Construction Risk Management: Using Technology to Mitigate liability

Published January 6, 2017 by Whirlwind Team

construction risk management

They say the only constant is change. The world keeps moving forward when you aren't looking, and if you aren't careful, you will be caught in a tangle of new codes, regulations, and standards. 

No change has been swifter than the technological change the construction industry has seen in the past few decades. New equipment comes with a touchscreen and GPS. Payroll, scheduling, and building information management are now controlled through specialized software. New construction products are being created all the time.

Fight fire with fire. Use technology to keep up with changes and mitigate risk.

Construction risk management challenges

Even as computerization is introduced into the industry, many construction documents are still paper forms that are filled out manually and rarely get updated to acknowledge new requirements or gather better data.

Handwritten forms capture limited detail and can be inconsistent from user to user. The forms may not be customized to your company or your specialty. Once the information is captured on paper, it may be entered into a computer manually, introducing a margin of error. It may even be entered into different programs, expanding the risk for error.

Once input, information is not validated by a third party to ensure accuracy and quality control. Audit trails and historical references are difficult to find and follow. Nothing is measured, benchmarked, or analyzed for trends to help with improvements.

There is no access to real-time data or automation of any kind.

Risk management strategies

Document management and records retention

Where would the world be without documentation? Everything requires a piece of paper and a signature.

Projects begin with a contract. Manage your risk beginning with a thorough review of the scope of work and contractual obligations to uncover problem areas and determine if this is the right project for your company.

Once the contract is signed, document every decision and change so you can answer any claims that come up in the future. Complete all change orders and make sure the owner and architect or engineer approves them. Maintain minutes of all meetings including attendee signatures so you can later prove who was there and what was discussed.

Record decisions made and who made them. Create an audit trail that allows you or a third party to track a line of inquiry from beginning to end.

Once records are created, store them per requirements for records retention. Storage of physical documents can be expensive and take up space, but you must keep them for future proof if needed of the presence of particular people, types of materials used, and any changes made in the original plan.

Subcontractor compliance

Put a pre-qualification program into place to ease subcontractor selection. Part of the process should include skills for new product installation and equipment as well as insurance documentation.

Subcontractor risk can be seen in surety and banking support and insurance sufficiency. You can also inquire about financial health and research performance.


A reliable insurance agent can help you determine the type and amount of insurance you need for each project.

Risk management technology solutions for construction

A risk management solution can create customized documents, capture data in real time, and store information so it is easily retrieved. Data is placed into a database where it can be analyzed for trends and activity measured.


Any time a subcontractor is hired, all information can be entered into a record for each sub for future use and decision-making processes. As a bonus, it only needs to be entered once. The record can be updated as needed but the complete record will always be available.

Once a sub has been hired, automated notifications can be provided by the system when expiration dates, renewal dates, and other compliance-related issues arise. You and your subcontractors will have plenty of time to document new contracts, continuances, and insurance before the due date.

Subcontractor insurance notification can be automated as well. You can keep track of any downgrades in surety. Once the contract is set, an automated notification can be set to alert you to payments due, changes in coverage, claim status, and more.

Change orders

Construction change order management benefits from the ability of technology to encourage and enhance collaboration. Unlike processing change orders through email and using a spreadsheet, a change order can be created and tracked through the system as a log captures its travels.

Not only can more than one person be involved at a time, the information is passed more quickly and contains more pertinent details than older forms of documentation and sharing.

Turn-around time on approvals and maintaining awareness of all changes reduces the chances you will drop the ball on anything.


Forecasting is impossible without data. The newer the data is, the better. Projecting completion costs on a spreadsheet is a highly manual process requiring hours of work and references to multiple other documents. 

These documents are static reports that reflect information from the past, sometimes the remote past.

A risk management solution can maintain all the required data and compile it into a single report that can be analyzed and updated with current information. When you have access to complete real-time data, you can drill down into the various values and uncover better methods of aligning costs and work with conditions.

A good forecast is a tool to help you keep abreast of problems and find and correct potential issues before they grow too big.


Real-time budget updates are required for good forecasts and cash flow. If you can update your budget and forecast automatically and receive notifications of problems in the making, you stand a better chance of making corrections before issues obstruct your work.

Construction is a complex business where every penny counts. Manually maintaining documents and relying on email and spreadsheets for visibility into how the project is running is a waste of time and money.

Real-time data, captured and correlated into an actively updated record will help you resolve problems when they are still small and save on the cost of paperwork besides.

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