Risk. If you work in the construction industry, it’s a word you know well.
Everything you do in your work as a contractor has an inherent risk factor, from your bid to completion of the project.
In construction, risk is the probability of a loss occurring. You may think your general liability policy is enough to safely protect you, but you may be surprised where additional losses might pop up.
Savvy contractors know all the major risks, and how to avoid them.
Risk #1: Theft or Vandalism
You need your tools, equipment, materials, and supplies to get the job done.
No matter how carefully you maintain your tools, or how cautious you are about securing equipment and materials, it is almost impossible to protect these assets 100%.
Maybe one of your employees accidentally takes a tool home with him, and it never returns to the site.
Whether it is accidental or intentional, theft happens.
And so does vandalism.
Replacing tools and equipment that have been stolen or damaged can eat away at your profits on a project.
Risk #2: Other People
One of the biggest safety risks on your project may not even be one of your guys.
Interference from people outside of your immediate sphere of influence is tough to predict.
How many times has a homeowner’s neighbor come over to check out the new remodel project?
You know the type...
Nosey Ned pretends to take the dog out for a walk so he has an excuse to wander to the project site. He likes to tell you all about the upgrades he has made in his own home, give you some advice on how to do your job right, and then…
He trips over an extension cord connected to a power tool and falls down.
Now, Nosey Ned has lawyered up and expects you to pay for his curiosity and clumsiness. Third-party lawsuits can cost you big-time. Even if you aren’t found liable in court, the cost of a lawyer and all of the fees could be huge.
Risk #3: Data Loss
Welcome to the age of construction technology.
The conveniences of smartphones, tablets, and software programs to your business can mean increased convenience and profitability for your business. You use accounting software, an app for finding bids, a system for tracking leads, and even a project management program that you access on your tablet.
The computer equipment, data systems, and information storage you use daily makes you more efficient and more profitable.
What would it cost you if something happened to your computer equipment and data? Aside from the simple cost of replacing these valuable (and usually pricey) tools, data breaches and stolen equipment leave your accounts, and your client’s personal information, vulnerable.
Risk #4: Stormy Weather
Rain. Hail. Winds. Unexpected and severe weather can happen in an instant.
High winds can uproot trees, sending them crashing through your remodel project. Lightning can strike. Hail the size of golf balls can pelt down and damage materials and supplies. Severe rains can turn to floods.
It can be hard to think about the potential risk of a flash flood when the sun is shining, or to imagine the damage that high winds can bring on a mild, spring day.
But unexpected weather extremes, and even natural disasters, can happen without warning.
If one of these events happened and caused serious damage to your project, materials, and supplies, you could be facing the repair and replacement costs out of your own pocket.
Risk #5: Yesterday’s Project
As a contractor, you face a unique risk that not many other professionals have to worry about. Even after you have completed a project, it still continues to present a risk for you and your business.
If a project you completed months, or even years, ago injures someone because of a construction defect, you could be left holding the bill.
How to be savvy about protecting your business from construction risks:
If any of the above scenarios sounds like it could bring a huge loss to your business or personal assets, don’t panic.
You can protect yourself from all of these risks.
Here’s how contractors in-the-know avoid them:
The most successful contractors didn’t get that way by worrying all day. They plan proactively to protect their business from risks. Calculate risk, have a great plan for managing that risk, and cover yourself where you can.