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COVID-19: Next Steps in Construction

Construction never stopped in some cities and states during the height of the COVID-19 outbreak — and some airport and public works projects, in fact, gained some efficiencies because of fewer travelers and passers-by on the periphery of job sites.

Where work continued, contractors adjusted on the fly to help reduce coronavirus health risks to their crews. Now, as more construction projects are permitted to resume, contractors can incorporate lessons learned so far and factor in new variables to help manage risks and rebuild momentum in a world transformed by COVID-19.

Contractors deal with unexpected challenges frequently, often weather-related. That experience will serve the industry well as it adjusts to new safety requirements along with complexities of returning to sites where work perhaps started but then was halted.

Costs may increase, and schedules may stretch to compensate for additional steps that must be taken each day before hammer meets nail. Simply doing what’s compulsory shouldn’t be the focus.

See also: How Risk Managers Must Adapt to COVID

Contractors should develop and refine a comprehensive COVID-19 exposure control plan, which may include:

  • Appointing a COVID-19 officer at every job site, even if it’s not mandatory.
  • Integrating COVID protocols into a virtual or online training program for workers.
  • Adjusting management procedures to avoid communication gaps, given that project managers and other personnel may continue to work remotely.

Two key issues: Temperature screening and face coverings

You will need a high level of detail in COVID-related operating procedures. Take temperature screening at job site gates:

  • How will you take temperatures so as to avoid breaching the six feet of social distance?
  • Will workers be trained to take temperatures using no-contact thermometers, or will a third-party medical service or portable testing centers be brought in?
  • What temperature threshold will send a worker away?
  • What documentation, if any, will be kept of workers’ test results, and how will confidentiality be preserved?
  • Do workers need to arrive earlier than in the past, and does that have ramifications for overtime?

There are lots of decisions — and that’s just for temperature screening.

The protocols for face coverings require similarly detailed decision making as well as awareness of state and local mandates. Are face coverings required at all times, or only when it’s not possible to keep six feet of social distance? Are cloth face coverings sufficient, or are respirators approved by the National Institute for Occupational Safety and Health (NIOSH) mandated in certain circumstances?

Note that these new protocols may lead to new risks, such as fogging of eye protection and creation of blind spots. Consider applying anti-fog solution to the lenses, or use helmets with face shields, if appropriate.

This planning may seem daunting, but establishing protocols and communications materials now will make it much less onerous to enforce going forward.

Review financial and supply chain status

Contractors who complete a post-shutdown risk register or hazard analysis should expand their focus beyond health issues. It’s wise to ensure financing, permits and insurance policies have not expired. Consider requalifying subcontractors to check financial status. If there are red flags, consider using joint checks to ensure that lower-tier subcontractors and suppliers receive payment. And is your own cash flow sufficient to make payroll, or have you made other arrangements?

Note that some supply chain and labor issues resulting from the shutdown have not yet been resolved. Make sure you have the materials and crew you need to keep the sequence of work on target.

New reasons to adopt emerging technology

In the hierarchy of technology adoption, many contractors are starting by converting to virtual training and orientation to enable social distancing. Make sure you adequately test your technology and distribute clear instructions to help your workers adjust to using it.

Next, consider the use of technology such as wearables that allow contact tracing, which could help ensure that workers are complying with social distancing guidelines. Wearables for construction are being modified so that, for example, a worker could receive an alert when less than six feet from another worker. Some systems also allow you to identify what workers may have come in contact with an infected worker, should someone later test positive.

There also are opportunities to increase your use of offsite and onsite prefabrication, in part to reduce the number of people on a site at one time and possibly to contribute to efficiency.

Finally, this may be a great time to experiment with emerging technology, such as using robots to do floor layout, which has the potential to improve accuracy as well as reduce the number of people on a job site at one time.

There are some silver linings

No one would have invited coronavirus into the world, but new protocols to reduce health hazards may produce additional benefits.

Limiting the use of elevators to materials and creating one-way pathways for personnel may not only assist in social distancing but also contribute to increased productivity.

See also: 4 Post-COVID-19 Trends for Insurers

These steps could become a best practice worth keeping, along with many other new procedures.

It’s too soon to gauge the net impact of the coronavirus pandemic. But in terms of the business outlook, potential positive developments could include:

  • Construction opportunities increasing in sectors such as healthcare, infrastructure, warehousing (which was already going strong) and manufacturing.
  • Growth in modular, off-site construction, in part because it can help reduce the number of people on a job site at one time.
  • More U.S. manufacturing of construction materials, in response to coronavirus-related supply chain delays associated with offshore providers.
  • Regional population shifts in response to the hardships endured during the pandemic. These may result in increased residential construction in areas of growth, followed by additional commercial and infrastructure development.

In the near term, some projects will be under pressure to accelerate to get back on schedule. But COVID-related mandates may force a slowing of the process, which could enhance overall site safety and quality of work.

Vigilance, as always, is key — and not just about coronavirus. We need to remain attentive to typical construction-related injuries and issues such as heat-related illnesses. Caring for people will help us take care of business now and during the months of recovery ahead.

Visit Zurich’s COVID-19 Resource Hub for more information.

Mismatches and Misunderstandings

There is a culture clash in the construction industry.

Employers and lenders want their contractors on the hook for any insurable losses as long as possible, whereas insurers want to switch from the construction phase to operations, where they usually have rights of subrogation against the contractor as soon as the facility has achieved commercial operations date (COD).

This can cause a mismatch where either a project may be uninsured but does not realize that is the case, or the employer is in breach of its contract with the contractor.

Both these potential situations can produce an excellent payday for lawyers, with a cost to the litigating parties far higher than the premium and advisory expenses to ensure it didn’t arise in the first place.

See also: Strategies to Master Massively Big Data  

Most construction underwriters aim to have their policies cease once the project insured is able to operate and thereby achieve its (COD). Part of their desire for this is that they can then issue operational policies, which exclude some parties previously insured during the construction phase and thus ensure that insurers have rights of subrogation against those parties, primarily the engineering, procurement and construction (EPC) or turnkey contractor and major original equipment manufacturers (OEMs).

This approach may resonate and align with a concession agreement or power purchase agreement (PPA)-type contractual structure because these agreements often allow commercial revenue generation at the earliest possible time to facilitate usage of the project by the public, whether it be a hospital, power station or road, etc.

But the employer, which has the exposure to the availability and efficiency risks, wishes to receive a project of unquestioned quality, so many modern construction contracts demand a more stringent process for reaching a point where the employer will accept risk of loss back from the EPC contractor. These policies require the contractor to perform numerous tasks beyond simply helping achieve commercial revenue generation before a form of “completion” is awarded to the contractor and risk of loss reverts back to the employer.

Indeed, terms such as COD are rarely found in construction contracts. A recent example from a project where Aon is the broker involves a contract where the contractor is required to provide confirmation of the successful finalization of more than 20 items in addition to completing a testing regime to allow for the COD to be issued.

Therefore, the issue is essentially about a disparity between insurance industry practice and the risk allocation in the main contracts that create and drive projects and especially in public-private partnership (PPP, or P3), build-operate-transfer (BOT), build-own-operate-transfer (BOOT), build-own-operate (BOO)-type deals where greater lifecycle risk remains with the private sector stakeholders even during operation.

The disparity can lead to a situation in which:

  • COD has been awarded under a concession-type agreement, and therefore commercial revenue is being generated,
  • So the construction-period insurers are looking to come off risk,
  • But the EPC contractor still has risk of loss (for at least a part of the project), which, contractually, is still considered as being under construction,
  • And the owner has agreed within the construction contract to maintain insurance on behalf of the contractor until completion, however defined, in the construction contract
  • Which can create confusion as to the date of commencement of any defects liability or maintenance or warranty period insurance cover.
  • Plus, there are situations in which through this initial period (i.e. until the contractor has demonstrated that the project can meet the performance criteria required by the EPC contract, which may have some differences to the owner’s agreement with their client), it is the EPC contractor that operates the plant, thus ensuring the need for that entity to remain an insured.

See also: Why to Refocus on Data and Analytics  

Therefore, it is essential that your construction risk and insurance adviser is:

  • Involved early enough in the procurement process to become fully versed in the contractual terms, clauses and nuances of all the project agreements (i.e. not just the construction contract),
  • Able to engineer an insurance solution that both meets the contractual requirements that the employer desires (or has agreed to) and leaves no stakeholder exposed to an uninsured loss that could result in legal action against the employer and even become an event of default under the loan agreement, and
  • Able to explain the contracts and their ramifications to the insurance market to ensure that no gaps in coverage are created and that no insurer can subsequently say: “we weren’t told about that.”

How to Expand Safety Supervision

Safety performance can either make or break a project and help or hinder one’s future career prospects. It can both positively or negatively reflect on a company’s reputation and affect its financial health. Front-line supervisors hold the key to unlocking your company’s potential for high safety performance. Supervisors are responsible for directing the allocation of your company’s key assets of people, equipment, machinery and tools that affect the execution of projects and financial results. They are either the vital link or the missing one in a successful construction safety program.

Many construction companies hold supervisors accountable for safety compliance, training, performance and results. Proper safety supervision is the byproduct of defined roles, specific responsibilities, clear expectations and measured accountabilities. Not all companies fully equip supervisors with the tools or resources needed to effectively lead safety in the field. This leads to an unnecessary, yet preventable, safety performance gap.

Understanding the Safety Performance Gap

The safety performance gap is the difference between what is expected versus what is accepted. In other words, the safety performance gap is the difference between what behaviors a company says it expects employees to adhere to and what behavior it actually allows to occur. Put even more bluntly, the safety performance gap is the delta between defining and driving superior performance standards and condoning and excusing less-than-target safety performance. For construction companies, the performance gap applies to other key performance areas beyond safety, including accounts receivable, contract management, IT outages, quality defects and rework and labor costs.

See also: How to Understand Your Risk Landscape

Closing the Gap

How do company owners and senior leadership teams close the safety performance gap? Leaders can alleviate this gap by changing how safety is conceived, defined and actively communicated within the company. Is safety a core value in your company, or is it regarded as a top priority? Many construction companies say safety is a priority, and they mean it, until push comes to shove against an impending schedule or sequencing change, and safety is compromised. Safety must be conceived as a core value. Priorities shift over time and rise and fall based on perceived urgency. In contrast, values endure the test of time and withstand the changing pressures of project scope, schedule, sequence, quality and budget.

When company leaders view safety as a core value, the proper commitments can be made and, more importantly, kept. This approach leads to a more proactive culture because safety is woven into every aspect of the project life cycle.

Clarifying the Vision, Commitment & Mission

After clarifying that safety is a core value and not just a priority, it is vitally important to provide front-line supervisors with a clear understanding of the vision, commitment and mission of the company’s safety program. This drives and reinforces alignment on safety throughout the organization. It also helps close the safety performance gap by establishing baseline expectations for performance. The following is an example of how this is done.

  • Safety vision—Your company should aim to not only get employees on projects home safely at the end of the shift, but to also get employees back to work safely for their next shift. This is built on the foundation of promoting safety at work, home and at play.
  • Safety commitment—Your company should be committed to protecting the safety and well-being of employees, customers, subcontractors, engineers and inspectors and the traveling public.
  • Safety mission—Your company should create a culture of safety leaders who are empowered to identify and correct unsafe conditions and behaviors and who accept personal responsibility and shared accountability for safety.

Ideally, all supervisors will receive specific instruction in supervisory responsibilities and tools to help effectively implement the safety strategy. A simple way to involve supervisors in the safety strategy is to develop a series of safety objectives or special emphasis programs. These actions will help reinforce the development of a proactive safety culture.

Unlocking Improved Supervisory Safety Performance

Use the 10 questions below as a needs assessment or gap analysis to determine how your company can expand the level of effectiveness of safety supervision.

  1. Does your company clearly communicate the expectations for safety responsibilities to supervisors?
  2. Do you consider safety competencies for supervisors in your hiring decisions?
  3. Does your company consider the core safety competencies for supervisors in your promotional decisions?
  4. Does your company’s performance review process consider safety supervision as a performance criterion?
  5. Does your company’s discretionary compensation or bonus system align with safety performance such that safe work is incentivized and poorly executed performance is not rewarded?
  6. Does your company provide training to supervisors in safety skills?
  7. Do your company supervisors provide job- and task-specific safety instruction to new hires?
  8. Do your company supervisors lead or oversee daily safety huddles or toolbox talks for pre-task planning?
  9. Do your field supervisors and front-line workers have stop-work authority to address safety challenges encountered in the field in real time?
  10. Do your field supervisors and front-line workers actually exercise stop-work authority in the field to address safety challenges and determine appropriate corrective actions?

See also: Why Workers’ Comp Claims Stay So High

Although this is an unscored assessment, the questions and your responses will help guide your company to leverage supervisors in your company’s safety program and processes. Too frequently, supervisors are an underutilized resource in achieving your company’s safety strategy. Supervisors who understand their role, responsibilities and expectations can be a force multiplier as your company builds a proactive safety culture.

This article is the first in a six-part series about supervisory safety responsibilities, which will discuss leveraging supervisors within your company to build a stronger safety plan. Visit www.constructionbusinessowner.com/supervisory-safety to learn more.

Blueprint for Suicide Prevention

On Sept. 3, 2015, a press release was issued by the Carson J Spencer Foundation; RK, a construction company in Denver; and the National Action Alliance for Suicide Prevention. This press release was timed to coincide with Suicide Prevention Month in September and World Suicide Prevention Day on Sept. 10 . This press release announced the distribution of A Blueprint for the Construction Industry: Suicide Prevention in the Workplace (aka The Blueprint). One year later, we believe  that this document was a catalyst in developing a national movement in suicide prevention in construction. This articles tracks the milestones of this movement and future directions.

In 2010, the National Action Alliance for Suicide Prevention and its Workplace Task Force were launched in conjunction with World Suicide Prevention Day. The co-authors served as inaugural members of the Workplace Force. The Blueprint was intended to create awareness, generate advocacy and spur action in the construction industry around suicide prevention. In addition, The Blueprint provided a toolkit for how to discuss mental health and suicide prevention in the construction industry.

Equipped with The Blueprint, the co-authors began an initiative to break the silence and create a culture of caring. The co-authors sought to gain the attention of the construction industry through a media saturation campaign. The intent was to build a reproducible model within the construction industry that could subsequently be used as a reproducible model by other industries. In short, the coauthors sought to integrate mental health and suicide prevention in safety, health, wellness and employee benefit programs by framing the topics as the “next frontier in safety.”

The Centers for Disease Control and Prevention (CDC) published a report that placed the construction and extraction industry as second-highest in the nation for suicide rates.

But, a year later, The Blueprint has exceeded expectations. It spawned an outpouring of targeted action that is rippling throughout the construction industry. The impact has been felt in: publications, presentations, projects and partnerships.

Publications

The publishing of The Blueprint created demand for articles by major independent construction industry publications and those published by trade associations. There have been at least 28 unique articles published since the first one was posted online by the Construction Financial Management Association (CFMA) on Nov. 1, 2015.

See also: Union Pacific Leads on Suicide Prevention

These articles have included both in-print and online versions. The articles have begun to cross over from construction into architecture and engineering, to make this an issue that is being discussed in the integrated AEC industry. The articles have penetrated major industry brands, including Engineering News-Record (ENR); the Associated General Contractors of America’s Constructor; CFMA’s Building Profits; Associated Builders and Contractor’s Construction Executive; Construction Business Owner; and the National Association of Women in Construction’s Image.

Presentations

Once articles were appearing in industry publications, it was easier to solicit presentations. The first presentation that Cal Beyer gave regarding suicide prevention was the September 2015 CFMA Southwest Regional Conference, where he included suicide prevention as part of his company’s commitment to Safety 24/7: safety at work, home and play. The second presentation he delivered was to the South Sound Chapter of the National Association of Women in Construction in November 2015 near Seattle. These two early successes made it easier to “sell” the concept of presentations.

Sally Spencer-Thomas presented at the January 2016 Men’s Health Conversation at the White House in January 2016, while Beyer presented at the pre-meeting at the Department of Health and Human Services. The next two presentations were led by Spencer-Thomas in February 2016 at an executive roundtable sponsored by Lendlease in Chicago and to the Associated General Contractors of Washington. More than 100 attendees heard Beyer’s presentation at the Pacific Northwest Forum of the National Association of Women in Construction in April 2016. Two sessions were facilitated at the CFMA Annual Conference in June 2016. Similar sessions were offered in Portland, OR, in June to the AGC of Oregon and in Boise, ID, in July for the Idaho Chapter of CFMA .

The marquee event was held in Phoenix on April 7, 2016, when more than 100 attendees participated in the CFMA’s Regional Suicide Prevention Summit. Similar summits are scheduled by CFMA chapters for Charlotte on Nov. 9, 2016, in Portland, on Nov. 16 and Chicago on Feb. 17, 2017. A series of summits have been proposed by numerous CFMA chapters in 2017, including: Denver; Washington, DC.; Indianapolis; Houston; and Las Vegas.

Projects and Partnerships

The first partnership was established with CFMA through publications — including the first article as well as two custom PDF publications highlighting both the “why” and “how” to address suicide prevention in construction companies. Moreover, CFMA launched the aforementioned Construction Industry Alliance for Suicide Prevention and created an executive committee task force.

Clare Miller, the Executive Director of the Partnership for Workplace Mental Health, has been distributing periodic updates on the construction industry to her organization’s members. A partnership was formed with the JP Griffin Group, an employee benefits consultancy in Scottsdale, AZ. The Griffin Group created artwork for four custom poster templates that has been provided to the construction industry at no charge. Hoop 5 Networks, an IT system consulting company from San Diego, provided web development services for the Construction Working Minds website maintained by the Carson J Spencer Foundation.

Union Pacific invited Spencer-Thomas and Beyer to present in Omaha at the Railroad Suicide Prevention Summit on Aug. 24, 2016, so that rail industry leaders could transfer the lessons learned from construction to their own industry. Likewise, the U.S. Department of Veterans Affairs requested the construction industry be represented at its roundtable on suicide prevention on Aug. 30, 2016. While Beyer was not able to attend, he invited representatives from the CFMA and ABC associations to attend.

See also: A Manager’s Response to Workplace Suicide  

Finally, the best example of the growing partnership is the creation of a construction subcommittee on the workplace task force of the National Action Alliance for Suicide Prevention. There are now nine members on this subcommittee, and it is the largest subcommittee of the workplace task force. These subcommittee members represent a broad cross-section of the construction industry. The nine subcommittee members are:

  1. Cal Beyer; Risk Management Director; Lakeside Industries, Inc. (Issaquah, WA)
  2. Dr. Morgan Hembree; Leadership Consultant; Integrated Leadership System (Columbus, OH)
  3. David James; CFO; FNF, Inc. (Tempe, AZ)
  4. Tricia Kagerer; Risk Management Executive; American Contractors Insurance Group (ACIG); Dallas.
  5. Joe Patti; Vice President & CFO; Welsbach Electric Corporation (College Point, NY)
  6. Christian Moreno; Vice President; Health Risk Solutions; Lockton Dunning (Dallas)
  7. Bob Swanson; Retired President; Swanson & Youngdale, Inc. (Minneapolis)
  8. Sally Spencer-Thomas, CEO, Carson J Spencer Foundation (Denver)
  9. Bob VandePol; Executive Director, Employee Assistance program; Pine Rest Christian Mental Health Services (Grand Rapids, MI)
  10. Michelle Walker; Vice President Finance & Administration; Spec ialized Services Company (Phoenix)

Conclusion

Thus, in less than one year, the construction industry has moved from not thinking about suicide prevention to being a leading industry in the effort. In fact, in May 2015, Forbes published an article called, “What Construction Workers Could Teach Other Industries About Mental Health Awareness.” This demonstrated how broadly this awakening and action has been felt.

This first phase of garnering awareness and political will is critical in starting this national movement. The next phase is to institutionalize these efforts by bringing best practices in suicide prevention to companies, researching outcomes to better understand what works and developing policy and procedures that support mentally healthy, resilient and psychologically safe workplaces.