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Essential Risk Guidelines for Safely Managing Ceiling Contracts

Evaluating risks on any construction project is critical for contractors. Every construction contract comes with specific risks. Identifying the risks of a particular project and implementing measures to mitigate them can help to prevent accidents and losses while also helping to protect your profit margins. When you are contracting to build ceilings, you should understand the particular types of risks involved and ways to reduce the chance that they will occur.


What is risk management for ceiling contracts? Risk management involves identifying the risks that are involved in a contract and assessing the procedures you can use to avoid them or minimize their impact. This process involves identifying risks, planning for how to mitigate them, monitoring the project for risks and controlling them when they occur. To effectively manage risks, you will need to complete a risk management plan that details each risk, how it will be addressed and the designated party who will be responsible for it.

Risk Sources in Ceiling Projects

Creating your risk plan will require you to identify the project-specific factors that could pose the greatest risks. Some of the most common types of risks involved in ceiling projects include the following:


Safety risks—falls from heights, poor lighting in ceiling spaces, loose nails and materials, falling objects and proximity to electrical work.


Project risks—poor resource management, project delays, time miscalculations, inadequate policies, payment delays, lack of payment, contract delays or a misunderstanding of the deliverables.


Legal risks—contractual disputes with clients related to how the contracts are fulfilled.


Environmental risks—earthquakes, floods, tornadoes, hurricanes and other natural events that could damage the site and make it inaccessible.


While these are among the most common types of risks that you might encounter, you also need to consider the project and the risks that are specific to it. You should identify the project-specific risks before construction begins so that you can ensure you have time to implement risk management strategies and determine whether the project is worthwhile.


Meet with the stakeholders involved in the project to brainstorm. This process can help you to identify all potential scenarios that could impact the ceiling project while allowing all stakeholders to contribute their expertise and knowledge. You can also look at data from past projects to identify potential risks to watch for. Holding regular meetings with your project team throughout the project can also help you identify new risks as they arise so that you can modify your risk plan accordingly.


Once you have identified the risks involved with a potential ceiling contract, you will need to categorize them by the impact each would have on your business if it occurred and the likelihood that the risk would happen. Order and rank the risks according to those with the highest impact and likelihood of occurring down to those with the least impact and the lowest chance of occurring. Tackle the major risks first.

Determine How to Respond to Risks

After you have ordered and prioritized the risks involved with your ceiling contract, you will need to determine the response strategy for each one. Risk response techniques are generally categorized into the following four categories:


Risks to avoid—If a project poses major risks that you are not equipped to handle, the best option might be to avoid the project and its risks altogether.


Risks to transfer—
Transferring risks can be a good way to manage risks without accepting them. For example, a contractor bond can be used to transfer the risk of the contractor’s nonperformance of a ceiling contract away from the project owner to the contractor. Similarly, a payment bond can be used as a risk-transfer mechanism to transfer the risk of nonpayment away from the subcontractors, suppliers and project owners to the general contractor. Insurance, including commercial liability insurance and workers’ compensation insurance, can be used by the general contractor to transfer liability to a third-party insurance company in case a worker is injured while working.


Risks to mitigate—Some risks can be mitigated through careful planning that helps to reduce them as much as possible. For example, you can supply your employees with appropriate personal protective equipment, use fall protection systems, follow the safety guidelines promulgated by the Occupational Safety and Health Administration, use adequate lighting in ceiling spaces, and take other measures to mitigate safety risks.


Risks to accept—There are some risks that you will simply have to accept to complete a project. These types of risks are those for which the potential benefits outweigh them. If one of these types of risks occurs, you can exercise project management strategies to work around it.


The risk response strategies you implement should be based on how resilient your company is to each risk and the rewards the project might offer. Even if a ceiling project comes with higher risk, you might still determine that it’s worthwhile based on the potential rewards.

Implement Your Plan for Managing Risks

Once you have completed the risk assessment of a ceiling project, you will need to create and implement your risk management plan. Ideally, your plan should optimize the responses to the risks posed by the project, detail important information for each member of your team, and provide solutions for each risk to mitigate, transfer or accept it. It should also designate the parties who will be responsible for each potential risk if it arises. Your plan should include the resources that will be needed for each defined risk.


As your project continues, you might encounter new risks that were not identified in your plan. Because of this, it is a good idea to revisit your plan regularly and modify it as necessary to address new risks. Assessing risks and planning how to address them can help your business to evaluate ceiling projects more effectively and determine which ones might offer the greatest benefits and profits while avoiding those that carry too much risk to be worthwhile.

Eric Weisbrot is the chief marketing officer of JW Surety Bonds. With years of experience in the surety industry, he is also a contributing author to the surety bond blog. He has held a range of different roles within the surety industry, from agent assistant to bond issuer, which gives him a unique insider perspective on surety related topics.

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