Report Says Collaboration Can Reduce Risk

Three quarters of contractors and building owners have experienced a dispute or claim in the last three years, and 91 percent say increased collaboration can help mitigate future risk, according to a new report from Dodge Data & Analytics.

The report, Managing Risk in the Construction Industry, illustrates a link between specific risk reduction practices—such as regular meetings with the full project team, formal brainstorming and developing a risk-management plan—and tangible project benefits such as reduced construction cost, improved project schedule and better safety.

“Early collaboration by team members can lead directly to less project risk and crisis—a significant incentive to start working together better, more often,” says Steve Jones, senior director of industry insights research at Dodge.

Among the three types of industry players surveyed—building owners, general contractors (GCs) and trade contractors—general contractors have experienced the highest level of claims or disputes in the last five years. For GCs, subcontractor defaults, terminations and failures are the most frequent and costly issues they face. The report shows that 33 percent of GCs consider labor procurement and subcontract management to be high risk areas, and 81 percent of all respondents find labor scarcity will increase project risk.

Building owners, by contrast, are most impacted by claims arising from construction defects, and trade contractors are plagued by the frequency of warranty issues.

Formal brainstorming is the top evaluation strategy for mitigating risk, but different players see different advantages, the report shows. Building owners are most enthusiastic about brainstorming to help increase reliability of overall project performance. GCs also see its impact on improved project schedule and safety, while trade contractors find it most effective for reducing construction costs.

The most effective risk evaluation strategies, according to the study, are regular meetings with the full project team focused on risk and the development of a plan to manage risk. Both practices help increase project performance reliability, maintain project quality and improve project safety.

“The concept of collaboration and integration is not new and has been around for decades,” says Karen Walsh, senior vice president and regional director of Alliant Insurance Services Inc., which partnered with Dodge on the study. “The difference today is with the preponderance of large scale mega projects, this becomes a new reality with much higher stakes for all sides.”