Now that the building boom has presented a great deal ofopportunity after years of limited activity, for constructioncompanies and subcontractors looking to make the most of it moreattention than ever must be paid to effective risk managementpractices that will not only save money but also save lives.

“There's a lot of introspection that's seen now in theconstruction industry that wasn't there before,” says BillMcIntyre, chairman of American Contractors Insurance Group Inc. andfounder of the International Risk Management Institute, which thisweek hosted its annual Construction Risk Conference in Orlando,Florida.

During the three-day conference, a great deal of discussioncentered on the topic of creating value through effective projectmanagement that has deep roots in worker safety. Increasedself-analysis, McIntyre says, is essential to remaining viable inan increasingly competitive industry.

When it comes to bidding on jobs, “Everything is done on acompetitive-bid basis,” he explains. As a result, when a companywins a contract by offering to do the job at a competitive price,“the safety and quality is not always there. Unsafe contractorssometimes get the work, and the [project] owners aren't alwayssophisticated enough to recognize that.”

While progress has been made in reducing losses, McIntyre says,the rate of serious injuries and fatalities remains high, with morethan 1,000 killed on job sites in the U.S. each year — with smallercontractors and subcontractors accounting for four times the deathsthan larger ones do. According to the U.S. Department of Labor, outof 4,386 worker fatalities in private industry in calendar year2014, 899 (or 20.5 percent) of those deaths were inconstruction.

The leading causes of private-sector worker demise in theconstruction industry were falls, followed by electrocution,struck-by-object, and caught-in/between. These “Fatal Four”represented 60.6 percent of construction-worker deaths in 2014.

“Even if your people are safety-trained but your subcontractorsare not, then you've got an issue there,” says McIntyre, who addsthat a sea change in how people are trained must occur in order tolower that staggering number of construction-related fatalities.“The biggest contractors have to figure this out, and pass that onto the smaller general contractors and subcontractors.”

Bridging the talent gap

One part of the construction industry's problem is having theright labor on job site — especially top talent, for which there isgreat demand. Maintaining a qualified workforce is one of the topconcerns for construction company executives, says Jack Gibson,IRMI's president and CEO. As many older, more seasoned constructionworkers exit the business, they're taking with them a wealth ofexperience.

“We're seeing more and more baby boomers retiring,” he says, “alot of institutional knowledge leaving at the trade level andsupervisor level. We have to fill that void.”

One way to do that is to reach out to the younger set toemphasize the career opportunities in the field of construction.More contractors are working with high schools to meet with youngpeople and educate them about the industry. Then comes the processof training them, and then retaining them. Keeping themengaged.

While replacing a lot of seasoned people out of the workforce isby no means easy, Gibson is encouraged by the results of mentoringprograms such as the ACE (Architecture Construction & Engineering)Mentor Program, which encourages students to pursue careers inthose fields and financially supports each student's journeythrough scholarships and grants.

Gibson, who serves on ACE's national advisory board, says thatthe good news is, “Millennials want to learn, they want to becoached.”

Further challenges

Another issue that has construction-industry executivesconcerned: Onerous contracting conditions being put into contracts.Language for indemnity and transfer of liability is being passeddownstream to the contractors below them; the owner passes the riskto the general contractor, who then passes it down tosub-contractors. Performance-oriented guarantees are being seen inagreements, as well as provisions in which the contractor may haveto pay for delays or non-performance.

“Owners transfer risk down to the general contractors.Contractors pass risks to each other as well, usually down the lineto subcontractors,” Gibson explains. “In theory, the party with themost control of the risk should manage that risk. But it's reallythe party with the most bargaining power transfers the risk to theparty with the least bargaining power.”

Having those subcontractors assuming a good deal of thepotential liability gets even more dicey when considering howinconsistent they can be on two fronts: their financial strength(subcontractors can get stretched for cash flow by taking on toomany jobs, and then risk defaults) and their safety protocols.

“If you're a general contractor and you have lots ofsubcontractors, whatever safety and quality protocols they bring tothe table, you're stuck with that,” says Gibson. “Are they doingquality work safely, or cutting corners?”

How safe are your people?

The process of developing and engendering a culture ofsafety — one in which there is a genuine sense ofresponsibility for all the workers on your team and a clearlycommunicated and reinforced message — becomes paramount,McIntyre and Gibson say.

The key is top-executive-level buy-in, Gibson notes: If the CEOisn't 100 percent committed to safety, it's not going to happen. Ithas to be driven down the organization to all levels.

“Employees need to understand that they're responsible, too:Employee buy-in is equally critical,” says Gibson. “Older babyboomers have been working in the industry for years and they'vebeen doing things a certain way — perhaps not the safest way — fora long time, and you have newer ones who aren't trained. Or oftenthey have contractors who get complacent, who get lax onsafety.

“What you want to strive for is a safety culture to the pointwhere you have employees feeling comfortable enough to point out toeach other that they do have to put on goggles or a helmet,” headds. “They shoulddo that. You have to try and build that into theculture.”

Maintaining consistent safety protocols across subcontractors isa constant challenge, especially when profit margins become thinneras more contractors fiercely outbid each other to provide thelowest estimate for the job.

“It's a buyer's market,” says Gibson, and in that climate, “itreduces the room for error, which makes risk management andinsurance more important. Paradoxically, they want to reduce theircosts, and many risk management practices can sometimes get shortshrift.”

One thing, however, is certain: For the foreseeable future, jobswill keep coming — and contractors will need to rise tothe challenge of completing them. McIntyre, who has been around theconstruction industry for decades, knows that a finished projectlike a high-rise or a bridge is a living monument that workers canpoint to for years to come and say, “I helped build that.”

“If you really analyze the risks, you might wonder why one wouldget into this business,” adds McIntyre. “But when you know, youunderstand that it's a great source of a lot of pride for thesefolks.”

For full conference coverage, see our IRMI Construction Risk Conference news andinsights page and follow us on Twitter @PC360_Risk.

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Scenes from the first day at IRMI2016

Scenes from the second day at IRMI2016