Risk Management

Risk management is the process of identifying, assessing, and controlling risk. Every business implements some type of risk management procedure that involves prioritizing risk. For construction companies, that procedure can change on a daily basis depending on the projects a contractor encounters. This situation creates challenges for construction risk managers since they not only have to develop appropriate programs that address these constantly changing risks but must also implement those programs and procedures company-wide. Be it contractual, procurement, or operational — it isn’t an easy task for risk professionals.

At TSIB, we feel our unique and extensive experience gives us in-depth understanding and proven abilities in risk management consultation. We operated the risk management department of one of the largest construction companies in the world and developed the most comprehensive CCIP program in the country that placed billions in construction volume annually. This experience involved insurance procurement of over 40 lines of insurance coverage, direct oversight over contractual language affecting owners as well as subcontractors, risk oversight, and operational controls from a claims and safety perspective — all of which had a direct result on the construction company’s bottom line. TSIB’s Risk Management Services consist of three distinct categories:

Program Design:

We can help you evaluate all forms of risk financing options and coverage analysis, from retention and deductible programs to captives that include group and single cell options to excess placements. We specialize in both Corporate and Wrap-Up placements, as well as alternative covers like Professional, Pollution, and Builder’s Risk.

Operational Assessment:

Our knowledgeable construction professionals understand the day-to-day construction industry and the means and methods contractors implement that affect risk. We can use this information to help you evaluate appropriate controls and procedures to address these challenges. From business development and subcontractor procurement to construction operations, we can provide you a third-party assessment that builds the proper risk management controls you need.

Implementation:

We understand the core business of our clients and have experience working with construction firms, real estate developers, hospitals, and higher education groups, as well as public entity clients. Successful risk management programs must be integrated not only with the field staff but with all facets of a construction operation. We can help you evaluate and identify procedures that you can readily apply and monitor. Our unique construction and CIP perspective affords us the ability to seamlessly integrate programs into the day-to-day operations of a construction project without taking the focus away from the project.

Risk Management Service Approach Example

We presented the following program to a large general contractor that wanted to evaluate and maximize their CCIP program and operations. We implemented six measured steps to complete this process:

Examination of the CCIP program and how it aligns with the risk management and financial goals of the firm. The goal of this stage is to establish a baseline of CCIP potential in terms of utilization, profitability, and overall risk management effectiveness.

This initial review includes:

  • Review of existing projects’ size, scope, geography and relevant statutory elements. Generalized information only required (no project names for example).
  • Comparison of sold insurance program against project scope. We want to analyze your CCIP Insurance Financial Deal to identify potential conflicts with your CCIP projections.

We suggest studying each part of the CCIP Process from estimating and sales, through procurement and operations, to final project completion and closeout. The goal of this stage is to identify current challenges and identify opportunities for process and program improvement to increase utilization and performance.

To maximize the results of this step, we may need to interview individuals within your company in the following business functions:

  • Business Development: What are the different way(s) that CCIP is discussed in proposals to clients? What language is used when speaking about CCIPs? How does your sales team handle questions regarding coverage, or comparisons against traditional insurance cost or Owner Controlled Insurance Programs?
  • Estimating: Essentially “how is the CCIP priced”? What considerations are established and how is CCIP pricing implemented into the overall project cost?
  • Project Management/Project Executives Exposure: What is the current ‘in-the-field’ experience with the CCIP? What challenges may be presenting themselves that lead to a negative experience with the operational team?
  • Project Level Accounting: What are the financial challenges experienced during construction and post-completion in terms of cash flow, documentation, financial reconciliation, etc.?

Review established operational controls that are critical to effective CCIP implementation and performance. The goal of this stage is to identify areas for enhancement from the perspectives of ease-of-field implementation as well as program performance.

Our team will focus on the following areas of review in this stage:

  • Procurement and Trade Contractor Pre-qualification
  • Safety Operations and Coordination with CCIP Projects Claims Management Process & Controls
  • Claims Special Handling Instructions
  • CCIP Administration
  • On-site Operational Controls & “Gatekeeper” Functions

The General Contractors CCIP insurance program needs to reflect the overall strategic and implementation needs determined in Sections A-C above. The goal of this stage is to evaluate the alignment between strategic needs and CCIP insurance structure and coverage.

The TSIB team will review:

  • Overall program structure including deductible level, program aggregate, financial terms, program agreements, etc.
  • CCIP policy(s) coverage terms & conditions
  • Supporting insurance program terms & policy documents (e.g. Builder’s Risk)
Scope of Work Stages Days from Start
Strategic Program Review:
Review of Existing Projects 0–30
Comparison of Sold Program Against Project Scope 0–30
Comprehensive Program Design Review:
Business Development 30–60
Estimating 30–60
Project Management/Project Executive 30–60
Project Level Accounting 30–60
CCIP Operational Analysis:
Review of Pre-qualification 0–30
Safety/Claims Coordination with CCIP Controls 0–30
Claims Special Handling Instructions 0–30
CCIP Administration 0–30
On-site Controls and “Gatekeeper” Functions 0–30
Insurance Program Structure and Coverage Analysis:
Review of Overall Program Structure 60–90
CCIP Policy(s) Coverage Terms & Conditions 60–90
Supporting Program Terms 60–90

Upon completion of the review and analysis, TSIB will present our findings in a deliverable organized as follows:

  • Executive Summary
  • Review of General Contractors CCIP, Program Objectives & Utilization Potential
  • Analysis of the Current Program Design
  • Analysis of Processes & General Contractor Departmental Impacts
  • Recommendations for Program Enhancement Including:
    1. Design
    2. Structure
    3. Documentation
    4. Operations
    5. Implementation

After review and discussion of the project deliverables, TSIB is available to assist the General Contractor Risk Management Team in developing an implementation plan of incorporation of recommended program enhancements into the existing General Contractor CCIP framework.

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