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  • Writer's pictureYvonne Root

Risk Mitigation is in the Details

You understand that construction risks are potential events or factors that can and sometimes do negatively impact a construction project. They can include:

  • Safety hazards

  • Theft

  • Legal disputes

  • Procedures trumping common sense

  • Financial issues


Leading your construction company successfully means proactively identifying and mitigating risks constantly, steadily, and effectively. 


A True Risk Mitigation Story

My cousin is retired from her job in banking. She shared an interesting story about the time her bank location was robbed. The robbers rushed the bank manager as she arrived early to open the bank. They hurried her into the building and told her how to load their containers with cash. The manager followed their instructions. Although frightened, she felt that help would be on the way soon. After all, the “all safe” signal had not been implemented.


The steps for opening the bank mentioned above were outlined in the written protocol.

  • One employee should enter the building to establish that it is safe.

  • When the first employee establishes that entering is safe, they display a given signal.

  • When the signal is in place, other employees can then enter.

  • If the signal is missing, the police are to be contacted immediately.


Unfortunately, three bank employees who each entered the building only minutes apart had not noticed the missing signal. While none of the employees were hurt, the robbers completed their task, and no one alerted the police to the problem until after the fact. The employees lost a risk mitigation opportunity.


Risk Mitigation Takes Many Forms

Construction sites are filled with many risk mitigation objects, from first aid kits to fire extinguishers, safety harnesses to hardhats, and site signage to waste receptacles.


Even after the crew goes home, plenty of risk mitigation measures are in place. They may include the use of:

  • Fences or barricades

  • Locked storage areas

  • A private security company – with or without guard dogs

  • Alarms

  • Lighting

  • Insurance


Most Important Job Site Risk Mitigation

Perhaps the most critical risk mitigation factor on a job site is found in the grey matter of each employee; it’s the people. From conducting equipment inspections to properly storing tools, from donning appropriate PPE to removing debris, from using the right tool for the task to communicating well, employees who remain situationally aware reduce job-site risk.


Risk Mitigation Through Leadership

Teach your employees how to think – not only the procedures to follow. In the bank robbery mentioned above, the problem was simply that the employees didn’t follow the guidelines. However, there are times when employees must understand that procedures can only go so far. Giving your employees not only permission but the mandate to think allows you to mitigate risks at an even higher level.

Risk Mitigation Leadership Example

Brian Harding, owner of Service Industry Success recently shared a story with me about how he and his former partners solved an (almost) devastating employee problem that took place around the years of 2016 and 2017. As the owners of a successful plumbing company that employed 30 to 40 techs, they ran into (literally ran into) a nasty problem involving texting and driving.


Their employees knew the rule – no texting and driving! But accident after accident occurred because the rule was being ignored repeatedly. Brian and his partners tried threatening, suspending, and even begging their employees to stop the practice. Finally, when they discovered their business had a real chance of going under because one insurance company after another refused to touch them, they knew something had to be done.


The solution was to call the senior workers of their team (about a quarter of their staff) into a meeting lasting half a day. They also had a few follow-up meetings. The stipulation was that the team members be honest and not fearful of telling the truth.


Leadership laid the problem on the table.


The employees spoke up about why texting and driving was still taking place. There were some valid mentions concerning why the team continued texting and driving – like responding to dispatch questions and assignments.


Leadership and team members together devised a plan. These were the measures they took:

  • When driving, cell phones must be placed in the glove box.

  • If the driver heard incoming messages, he could move to a safe stopping place and, from there, respond.

  • Before entering the vehicle, the driver should proactively notify dispatch, family members, or others of changes or developments.

  • A bonus plan was put in place for those who remained accident-free.


In this case, mandating that employees think was a money-saving and business-saving tactic.


Risk Mitigation Through Accounting Practices

Traditionally, accounting teams have been guardians of financial information. Now, accounting professionals are shifting from traditional stewardship roles to becoming more active as data analysts who play a part in risk mitigation.


Especially when you realize that accounting is the language of business, identifying, evaluating, and addressing potential risks moves the accounting team from being an expense to being an asset of your construction business.


As part of the process, accomplished accounting teams produce financial statements that are accurate, timely, and relevant. They address:

  • Compliance risks

  • Credit risks

  • Liquidity risks

  • Market risks

  • Operational risks

  • Regulatory risks


Reports such as financial statements, income statements, balance sheets, and cash flow statements are all brought into the analysis arena, helping to generate information like:

  • Comparing budgeted spending to actual spending.

  • Reporting on comparable accounting periods.

  • Disclosing which types of jobs are more profitable.

  • Contrasting the company’s performance to industry averages.

  • Identifying and stopping fraudulent activity. 

  • Informing decision-making at all organizational levels.

  • Planning for exit strategies.


Risk Mitigation Details

Whether through outside sources, internal controls, or compliance mandates, owners of construction companies who are proactive in mitigating risks reduce the impact of potential uncertainty, liability, or danger. They limit setbacks as much as possible.     


Reflection: Do you need to be more proactive in risk mitigation? What steps will you take?



Ambitious Construction Contractors look to The Profit Constructors to provide advocacy in dealing with:


  • Clients and customers

  • Employees and subcontractors

  • Vendors and service providers

  • Governmental entities


Working with The Profit Constructors gives Construction Contractors the means to organize their operations in ways that help them:


  • Remain informed

  • Avoid hassles

  • Reduce risks

  • Be future-ready


Ready for action? Or want to know more? Get in touch today to schedule a complimentary discovery call. 866-629-7735


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