High-caliber, competitive contractors have made strategic investments that help distinguish them as reliable and valuable partners. Among those investments is technology. Of course, contractors who have made this investment are already aware of the obvious benefit of using software to keep projects on time and on budget. But many are just beginning to understand how their own data can create a flywheel that breeds a stronger safety culture and an improved risk profile in the eyes of insurers.
Because insurance is one of the top costs on a project, the most budget-minded contractors are using data strategies to reduce insurance costs and obtain broader coverage.
As nebulous as it may sound, beginning your journey of using data to strengthen safety programs and improve insurance outcomes is easier than you might think. That’s because the operational data you already capture can enhance your understanding of your performance in relation to risk mitigation.
In doing so, you’ll reveal areas of improvement. By translating these insights into action, you’ll power the flywheel of reducing risk. Not only will this result in favorable insurance rates and broader coverage, but it will also create safer, more profitable projects.
Recently, Chase Leist, HITT Contracting’s director of insurance and risk management, sat down with Procore’s Kris Lengeiza and Peter O’Brien to discuss many of the day-to-day practices they have witnessed, both on and off the jobsite, that have brought tangible results.
With the emergence of new data that wasn’t available in decades past, the three discussed the growing significance of data-driven risk management, and how it applies not only to traditional risk management but also to performance management, financial management, and even reputation management.
Here are the five key tips they shared for getting started:
1. Almost everything you collect is an indicator of risk.
When you look for data points to help you assess and manage risk, start with anything you capture in your software that includes workflows or completion dates. Many successful risk managers look at observations, submittals, change orders, inspections, daily logs, and more. For example, let’s look at requests for information (RFIs). RFIs happen on every single job. As you analyze your RFI data, consider when they are happening and how quickly they are being responded to. If they are taking a long time, that means there is a higher likelihood of rework and schedule delays, which increases the chance for incidents to occur. In fact, some people refer to RFIs as “Risk Frequency Indicators”.
These data points allow you to see where your firm might be missing the mark and where your staff can make improvements.
2. The role of the risk manager is evolving.
Historically, a risk manager’s responsibilities included purchasing insurance and managing claims. However, the modern risk manager role has moved away from “handling insurance” to becoming a trusted advisor to the C-suite. Risk managers are becoming an integral business partner because they have a deep understanding of revenue and exposure, and can advise on operations and strategy to bring value to the table. Access to technology and data is further accelerating this. Risk managers now have a historical view of where risk tends to creep in, and can use it to make better decisions and put practices in place so that risk management becomes proactive instead of reactive.
All that said, a good risk manager will operate in their role as if they are building guardrails — not stop signs — to keep everyone on the road where business is flowing while avoiding risk.
3. Managing risk is a shared responsibility.
Firms without a risk manager should tap into internal teams as well as external ones. By distributing risk awareness throughout the organization, everyone in your firm can become a safety champion. To get started, lean on the external expertise of vendors, consultants, and partners who can help you train teams to identify and manage risk. Then, as your business grows, you can add a risk manager.
4. Have an open dialogue with your broker and your underwriter.
The insurance landscape is evolving, with some adopting an entrepreneurial approach beyond using conventional underwriting models. To take advantage of this shift, you should foster transparent conversations with your broker and underwriter to establish trust. Rather than proving you own a safety manual or mere box-checking, you should shine a light on how your safety practices have a tangible impact on the jobsite. You can contribute to the underwriting process and weave a favorable narrative by demonstrating that you have a history of efficient and effective operations, enabled by tech adoption.
5. The future of risk management is already taking shape.
The emergence of artificial intelligence, insure-tech, risk-tech, and construction-tech is collectively enhancing safety in the construction industry. For example, AI can help identify patterns and trends so that you can proactively shift your operations, prioritize preventative measures, and mitigate risks before they occur. Monitoring devices can track equipment and workers. Water detection devices alert when an intrusion or leak occurs. These tools allow you to immediately respond and intervene.
Digital documentation and record-keeping can help you ensure compliance. Integrating these technologies significantly reduces the chance of human error, enhances safety protocols, and reduces accidents.
Want to learn more? You can watch the on-demand webinar “Safety Through Insights: Building a Data-Driven Culture”
About the Contributors:
Chase Leist is HITT Contracting’s director of insurance and risk management. She has 20 years of experience in construction and works closely with HITT’s safety team to ensure industry-leading risk management and safety practices are carried out on their job sites nationwide.
Kris Lengieza is vice president of global partnerships and alliances at Procore Technologies. He has been in the construction industry for over a decade helping owners, developers, and builders achieve maximum value in their construction projects.
Peter O’Brien is the general manager of Procore Risk Advisors. He has spent the last ten years at the intersection of construction and technology, seeing its impact on creating a safer, more productive, and more efficient industry.