Safety Adds Value L
et’s face it. The amount of stress that Community Managers and HOA Board Members take on while budgeting for construction projects is plenty. Deciding upon the right combination of
contractor, product, and cost to determine the best overall value is even MORE stressful. However, the stress created throughout those two stages of the purchasing process combined, does not come CLOSE to the stress created once they figure out that they made the wrong decision.
The most common mistake when comparing construction bids – particularly on larger projects – is basing that decision solely upon who presents the lowest number. Whether the contractors themselves compile their own specification based upon their own recommendations and capabilities, or you hire a consultant or engineer to devise a consistent specification, it is still impossible to compare “Apples to Apples.”
The specification is only one fragment of the overall value. Portfolio’s, experience, company missions, and even personal relationships and references can all be exaggerated and manipulated to the benefit of any good salesman. However there is one aspect that many overlook – one that is vital to long term success of any company in the construction industry – and that is their Safety Record. Unfortunately, to run a large company from the ground up with a strong commitment to safety is NOT the least expensive business model. That cost needs to be absorbed somewhere, and that place is in the cost of the overall project bid. Therefore, it is crucial that
all board members and managers realize the value that this sort of company brings to the table in comparison to its competitors, for it may have a direct impact – and sometimes a very significant impact – on the overall outcome of the project and long term cost.
Quality and Safety are equal partners in the world of Risk Management. One must realize that it is difficult to run an efficient and safe project resulting in poor quality. However, quality supervision requires extreme attention to detail in every aspect within a scope of work. This takes time, and time results in increased labor cost. It is for that reason that safety is often the first and most common overhead cost for businesses to cut. Unfortunately, the workers often become the victims of this cost cutting strategy, and the property owners become open to added risk if an employee gets injured on their property.
The Occupational Safety & Health Administration (OSHA) was created under the United States Department of Labor in 1970 to assure safe and healthful working conditions for working men and women. OSHA sets the standards for construction safety and ensures their regulations are followed, but they are often understaffed and underfunded, so they could not possibly cover every ongoing project. The training & employment of Safety Administrators and Managers, therefore, is the responsibility of the contractor – once again, and added cost to that contractor’s bid, but added value in terms of overall quality.
So, how can one forecast the future performance of a contractor today as compared to the price they proposed for their service? You can look at their past and present practices in terms of their Safety Program. The most common test is their Insurance Experience Modification Rate, “Experience MOD”, or “MOD Rating”. Contractors are compared to each other using claim data over a 3 year period. A
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Second Quarter - 2016
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