Contractors Still Face Challenges Managing Risk

May 2nd, 2019 by Jordan Scott

According to recently gleaned data, contractors still face significant challenges in managing risk on their projects, but are optimistic about the potential for technology to help.

According to the report “Using Technology to Improve Risk Management in Construction,” by Dodge Data and Analytics and Triax Technologies, when asked to rate the difficulty level of six risk management activities, 66% of contractors rated ongoing management of project risks as the most difficult activity.

Other tasks ranked by difficulty include:

  • Preparing critical assessment of project risk (63%);
  • Accounting issues for projects (61%);
  • Identifying project risks (51%);
  • Determining insurance coverage limits for projects (33%); and

For its study, Dodge surveyed 80 general contractors, construction managers or design-builders and 55 specialty trade contractors from November 11-28, 2018. Of the respondents, 47 were from small companies (2017 annual revenues of less than $10 million); 47 were from midsized companies (2017 annual revenues of $10 million to less than $100 million); and 41 were from large companies (annual revenues of $100 million or more).

The report also examines the ways in which contractors manage risk—including whether on or off site. Most contractors (72%) stated that they proactively monitor risk practices onsite. However, more than two thirds only somewhat agree with this statement. Therefore, even this most widely used approach is not rigorously adopted or pursued onsite, the report suggests.

According to the report, proper data management is essential to being able to extract useful analysis and insight. Contractors reported that in-house is the preferred method of collecting, analyzing, incorporating and acting upon safety and risk data.

Many contractors who are not currently doing these activities would like to in the next three years.

“Contractors generally recognize the value of these activities, which suggests that resource and expertise constraints are key issues preventing wider use,” says the report.

There were some major differences in how these activities are managed when comparing by company type. While 63% of general contractors (GCs) collect safety and risk data digitally, only 43 percent of trade contractors do. Trade contractors are also less likely to analyze raw safety and risk data and incorporate raw data into existing data sets. However, 72% of trade contractors reported developing and acting upon key safety and risk insights, only slightly lower than GCs at 79%.

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