Be Alert for Falling and Flying Objects

Helpful tips for preventing injuries on the construction site from the Arnold Insurance Agency

Objects falling from above pose a serious hazard on a construction site, and you are at increased risk when you are beneath cranes or scaffolds, or when others are working above you. The following case is an example of how dangerous a job site can be.

A carpenter was attempting to anchor a plywood form with an exposed actuated fastening tool before pouring a concrete wall. The nail passed through the hollow wall, traveled 8 meters (26 feet), and struck another employee in the head. As a result of this accident, the employee died. In this instance, the carpenter had not been successfully trained on how to use the tool, and the victim was not wearing a hard hat.

To help prevent disasters when working around falling and flying hazards, take the following precautions:

Cranes, Hoists, and Scaffolds

• Always wear a hard hat.

• Stack materials to prevent sliding, falling, or collapse.

• Avoid working underneath cranes, hoists, and moving loads.

• Do not exceed the loading capacity of cranes and hoists.

• Secure tools and materials to prevent them from falling on co-workers below.

• Use toe boards, screens, and guardrails on scaffolds to prevent objects from falling.

• Use debris nets, catch platforms, and canopies to catch or deflect falling objects.

• Do not deliberately throw material from above, even if the worker below is ready to catch the item.

• Do not enter worksites that are restricted due to unsafe conditions.

• Inspect wire ropes, lifting hooks, and chains for damage before use.

Power Tools

• Wear safety goggles, glasses, or a face shield when using tools that cause particles to fly.

• Inspect tools to ensure that their protective guards are in good working condition before each use.

• Do not use tools unless you are properly trained on how to do so.

Air Compressors

• Reduce the amount of compressed air used for cleaning to 30 PSI.

• Only use this machine with the appropriate guarding and protective equipment. Blown objects can injure you.

Did you know: Excessive exposure to paint, chemical agents, sunlight, and heat can weaken your hard hat. Rinse it off regularly and never store it in a hot place or in direct sunlight.

Reasons Why Subcontractors Fail

Subcontractor default is a problem that is neither understated nor under-reported. Everyone in the industry is familiar with it and the consequences of the likely, yet always surprising, the situation when a subcontractor goes into default on a project.

Therefore, it is more important now than ever to review why subcontractors fail, and what everyone else should be doing about such failures.

Managerial problems

• Inadequate accounting, financial, or project management systems

• Management or personnel changes or complications

• Business strategy changes

• Rapid over-expansion and growth

• Poor owner, lead contractor, or project selection

Labor and material problems

• Shortage of labor and materials

• Unrecovered cost escalations

• Tariffs

Uncontrollable factors

• The lead contractor on a different job does not pay

• Severe weather hindrances

• Unexpected economic failures

• Difficult contract terms or working environment

• Changes in the job site conditions

• Death, illness, or departure of necessary employees

• Labor shortages or difficulties

• Material and equipment shortages or price increases

Financial signs of failure

• Tight cash flow

• Receivables turning over slowly

• Bills are past due

• Vendors demand cash on delivery (COD) for supplies and materials

• Bank lines of credit are borrowed to the limit and credit

Business plan problems

• No contingency plans, goals, or objectives

• No road map for future plans

Project management problems

• Inadequate project supervision

• Inability to find reasonable prices on change orders or inability to collect on change orders

• Projects are not completed on time

• Projects are moving at a slow pace

• One or more projects has a claim

• Safety violations on the job site

Poor estimating and job cost reporting

• Revenue and profit margins decrease

• Operating losses

• Loss or reduction of bonding capacity

• Contractor bids low to get new work out of desperation

Communication problems

• Lots of disputes between the contractor and project owner

• Poor communication between management and field workers

Loss of loyal customers

• The contractor cannot fulfill contracts – jobs are not done in time or within the established budget

• Establish a good relationship with your producer and surety underwriter

• Manage growth and control overhead

• Communicate with the surety if and when problems arise

• Understand contracts and their language

• Read bond forms and look for difficult or unmanageable terms and conditions

• Verify the surety’s licensing abilities by checking with the state insurance department

• Develop a solid relationship with the surety and remain respectful of their decisions and practices

• Use a construction-oriented CPA

• Have a bank line of credit available to support your business plans

• Conserve capital

• Adjust your overhead

TOP THREE WAYS TO HANDLE SUBCONTRACTOR FAILURE

The failure of a subcontractor can be sudden and can cause vast problems. Therefore, the question is whether anything can be done about it. Here are the top three ways to protect against subcontractor failure.

1. Lien rights. Though this one doesn’t apply for those at the top of the chain (general contractors, owners, and lenders), it is still the number one protection measure because of how enormously effective it is for all of the other affected parties. In fact, it is even effective for the defaulting subcontractor, as it can put it in the best position possible to claw its way out of a bankruptcy proceeding. Lien rights protect a company’s right to get paid for work, and more importantly, prevent companies from being placed into the back of a payment line. A subcontractor in the front of the payment line avoids cash problems and is insulated from others defaulting on the project.

2. Surety bonds. Subcontractors can obtain performance bonds and payment bonds, and it’s common for general contractors, owners, and lenders to require some subcontractors to acquire these bonds. When a subcontractor has these bonds, default is less burdensome because the surety bond will compensate the affected parties for the losses.

3. Prequalification. Prequalification often is used by top-of-the-chain parties to assess the likelihood of failure by a lower-tiered party (i.e., a subcontractor). It also can be used by lower-tiered parties to assess the problems that might arise by higher-tiered parties. Everyone is affected by default and should do a preliminary analysis to avoid the same. Examining the ability of a subcontractor to deal with the expected cash flow challenges is a necessary evil in today’s construction economy. Also, it serves everyone well to make sure the subcontractor is also taking measures to protect lien rights. If not, the subcontractor is going to be in the back of the payment line, and the result is heightened default risk.

We can help protect you from all the issues that come from subcontractor failure so please give Arnold Insurance a call and get started building your plan against subcontractor failure. 614-863-0455