inclement weather
- Supply chain issues
- Economic instability
- Poor project design or plans
- Issues with subcontractors
- Labour shortages
- On-site safety hazards
- Tool and equipment theft
How To Develop a Risk Management Process
Every construction project is different. However, approaching each with a predefined process is an important step when looking to manage construction risks. Follow the steps below to develop your construction risk management strategy.
1. Identify and Assess Unique Risks
First, you need to identify the risks specific to your project. Do your research and make a list of possible hazards using risk assessment data from similar past projects. This could be safety hazards, financial uncertainties, or regulatory compliance issues.
Meet with your team and relevant stakeholders involved in the project to evaluate each identified risk in terms of its likelihood and potential impact. Prioritize risks based on their significance to the project.
2. Create a Risk Mitigation Plan
Next, it’s time to classify these identified risks into five categories: those that can be eliminated, avoided, transferred, reduced, or accepted. Serious risks that can be eliminated or reduced should be at the top of your priority list.
Develop strategies to mitigate or minimize high-priority risks. Examples include:
- Make safety training a requirement for all workers
- Provide standardized equipment to workers
- Draft policies that dictate site accessibility
- Consult relevant stakeholders regularly
3. Protect Yourself With Policies
While some risks will fall under your jurisdiction as a contractor, others can be best managed by transferring them to a third party. Insurance and bonds are two examples of how you can protect yourself and everyone else on construction sites.
As a contractor, you can look to acquire contractors insurance, general liability insurance, or other specialized types of liability insurance to protect yourself. This offloads the financial risk onto the insurance company rather than your wallet.
You can also obtain a surety bond for contractors. While this three-party agreement most clearly benefits the project owner and construction companies, it also boosts your credibility by guaranteeing your crew and subcontractors will get paid.
Mitigate Construction Site Risks with KASE Insurance
Every successful contractor knows that preparation is key. Safeguard your projects and livelihood by investing in comprehensive trades and construction insurance coverage.
At KASE Insurance, we understand the inherent risks of running a construction business. Over the years, we have helped protect numerous clients in the construction industry with comprehensive, tailored insurance policies that are designed to mitigate their specific risks.
Get in touch with one of our insurance brokers today to learn more. We’re ready help!