How Safety Performance Makes Getting Bonded Easier and Cheaper

Every contractor knows that safety in the construction field isn’t just about getting protection hats. It extends to all aspects of a projects’ execution, and the well-rounded management and safety maintenance of a company.

That’s why safety performance is a major factor in obtaining a lower surety bond cost – or even getting bonded at all.

Considering the importance of contract bonds for contractors’ ability to work on public projects, safety performance becomes an even more significant point on construction companies’ agendas. This means everything from employer and public safety to safeguarding of equipment and property.

Let’s go through the major ways in which safety affects contractors’ bonding. Higher safety performance means:

A Solid Financial Base

Accidents and low safety standards negatively affect the reputation and financial status of a construction company. This goes beyond direct compensations for specific mishaps, as it impacts the liquidity and net worth of the firm. How, you might ask?

For example, insufficient training of personnel is a major reason for injuries and also for serious project delays. Sound safety culture and policy that includes adequate employee training and information, as well as monitoring and evaluation of risks would prevent such situations. This, in turn, minimizes the chances of accidents and ensures timely project completion, both of which mean preventing financial losses too.

There is another take on the link between safety performance and stable finances that contractors should not forget. Besides direct costs for actual accidents and project delays that result from such mishaps, there are further costs involved if risk is not managed properly by contractors.

These are the hidden costs of an accident that include OSHA citation and higher insurance costs, as well as the need to recruit new employees and to replace damaged equipment. All of these are considerable – and unnecessary expenses that can cause serious harm to a contractor’s reputation in the field and, of course, to the company’s profit.

How does the financial status tie in to the bonding process? Well, to underwrite a bond, a surety company reviews the stability of a contractor from all corners.

This includes the strength of the company’s safety program to prevent accidents, its ability to manage potential pending claims if such occur, and its overall financial health. In many intricate ways, safety and financial stability go hand-in-hand.

Easier bonding process

During the bonding process, a surety company needs to make sure that the construction company in focus meets a variety of financial and safety requirements.

It reviews a myriad of factors, including the current balances, profitability, workforce capacity, ability to meet project deadlines and to fulfil contractual obligations towards employees and subcontractors.

The goal of this detailed examination is to get a clear idea whether the contractor is able to meet all requirements of a project in a timely and quality manner.

Naturally, complete compliance with all necessary points comes with adequate safety management. When a sound safety program and active safety education for personnel are in place, the risk of accidents is minimized. This means workforce capacity is expected to be steady, and the probability for fulfilling obligations – on time – is much higher.

Without assurance that a contractor meets all requirements and potential obstacles, a surety company cannot provide the needed bonding. The reason is that a surety bond, in fact, is a form of credit given to the contractor. Thus the surety provider operates as if giving a line of credit, so the requirements are strictly set.

Lower costs for bonding

The safety performance of a contractor is a major factor, not only in their ability to get bonded, but also in the surety bond cost.

When a surety company is assessing whether to underwrite a bond for a company, they are measuring the risk that it presents on all levels. Once it’s deemed that the bond will be provided, the level of the premium is determined to a large extent on the same principle.

Of course, the foremost consideration is the financial status of the contractor. Profit, growth, debts and claims are all determinants in the formation of the bond price. If a contractor is considered high-risk, she’ll have to spend more on the bond.

However, as we discussed earlier, stable finances are not possible without a sound safety policy and a good reputation with institutions, partners and clients. Thus, safety performance affects quite directly the bond price that you will have to pay in order to get bonded and be able to undertake a new project.

We hope that this overview makes clear the strong link between safety performance and surety bond costs. After all, a good safety record and a sound safety policy are musts for getting bonded – and for getting a lower bond price.

What is your experience with safety and bonding? We’d love to hear about it in the comments section below.

Todd Bryant is the president and founder of Bryant Surety Bonds. He is a surety bonds expert with years of experience in helping contractors get bonded and start their business.


Why #buildoffsite technology is going to be a game changer in 2015

Buildoffsite is a membership organisation, referred to as ‘a coalition of the willing’ and has been formed to support a step-change increase in the use of offsite construction solutions.

Set up with the support of the UK government almost a decade ago and now comprising more than 100 organisations from the construction industry and client industry, the organisation challenges the supply side of the sector to continuously improve how they influence the traditional construction practices.

In turn, Buildoffsite has brought together a vast number of repeat construction clients from all sides of the industry who understand that through encouraging and, in some cases, demanding the use of offsite solutions, they will achieve the desired value.

Here, Construction Global spoke to Buildoffsite’s Chairman, Richard Ogden about the knowledge transfer organisation and its influence on the growing trend of offsite construction.

Construction Global (CG): When did you first recognise offsite becoming a growing technique and what is the history of this approach?

Richard Ogden (RO): The history of offsite construction is as old as construction. Understanding that it makes sense to construct components and then to transport these to the place of final assembly and use was something that was well understood by the civilisations of Ancient Egypt and Rome.

Personally I began my offsite journey when I became responsible for McDonalds Restaurants build programme.  At that time inflation was rife and the cost of construction using traditional methods was not commercially viable.

The solution that we developed was to build our restaurants using modular solutions, constructed and fitted out in a factory and delivered just in time for assembly on site in a couple of days ready to trade.

This approach totally changed the economics of our business and was subsequently taken up by the major food retailers and others.

Other businesses will develop their own solutions to meet their particular business requirements. However, in almost all cases the critical considerations when considering the use of offsite solutions will include much faster build times, right first time quality, a safer construction environment, predictable performance in use, enhanced sustainability and given the opportunity to deliver products at scale, cost benefits.

CG: To what extent do you see offsite construction as a growing sector?

RO: There is no doubt that offsite construction solutions are being increasingly used in all sectors of the building and civil engineering sectors. In some sectors maximising the use of offsite solutions is already standard practice.

The Cheesegrater building in London was constructed using almost 80 percent offsite components. There were no wet trades above ground floor. This is the way the leading edge is already going – and the question is not why but why not?

In terms of future growth I predict that for a whole raft of different reasons we will begin to see a major expansion in the use of offsite in the housing and residential sectors.

Offsite is actually reasonably well established in residential but for a long time, and for reasons mostly associated with the stop go/sell then build mentality of homes building it has been difficult for offsite suppliers to compete effectively.

However the dynamics of the market are changing with major institutional funders looking to invest and bringing with them a mindset that will focus on speed of delivery, quality and predictable cost of ownership.

Refurbishment and maintenance are also challenging areas for offsite solutions, but by no means impossible. This is particularly the case for clients who need work completed quickly so as not to impede their core business activities. I also predict that the growth in enabling technologies such as BIM and 3D imaging will connect seamlessly with the strengths of offsite manufacturing.

CG: Why is the offsite method gaining in popularity so much? What do you use as the main advantages of an offsite approach as compared with traditional builds?

RO: I have no problem with traditional construction. I greatly admire the skills that those who work in the industry have honed over the years. That said I do not believe that simply because construction has generally been carried out on site using a set of basic materials or components is in some way morally or technically superior. What we have seen happen in other manufacturing sectors over the last 30 years or so has clearly shown this not to be the case.

Our best manufacturing industries – those that are truly globally competitive – have long since learned that modern manufacturing involves assembling increasingly complex and superbly engineered components.

This transformation has had no negative impact on design excellence, on quality, on performance in use – quite the opposite. Customers have benefited, prices have been reduced, quality has been enhanced, mass customisation is the norm and not the exception.

So if this way of working is the norm for other manufacturing industries why should things be different for the construction industry? At the end of the day the market will decide and the more that the leading edge demonstrate that the future of construction is offsite the faster that offsite will simply become the norm – notwithstanding the inevitable pleading from some special interest groups.

CG: What do you think is the future of offsite construction? Can it ever challenge traditional methods for supremacy and what are your personal goals as an organisation?

RO: Buildoffsite’s modus operandi is not to challenge the traditional industry but rather to support knowledge transfer activities that serve to educate, inform and yes, to inspire the offsite industry to become more and more competitive and clients to become ever more demanding.

Given client pull and manufacturer push and with positive and self-interested support from architects, designers and other professionals there is an inevitability that offsite will continue to grow to the point where it becomes business as usual.

I would dearly wish the traditional industry to respond – to show that it can be so much more productive, to deliver defect free construction, not to waste approximately 10 percent of all materials and never to have accidents.

However, that is just not going to happen. So quietly and with growing confidence, Buildoffsite will get on with our job and we will leave the traditional industry to get on with theirs.


Advanced tech and a fresh approach is helping construction firms ‘go lean’

Challenges are forecasted for the construction industry in 2015, but they are different from the trials industry leaders faced in recent years. After a difficult start to 2014, the industry is recovering, adapting to new regulations and techniques, contending with labor and material shortages and implementing advanced technology. These factors create risk and potential setbacks, as well as tremendous opportunity for greater success in the new year.

The United States economy has continued to gain momentum, but the construction industry still dealt with the hangover from the downturn in 2014. The first six months of 2014 provided few new building opportunities. This was coupled with additional regulations, including healthcare reform and labor reporting, causing more hurdles for businesses. The sluggish market and time required to adapt to new guidelines bred an overall environment of cautious advancement. The turn came in mid-2014 as the market surged with a year’s worth of opportunities to be completed in just months. While the increase in work in 2014 was welcomed, those new regulations and requirements created unexpected extra costs that extend into 2015.

Those increased costs are just one issue that carries into this year as the industry works its way back from the recession. Companies continued to downsize last year, either through attrition or continued layoffs. The decrease in available workers could make it more difficult for companies to keep up with demand, which make joint ventures a likely path forward in the near-term. Companies will team up to handle the increasing demand, and owners may return to selecting a project team on a best value, rather than least expensive, basis.

While joint ventures allow for progress and probable industry growth, the labor-shortage problem is not going away. Even with a steady increase in demand, the industry probably won’t see a rise in labor. To begin to solve this dilemma, technical schools are working to revive and redesign their programs to attract a new generation of students to the construction field. In addition to improving education programs, passing comprehensive immigration reform will increase the labor pool and have an immediate, positive impact in construction. However, both of these measures will likely be a several year process, which means that the industry must rely on other measures, such as new building techniques and industry-wide collaboration, to continue its forward momentum.

Experimenting with new building techniques is always an evolving process, but it also provides a method to help address the labor shortage. Traditional practices involve bringing materials to the job site to erect a building. This takes time and is expensive compared to prefabrication techniques. Prefabrication is just what it sounds like: assembling a structure in a warehouse or other manufacturing site, transporting completed sections of structure to the site and putting those sections together to create the final structure. Long used in the housing industry, the practice is finding inroads in the commercial and industrial spaces as well. The approach allows businesses to take into account conditions of materials, natural elements, budget and labor, as well as providing a means of fixing issues more quickly than when building on site. Prefabrication techniques are advancing quickly due to technology improvements, which aid in reducing costs and completing builds with less labor.

Co-construction is another technique industry leaders are using to help combat labor shortages and limited resources. Co-construction is essentially allowing one team to build upon another’s work to collaboratively complete a project. While more companies are creating these teaming agreements, there is some risk involved. Co-construction leaves room for error and miscommunication. Effective co-construction incorporates sharing accountability in a fair and reasonable manner, while not creating an undue burden on the owner. Still, the practice has the potential to better serve and benefit owners as well as the teaming companies delivering the project.

Technology advancements help mitigate risks associated with co-construction as well as provide a platform for the industry’s early adopters to effectively progress in the coming year. Companies are implementing those technologies that allows for faster construction processes and more efficient use of the limited labor pool. Although some industry leaders are less comfortable with the ever-changing technology, the need for faster, more efficient techniques will likely outweigh, or at least lessen, any reluctance.

The construction industry is at an exciting turning point right now. We’ve collectively weathered the worst of the storm and see a bright path forward to create new industry standards for the coming year and beyond. In many ways, the downturn has forced the industry to reexamine its practices, technologies and overall approach to delivering projects. The opportunity for increased efficiency due to co-construction, prefabrication and advanced technology is great, but success will depend, in part, upon the open-mindedness of industry leaders and the incorporation of multigenerational ideas of how to improve the construction process.


How big data is transforming the construction industry

Big data analytics is being adopted at a rapid rate across every industry. It enables businesses to manage and analyze vast amounts of data at ultrafast speeds, and obtain valuable insights that can improve their decision-making processes.

One of the industries that are reaping the benefits of this technology is the construction industry. Construction companies are using big data to perform a wide range of tasks, from data management to pre-construction analysis.

Here is a look at how big data is transforming the construction industry…

How Construction Companies are Leveraging Big Data Analytics

Handling Large Amounts of Data

Many construction companies need to juggle many projects at the same time, and they have to collect, produce, organize and analyze a lot of data because of these projects.

Other than creating work reports and progress reports, they also have to manage technical information on various aspects of their projects. All the unstructured data that is collected and generated can burden their databases.

Big data solutions make it possible for construction companies to process massive amounts of data at unprecedented speeds, enabling them to save substantial time and effort, and focus more on the job site instead of IT issues.

Depending on which big data tools they use, they can improve almost every data-related process, from database management to report creation.

According to an article entitled “How Big Data is Transforming the World of Finance“, big data can help businesses create reports on their operations more frequently, or in real time, so that they can make well-informed decisions on a consistent basis.

Predicting Risk

In order to plan and execute projects effectively, construction companies need to be able to predict risks accurately through intelligent use of data.

By implementing big data analytics, they can gain valuable insights that enable them to improve cost certainty, identify and avoid potential problems, and find opportunities for efficiency improvements.

One example of a construction company that is using big data analytics to predict risk is Democrata.

Democrata conducts surveys to gain a better understanding of the impact of new roads, high rail links and other construction projects, and uses big data analytics to perform searches and queries on data sets to obtain insights that can lead to better and faster decision-making.

Solving Problems

The ability to solve problems quickly can contribute significantly to the successful completion of construction projects.

Liberty Building Forensics Group is a company that investigates and solves construction and design problems, and it has provided consultation on over 500 projects worldwide, including a Walt Disney project.

According to the company, forensic issues usually occur in major construction projects, and they can cause big problems, such as failure to meet deadlines, if they are not properly assessed.

In order to fix forensic issues efficiently, construction companies have to be able to collect the right data in an organized way and make the data accessible to the right people at the right time. This can be achieved through the implementation of big data solutions.

Presently, big data analytics is relatively immature in terms of functionality and robustness.

As it continues to become more advanced, it will be more widely adopted in the construction industry.

John McMalcolm is a freelance writer who writes on a wide range of subjects, from social media marketing to technology.

It’s been another active season here at BUILD World Headquarters. Summer’s officially over as of today, and a lot has been going on in our world since the spring update. As we gear up for the final few months of this year, we’re excited for the opportunities bubbling up as well as the projects and relationships that continue to develop.

A new residential project popped up on our radars, and we’re just getting our feet wet in the early schematic designs at the moment. A gorgeous site in Bellevue with views back towards Lake Washington and the shores of Seattle.


Qatar looks to build next generation of smart houses

A wave of new futuristic homes will be built in Qatar as the country continues to plough investment into infrastructure projects of all shapes and sizes.

Ooredoo and Alfardan Properties have signed a Memorandum of Understanding (MoU) to develop the next generation of “smart living houses” for Qatar.

The MoU, which was signed by Sheikh Saud Bin Nasser Al Thani, CEO, Ooredoo Qatar and Omar Hussain Alfardan, President & CEO, Alfardan Group, outlined the companies’ intent to develop smart homes for the general public over the next few months.

This is the first partnership for innovative smart home solutions in Qatar, and the agreement states that the first smart home will be available to view by the end of June 2015.

The new smart homes will include appliances, lighting, heating, air conditioning, TVs, computers, entertainment audio and video systems and security that are capable of communicating with each other and can be controlled from any room in the house, as well as remotely from any location in the world by phone or Internet.

Sheikh Saud Bin Nasser Al Thani, CEO, Ooredoo Qatar, said: “With technology moving forward daily, our lifestyles are rapidly integrating with our smart devices. Smart living development is the future, and we are excited to be able to work on such a truly innovative project with Alfardan Properties.”

Omar Hussain Alfardan, President & CEO, Alfardan Group, added: “The MoU with Ooredoo marks another milestone for Alfardan Properties. It demonstrates our commitment to offer the latest advanced technological services to our tenants, in order to consistently provide them with luxury living solutions and we are confident that

Ooredoo’s ‘Smart Home’ solution will add value to their experience.”
“We are thrilled to be working with one of the leading telecommunications companies in the region. In implementing the project, both parties have consented on the important aspects thoroughly to ensure seamless execution of the solution in our residential communities. We are looking forward to offering this highly innovative service to our residents,” he added.

In line with the agreement, Alfardan properties will provide a suitable property for the smart home, whilst Ooredoo will provide top-tier technology and connectivity on its bigger, faster network from within their range of smart solutions for the home, enabling businesses and the public to view their portfolio and strengthen their position as a top ICT solutions provider.


America’s fastest growing cities 2015

The construction industry has taken a bit of a battering over the last few years, with global financial troubles leading to job losses, slowing rates of construction and abandoned projects.

However, the construction industry has been looking up for a couple of years now, with strong signs of growth around the nation.

Research from GDM suggests that the construction market in 2015 will grow by 9.8% from 2014, which is good news for everyone from construction workers to home buyers.

So which areas are expecting new or continued construction growth, and how does that benefit the construction industry and house hunters nationwide?

Construction is Booming in These Cities

Many cities around the country have enjoyed a construction boom as of late, with growth expected to continue through 2015.

Atlanta, Georgia, has seen a boom of late, with no signs of slowing down in the coming year.

Construction has helped to regenerate the downtown area, giving it a new lease of life. With continued development expected in 2015 and plenty of exciting new restaurants, construction growth is going strong in Atlanta.

Phoenix, Arizona, made Forbes‘ list of America’s fastest growing cities for 2014, with growth expected to continue through 2015.

Construction industry jobs in Phoenix have been growing year on year, as the population continues to boom. Considering that construction in Phoenix was hit hard by the downturn, it is good news for this city.

Houston, Texas has seen an increase in construction in the last couple of years, with more new home starts in 2013 than the entire state of California.

That impressive rate shows no signs of slowing down in 2015 and beyond, with a projected increase in construction of 13% for 2015 and 2016. The housing boom in Houston is accompanied by an influx of new professionals as the local economy experiences a boom.

Construction Boom is Good News for House Hunters

A construction boom is often good news for house hunters. Greater choice makes it much easier to find a home in a desired location that fits in with the budget.

As the article “A Monthly Budget for a New American Dream” points out, affordability is still relatively high in the housing market nationwide.

It’s not uncommon for rent prices to stay stable or even relatively low during an expansion phase, and rapidly-growing cities often offer affordable housing options for both renters and buyers.

Whatever their budget or taste, increased construction means increasing choices for home hunters.

Things are Looking up for the Construction Industry

The current boom in construction is great news for the construction industry.

Construction workers in growth areas, or those willing to relocate, can benefit from increasing numbers of available jobs. This has a knock on effect, as increasing construction means a growing need not just for industry workers, but for materials, which is good news for suppliers and haulage companies everywhere.

A boom in construction means more work and more reliable income for those in the industry, and better security for their families, benefiting people across the board.

As construction booms and the industry strengthens, so too do the cities where construction is growing benefit from new amenities, more jobs and an influx of new professionals and talents.

Construction is looking good for 2015, building jobs and economies alongside homes and businesses.

Tristan Anwyn writes on a wide variety of topics, including social media, the construction industry and the economy.