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Risk Retention or Risk Transfer – Considering your Options

- August 20, 2018 by Leslie Stoll, CSP, ARM (View all posts by Leslie)

You’ve finally got the fund to start a major project, the excitement is uncontrollable. You’re going to finally be able to modify your facility to accommodate all your extra growth. But, with change comes choices. How do you manage the project and not take on too much risk? In this blog, I will identify key risk associated with major change and key considerations to consider.

If your plans include building or remodeling, one of your first decisions will be figuring out if your existing maintenance department can handle the task. Sure, you have electricians on staff who work with electricity daily repairing your machines, but are they qualified to install new building electrical or re-wire existing electrical? What about dry-walling the new office? Do you have the right tools and equipment to make this task safe for your employees to self-perform?

The question to ask yourself is “Does your staff have the skills, time and safety equipment to do the work?”

Once you factor in all the costs of doing the job safely, you might find it makes sense to hire a professional contractor. Plus, don’t forget about the risks associated with your staff performing the work incorrectly – when you hire a professional in the industry, they will have more resources than your staff does and if an error occurs causing a defect, they will be able to fix it properly.

If you determine that hiring subcontractors for some or all of the work is a good idea, the next thing to ponder is hiring a company to manage the project or hiring a general contractor.

Can your plant manager effectively manage the daily operations and a construction project?

The work that goes into qualifying subcontractors, managing and scheduling your project, and managing safety of the project may be too much to handle. Hiring a general contractor or project manager will ease the burden. You’ll also get an extra layer of protection if the proper contractual controls are in place to reduce your liability exposure. Whether you hire a sub directly or you partner with a general contractor, making sure that you have legal contracts protecting your interests is important. Your insurance agent or legal counsel can help you make sure everything is protected.

Once you’ve decided that hiring a general contractor is the right decision, that doesn’t mean you should just sit back and ignore the project. Regular meetings to get updates on the project will help keep your project on schedule and most importantly safe! An accident on your site will affect your company. Not only can it cost money if you lose production time, but a serious accident can bring OSHA onto your property.

Your ICW Group Risk Manager can help you develop a safety plan for your project with our contractor safety program. You can also download a copy of a contractor safety program by logging into the RMRx Safety Advisor.