Three quarters of building owners and contractors have experienced a dispute or claim in the last 3 years, and nine in ten say increased collaboration can be used to mitigate future risk, according to Managing Risk in the Construction Industry, a new SmartMarket Report from Dodge Data & Analytics. Produced in partnership with Alliant, and with support from e-Builder and Procore, the report is available for free download: www.construction.com/resource-center.asp
The report provides a unique link between specific risk reduction practices—like conducting regular meetings with the full project team, formal brainstorming and developing a plan to manage risk—and tangible project benefits, such as reduced construction cost, improved project schedule and improved safety. A key finding of the report is that collaboration is widely recognized as beneficial in an industry still plagued by silos and competition within teams.
“This study contributes to the growing body of knowledge about the positive impacts of project collaboration,” says Steve Jones, senior director of industry insights research at Dodge Data & Analytics, “and early collaboration by team members can lead directly to less project risk and crisis—a significant incentive to start working together better, more often.”
“The concept of collaboration and integration is not new and has been around for decades,” adds Karen Walsh, senior vice president and regional director of Alliant Insurance Services, Inc.
“The difference today is with the preponderance of large scale mega projects; this becomes a new reality with much higher stakes for all sides. Regardless of the disposition, each party’s risk concentration is exacerbated. Couple this with the emerging and still unknown complications of technological, political and workplace violence risks, and you have a situation that forces the concept for change for all parties.”
Among the three types of industry players surveyed—building owners, general contractors (GCs), and trade contractors—it is general contractors that have experienced the highest level of claims or disputes in the last 5 years. For GCs, subcontractor defaults, terminations, and failures are the most frequent and costly issues they face. The report shows that 33 percent of GCs consider labor procurement and subcontract management to be high risk areas, and that 81 percent of all respondents find that labor scarcity will increase project risk. Building owners, by contrast, are most impacted by claims arising from construction defects, and trade contractors are plagued by the frequency of warranty issues.
To help deal with these risks, industry can employ a series of risk evaluation and mitigation strategies. Formal brainstorming is by far the top evaluation strategy, but different players see different advantages, the report shows. Building owners are most enthusiastic about brainstorming, helping increase reliability of overall project performance, while GCs also see its impact on improved project schedule and safety. Trade contractors find it most effective for reducing construction costs.
The most effective risk evaluation strategies, according to the study, are regular meetings with the full project team focused on risk and the development of a plan to manage risk. Both practices help increase project performance reliability, maintain project quality, and improve project safety.
The Managing Risk in the Construction Industry SmartMarket Report also includes perspectives on risk from surety experts, offers tips on achieving cyber resilience, managing subcontractor default risk, and dealing with active shooter risks on a jobsite, as well offering insights on risk and the evolution of the construction industry since the Great Recession.
In addition to premier partner Alliant, supporting partners include e-Builder and Procore. A wide range of research partners also participated in the survey by distributing it to their members. They include: the Associated Builders and Contractors, the Construction Financial Management Association, the Construction Owners Association of America, the Construction Users Roundtable, the International Risk Management Institute, Inc., JB Knowledge, the National Electrical Contractors Association and the Sheet Metal and Air Conditioning Contractors’ National Association.
DODGE DATA & ANALYTICS
Dodge Data & Analytics is a technology-driven construction project data, analytics and insights provider. Dodge provides trusted market intelligence that helps construction professionals grow their business, and is redefining and recreating the business tools and processes on which the industry relies. Dodge is creating an integrated platform that unifies and simplifies the design, bid and build process, bringing data on people, projects and products into a single hub for the entire industry, from building product manufacturers to contractors and specialty trades to architects and engineers. The company’s products include Dodge Global Network, Dodge PlanRoom, Dodge PipeLine, Dodge SpecShare, Dodge BuildShare, Dodge MarketShare, and the Sweets family of products.
ALLIANT INSURANCE SERVICES
Headquartered in Newport Beach, CA, Alliant Insurance Services, Inc. is one of the largest insurance brokerage firms in the United States and has a history dating back to 1925. Alliant provides property and casualty, workers’ compensation, employee benefits, surety, and financial products and services to more than 26,000 clients nationwide, including public entities, tribal nations, healthcare, energy, law firms, real estate, construction, and other industry groups. ■
Modern Contractor Solutions, March 2017
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