Posts Tagged ‘construction risk’

Eliminating the Risk of the Past

November 9, 2011

Why do construction budgets need contingencies?

There are many facets to the answer but they boil down to two; the risk of the future and the risk of the past. While there are many things we can do to mitigate the risk of the future, it is a fact of life. Weather will change, buildings will leak and misunderstandings will continue. However, effectively eliminating the risk of the past is well within our reach.

What is the risk of the past?

It’s the decay of knowledge over time. As knowledge decays, uncertainty rises and our ability to make informed decisions suffers. Certain facts blur into vague recollections raising doubts and costs in the process.

How do we eliminate the risk of the past?

By recording the present, of course! Photos, video, sound and written notes are all key components of capturing the existing conditions on a site. The more facts we capture surrounding an event or condition, the more accurately we can examine it at a later date.

How does eliminating the risk of the past effect the construction contingency?

The right photo can eliminate the need for hundreds of hours of discovery, depositions and expert testimony.  Claims about sidewalk damage, impaired access or performance milestone melt away in presence of irrefutable evidence.

In my next post, we’ll take a look at the effects of reduced risk of the past on a contingency budget.

4 Steps To Maximize Insurance Coverage for Construction Defects

April 15, 2009

From this month’s Construction Executive Magazine (Sorry, no online copy for this article, authored by Chris Mosley at Sherman & Howard LLC)

  1. Purchase the Right insurance – Review your policy limits to confirm the existence of completed operations coverage. Typical general liability policies limit coverage to $1 million, which is wholly inadequate for construction companies.   Also, liability policies limit their coverage for defects claimed during a single policy year ( i.e. you can’t file a claim for work that was done several years ago.)  Consider excess insurance including completed operations coverage.
  2. Procure the appropriate additional insured endorsements from subcontractors – GC’s should required Subcontractors to maintain their own completed operations coverage. Also, GC’s should review each Sub’s  additional insured endorsements.  If the Sub has not obtained  a completed operations additional insured endorsement, the GC is liable for that Sub’s defects.
  3. Hire a Qualified Insurance Broker – Make sure the broker as claims experience. Also, you should have confidence in your broker’s ability to review your risk exposure and the additional insured endorsements of your subcontractors.
  4. Engage a Personal Counsel Experienced in Insurance Issues – Doing so increases the probability that insurers will pay claims in full. It’s also best to find your attorney at the same time you are shopping for coverage, rather than doing so after a claim arises when you’re likely to have a few more things on your mind.