Top Five Tips for Construction Claims Risk Management
Managing and minimising the risk of claims is central to any construction company’s long-term success and profitability. With margins still tight and bank funds often depleted after a prolonged industry downturn, the construction sector remains fragile and firms can be badly damaged by claims.
The key to claims risk management is to be prepared for all eventualities. Conduct a risk assessment for all aspects of your construction projects not just the statutory items such as Health and Safety. Ensure that you are maintaining detailed records and that they are accessible to the relevant people. By doing this a great deal of risk can be averted. Not only that, but a company’s resources can be protected, along with their finances.
1. Get it in writing
Contract negotiations are one of the earliest stages in any construction project, as well as one of the most important. This is where intentions are stated, realities are acknowledged, budgets are formalised and – most importantly – stipulations are inserted for specific eventualities. Unless a standard JCT/NEC contract is being used, contracts should be unambiguously worded to avoid rival lawyers finding loopholes in the event of litigation. Equally, common sense should also prevail, which is why it’s a bad idea to over-promise at the tendering stage. Contract formation usually exposes any over-optimism in a bidder’s approach.
2. Fail to prepare…
It’s a cliché, but a relevant one. Failure to prepare for potential issues or scenarios can effectively store up problems for a later date. For instance, it’s a boring job but if checks aren’t made that the correct version of drawings and specs are being used by all parties then a claim or an element of rework is likely to be on the cards. An appropriate risk assessment would highlight the correct procedure for this mundane but vital task and the project would get off on the right foot.
A detailed plan of action should be drawn up, followed in sequence and fully recorded at every stage. This can take many forms, from the all-important site diary to notes on any client communication - no matter how informal or brief. That way, a stout defence can be mounted against any future claims, with detailed evidence to show that the agreed processes were adhered to at all times.
3. Variations and retentions
Variation requests are almost inevitable during construction projects and it’s impossible to predict every issue that may arise. Managing variations is an artform rather than a science, but the key to handling them effectively is to manage the flow of paperwork and ensure that key people don’t have to drop what they’re doing in order to respond effectively. Losing these personnel for periods of time while they play catch-up can be as much of a drain on a company’s resources as a financial write-down. It’s far better to equip employees with the tools and procedures that allow them to resolve potential issues, efficiently and effectively.
Retentions are another cause of strife and redirected energies. Even a five per cent retention value can be significant in a seven or eight-figure contract, so if the client tries to withhold final payment, it’s important to robustly pursue this with the correct and pertinent information to hand. Again, comprehensive paper trails are crucial if there is any disagreement about a job’s completion or quality.
4. Call in the experts
Any contractor should know their way around a standard form contract, but because construction contracts are sometimes open to interpretation it is advisable to seek experienced counsel in this area and also when dealing with highly specialised areas like insurance. Issues like health and safety are too important - and potentially litigious - to be managed by inexperienced staff. That’s particularly true given the penalties (including prison sentences) that can occur following a major incident, particularly if on-site personnel hadn’t been provided with appropriate training and PPE.
5. On the record
Effective record keeping is the bedrock upon which all the above problems can be managed, diminished and resolved. However, this involves more than producing a daily diary of events, or communicating with suppliers by email. It involves combining disparate elements like photography, site reports, accounting and third-party correspondence into a single cohesive system. It should be undertaken at every stage of a project’s lifespan and be universally accessible.
The type of records required can encompass almost anything. Because of this, many companies struggle to maintain comprehensive records. Individual employees often have their own data silos, which are not part of any centralised information system. It isn’t good enough for staff members to tap their foreheads and say “it’s all in here”, or to put their trust in offline databases on easily lost or damaged computers without backup copies. A full record of events should be exactly that, with no exceptions for lost paperwork or computer viruses.
This is where the right construction management software can be beneficial, providing for comprehensive record keeping and note-taking. As well as offering real-time updates on costs and overspends, effective software will enable everyone to see the same information, with a consistent, joined-up timeline offering an unambiguous record of events. Best of all, information can easily be retained long after a project is concluded – six years is the minimum period that records should be kept.
Minimise Further Risk
Learn how to keep the finances of your construction project secure by reading ‘Avoid the Construction Project Estimation Pitfalls’.
Why engineers must always consider human-induced vibration
Human induced vibration, or more accurately vibrations caused by human footfall, often conjures images of Millennium Bridge-style swaying or collapsing buildings.
But in reality, the ‘damage’ caused by human-induced vibrations is less likely to ruin a structure and more likely to cause discomfort in people. Though not as dramatic as a structural failure, any good engineer wants to make sure the people using their structures, be it bridges or buildings or anything in between, can do so safely and comfortably. This is why human-induced vibration must be considered within the design process.
Resonance v Impulse
There are two ways that human-induced vibrations affect structures: resonant, and impulse or transient response. Put simply, resonance occurs when Object A vibrates at the same natural frequency as Object B.
Object B resonates and begins to vibrate too. Think singing to break a wine glass! Although the person singing isn’t touching the glass, the vibrations of their voice are resonating with the glass’s natural frequency, causing this vibration to get stronger and stronger and eventually, break the glass. In the case of a structure, resonance occurs when the pedestrian’s feet land in time with the vibration.
On the other hand, impulse or transient vibration responses can be a problem on structures where its natural frequencies are too high for resonance to occur, such as where the structure is light or stiff. Here the discomfort is caused by the initial “bounce” of the structure caused by the footstep and is a concern on light or stiff structures.
Engineers must, of course, design to reduce the vibration effects caused by either impulse or resonance.
Potential impacts from human induced vibration
Human induced vibration can lead to a number of effects upon the structure and its users. These include:
- Interfering with sensitive equipment Depending on the building’s purpose, what it houses can be affected by the vibrations of people using the building. Universities and laboratories, for example, may have sensitive equipment whose accuracy and performance could be damaged by vibrations. Even in ordinary offices the footfall vibration can wobble computer screens, upsetting the workers.
- Swaying bridges One of the most famous examples of human-induced resonance impacting a structure occurred with the Millennium Bridge. As people walked across the bridge, the footsteps caused the bridge to sway, and everybody had to walk in time with the sway because it was difficult not to. Thankfully, this feedback can only occur with horizontal vibrations so building floors are safe from it, but footbridges need careful checking to prevent it.
- Human discomfort According to research, vibrations in buildings and structures can cause depression and even motion sickness in inhabitants. Tall buildings sway in the wind and footsteps can be felt, even subconsciously by the occupants. It has been argued that modern efficient designs featuring thinner floor slabs and wider spacing in column design mean that these new builds are not as effective at dampening vibrations as older buildings are.
- Jeopardising structural integrity The build-up of constant vibrations on a structure can, eventually, lead to structural integrity being compromised. A worse-case scenario would be the complete collapse of the structure and is the reason some bridges insist that marching troops break step before crossing. Crowds jumping in time to music or in response to a goal in a stadium are also dynamic loads that might damage an under-designed structure.
How to avoid it
As mentioned, modern designs that favour thinner slabs and wider column spacing are particularly susceptible to all forms of vibration, human-induced or otherwise, but short spans can also suffer due to their low mass. Using sophisticated structural engineering software is an effective method for engineers to test for and mitigate footfall and other vibrations at the design stage.