6 Tips to Mitigate Construction Project Risks
Many factors can delay or ruin a construction project. For example, a volatile economy, weather, mechanical or material malfunctions, permits, etc. Of all the items that “pause” a successful project, subcontractor insurance compliance shouldn’t be on the list. But, according to the Pulse of the Profession Survey, 74% of organizations inconsistently use risk management processes. As a result, not confirming a subcontractor’s certificate of insurance (COI) or an endorsement can cost a General Contractor (GC) millions. Check out these six tips to mitigate construction project risks.
Tip #1 – Review Previous Construction Project Risks
If you have experienced expensive claims or project delays due to an invalid subcontractor COI, look at what happened in that situation. Conduct a risk review of what went well or failed on the project. Check compliance performance for vendors and subcontractors and create improved processes for the upcoming projects based on earlier findings. The best way to go through this review process and avoid problems is with COI tracking and management software.
Tip #2 – Catch a Fraudulent COI
The best way to sniff out a fake COI is to look for the “ACORD 25” in the lower-left corner of the form. ACORD is the Association for Cooperative Operations Research and Development, which sets the insurance standards in the industry. If the document isn’t an ACORD 25 form, it’s a good idea to investigate the coverage. Secondly, all content on a COI should have the same font, with the only exception being the electronic signature.
Tip #3 – Check if Insurers Are Legal Companies
If you come across a COI with an insurer, you’re unfamiliar with, contact your insurance agent or the issuing agent of the COI to make sure they’re a legitimate company. In order to find and confirm the insurance company’s rating Use tools like ambest.com. If a COI comes from a company with a rating of B or lower, avoid accepting that COI.
Tip #4 – Put in Place Rational Project Timelines
It’s important to set reasonable timelines for construction projects. For example, if project managers feel like they’re working against the clock, they’ll cut corners; and the first cut often pertains to compliance.
Also, if your project timeline is too tight, experienced insurance companies will recognize the rushed completion dates and charge higher premiums. When projects are on a tight schedule, subcontractors feel rushed, which leads to a higher risk of injuries or accidents, forcing the insurer to charge you more for the coverage.
Tip #5 – Understand Your Contract & Check for Correct Coverage
The contracts in place can vary based on the project, scope, or third party. Therefore, your risk management team must know which coverage is acceptable for each contract. Make sure your team is knowledgeable and trained to find inaccurate insurance exclusions and endorsements. Also, make sure they review policies against the contract to ensure compliance.
Read over the policy and check for any misspellings, inaccurate contact information, correct policy dates are in place, and if the broker is still active with the provided policy. Also, it is important to remind subcontractors to update their COIs at least a month in advance. With SmartCompliance, this process is automatic.
Learn more about how to review an ACORD 25 form like a pro.
Tip #6 – Digitally Issue, Collect, & Review Insurance Documents
Managing risk by tracking COIs manually is time-consuming and wastes resources,. It can also leave your company vulnerable to expensive claims if an error were to occur. Start managing your compliance process in a digital system to ensure you have an active and accurate COI from every contractor working on the job site or project.
With an online COI tracking solution, you’ll be able to consolidate all vendor insurance data into one platform. Automatically send requests for updated or missing COIs to limit time and resources spent managing files. You can also scan certificates, transcribe data, and compare to your customized risk requirements to guarantee that accurate coverage is in place.
Mitigate Construction Project Risks With Software
Construction projects shouldn’t have to stop due to compliance issues. If you’re looking for an easy-to-use, cloud-based platform to manage your vendor and subcontractor COIs and endorsements to mitigate construction project risks, check out SmartCompliance.
With our solution and services, you’ll be able to track COIs, send automated alerts before non-compliance becomes an issue, end manual COI data entry, and guarantee your company has protection. Request a free demo today to see how our solution ensures that all your future projects have coverage, so you can focus on what you do best…completing a successful project.