Focus on Risk Management

The construction industry has been plagued with fatalities, embedding a safety culture is key for all businesses

Construction in large, global cities, is diverse. Unfortunately, the industry has been plagued with unnecessary fatalities and often high profile safety issues such as crane collapses and other similar accidents. Many believed the cure for these losses and incidents was to provide more regulation, training and safety professionals on each project. Often the same people believe “regulating” companies will alter behaviours and ultimately enhance safety performance on the job. Laws are essential for companies who start with minimum knowledge of the risks and need guidance on what may be considered unsafe. There are many companies who start with limited experience in risk assessment for which this support is essential. Regardless of a company’s size, capacity and capability to manage safety, not managing risk will be detrimental to the point of causing possible failure. There is no direct correlation in a firm’s ability to perform above average. And, one thing is typically consistent; no one wants their employees or subcontract employees to be involved in a serious injury.

Construction projects have varying degree of stakeholders, each with their own willingness and resources to perform at sustainable, safe levels. Owners, trades, general contractors and construction managers all have different perspectives regarding their role in ensuring a safe work environment. Complexities emerge in regions where consideration needs to be given to utilising union versus non-union labour. The current skill shortage facing the industry in many regions of the world isn’t helping either as inexperienced labour is required to supplement the workforce. Both of these challenges have proven to be strong elements affecting project performance for various reasons.

“Companies with integrated and streamlined safety processes compared to companies with clumsy, poorly written safety manuals have a significant competitive advantage.”

As do companies who recognise the need to have staff dedicated to manage safety, when compared to those who think safety “happens”. Companies with leaders willing to be engaged, adaptive and an awareness that senior management has to lead safety at their organisations are shown to have better safety performance

Many factors, both internal and external, impact a firm’s overall safety performance. Among others these factors are:

  • Safety budgets and procurement
  • Regulatory pressures
  • Training needs
  • Pedestrian and occupant concerns
  • Production requirements
  • Inclement weather
  • Economic pressures

“In an effort to effectively manage the above considerations and the ever changing needs of their projects, companies need to routinely work with their insurance brokers and insurers to achieve the positive impact and results around safety performance.”

Most insurance brokers or insurers provide key loss prevention services including:

  • site inspections identifying unsafe conditions/acts with a written report documenting any recommendations for improvements
  • training
  • statistical analysis of losses to identify trends

“Engaging with your broker from the earliest opportunity and ensuring your insurance carrier is notified will allow you to work closely to maximise your settlement and finalise the claim in the most expedient manner.”

Most insurance brokers or insurers provide key loss prevention services including:

  • Site inspections identifying unsafe conditions/acts with a written report documenting any recommendations for improvements
  • Training
  • Statistical analysis of losses to identify trends

These services have been part of the fabric of loss prevention for decades. While they are not new, they are limited in their ability to enhance the company’s safety leadership or management. We recommend companies work with their advisors to ensure they understand how the company identifies risk, their appetite to manage it and their capacity to.

Before commencing in any type of diagnostic clients should take the time to understand what needs to be done to have real impact on the business. This needs to be an open and honest assessment of the company’s safety processes and leadership. Too often companies or consultants believe they understand the problem however in reality many don’t understanding the all of the issues let alone the origins of the problem.

Once the problem(s) has been identified, all stakeholders should work closely to find implementable solutions. Such solutions may include a change in safety personnel, leadership training, streamlining of processes, establishing meaningful metrics, initiating corrective action processes with verification and validation follow up as key steps or indeed a change in management.

“Depending on the client, we can immerse ourselves into the organisation; these engagements can take up to 3-6 months. Or we can provide a roadmap and allow them to make adjustments independent of our involvement” notes Chris Merrifield (Director – loss prevention/safety consulting services) of Construction Risk Partners, a JLT Group company.

"We diagnose the company’s performance using enhanced evaluation methods. Ideally, we like to spend ample time on representative projects to understand execution, conditions and culture” he continued.

“Companies should routinely assess how well they are using their safety systems/processes and evaluate if they are intuitive and simple.”

The core question is whether people are held accountable for utilising the systems/processes and if not, why not. Asking why should immediately initiate a deeper discussion around culture and leadership. “Due to internal challenges or conflicts, companies are not skilled or prepared to conduct these types of these assessments. Our goal is to get leadership to realise the origins of their failures around these issues” notes Merrifield.

Ideally, companies should work with their advisors to leverage results from the safety management systems and get a greater impact with leadership engagement and transformation. Like most construction companies, there is a subtle difference in how services are managed and the characteristics of leadership. Larger companies or those with longer project life cycles will generally see similar inconsistent results in performance. Using tools companies can validate their instincts, make intelligent, informed business decisions. Consideration should be given to those actions which will have the greatest impact on the safety of the company. It may be as simple as not overlooking loyalty or acknowledging accountability - both of which have been shown to have an impact on organisational performance.

A risk management policy and plan should not simply be created, it must be applied daily and updated periodically to ensure that it continues to reflect the needs of the business and/or the project. The ability to demonstrate this when seeking programme terms from insurers will result in tangible benefits – especially as the market hardens.