Benefits Of Construction Risk Management That A Contractor Needs To Know About
Risk management measures are necessary and should therefore be taken by individuals and companies that conduct their businesses I the construction industry. One way by which people and companies can manage risks is by finding ways of reducing the occurrences and any damage that can be caused by the risks.
Multiple cases of contractors and clients defaulting contracts have prompted the need to have construction surety bonds alongside the contracts. To ensure that both the construction company and the client stick to their contracted obligations in a construction project surety bonds like bid bonds, payment bonds and performance bonds have to be used.
The duty of ensuring that suppliers of construction materials, subcontractors and construction workers are paid for their services is assigned to the contractor and not the client. Surety bonds provide the guarantee to clients of construction companies that the construction job will have to be completed regardless of the actions of commission or omission by the contractor.
A bidder for a construction project contract should only be granted the contract after being deemed the best, through the use of surety bonds. Apart from clients, the contractors are also offered protection by the surety bonds in that the services of contractors and those of their workers have to be paid.
Construction projects can only be effectively completed if risk management is done to identifying the risk and cancelling its effects before it occurs. Resources meant for the construction job can only be utilized without the risk of wastage if risk management is conducted.
Property owners and even contractors doing construction jobs should therefore be urged to ensure that construction jobs are done within required time-frame in order to make the structures safe for human use. In order to manage risks, companies and individuals that intend to hire the construction services should first hire risk consultants to give provide them with a professional assessments of all possible risks the construction may bring.
Construction companies should rely on the explanation and control measures given by the risk consultants before embarking on the construction projects for their clients.Risk consultants also enable their clients to keep their contractors accountable for every construction material bought since they conduct an audit on the expenses the property owner incurs in addition to whether these materials were put into proper use.
When an insurance company can determine that the risks against which a construction company is seeking cover have a less likelihood of occurring, then the insurer is likely to charge low premiums to the construction company.
The clients seeking to hire services of construction companies can get to hire the most qualified contractors if the construction surety bonds are brought on board during bidding for the contracts.