By Marcy Marro, Editor
In the world of construction, much like many businesses, risk is
part of the job. According to a new report, Managing Risk in the
Construction Industry, from Dodge Data & Analytics,
three quarters of business owners and contractors have experienced
a dispute or claim in the last three years, while nine in 10 say
increased collaboration can be used to mitigate future
The 60-plus page report looks at the types of risk that commonly
plague construction businesses and sites, including owners, general
contractors and subcontractors, and points out practical ways to
mitigate them. This includes traditional risks such as claims and
disputes, and non-traditional risks like cybersecurity,
subcontractor defaults and violence in the workplace.
The report says there's a unique link between specific risk
reduction practices-such as 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 is that collaboration is widely recognized as
beneficial in an industry still plagued by silos and competition
Steve Jones, senior director of industry insights research at
Dodge Data & Analytics, said the study contributes to the
growing body of knowledge about the positive impacts of project
collaboration 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.
Karen Walsh, senior vice president and regional director of Alliant Insurance Services Inc.,
said the concept of collaboration and integration is not new and
has been around for decades. "The difference today is with the
preponderance of large scale mega projects, this becomes a new
reality with much higher stakes for all sides," she
added. "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."
Three types of industry players were surveyed for the
report-building owners, general contractors and trade contractors.
Of the three, general contractors have experienced the highest
level of claims or disputes in the last five years, with
subcontractor defaults, terminations and failures being the most
frequent and costly issues they face. According to the report, 33
percent of general contractors consider labor procurement and
subcontract management to be high risk area, and 81 percent of all
respondents found that labor scarcity will increase project risk.
On the other hand, building owners are most impacted by claims
arising from construction defects, and trade contractors are
affected by frequent warranty issues.
To best deal with these risks, the report shows the industry can
employ a series of risk evaluation and mitigation strategies, with
formal brainstorming being the top evaluation strategy. However,
different players see different advantages, with building owners
being most enthusiastic about brainstorming to help increase the
reliability of overall project performance, general contractors
also seeing it as having an impact on improved project schedule and
safety. Trade contractors, say it is most effective for reducing
However, according to the study, the most effective risk
evaluation strategies are regular meetings with the full project
team focused on risk and the development of a plan to manage risk.
Both of which help increase project performance reliability,
maintain project quality and improve project safety.
Do you agree? George Hedley talks about it regularly in his
monthly columns, how holding meetings with your team can help
reduce errors on the jobsite, speed up construction and create
value in the company. How has brainstorming and regular meetings
with your staff helped your business?
The report, which was produced in partnership with Alliant and
support from e-Builder and
Procore, is available for