After several lackluster years, the construction world in
B.C. is heating up again. With more work comes more risk. The
promise of greater returns will be illusory unless those risks are
properly managed and contained. Fortunately, there are some
basic risk management strategies that are sure to help keep you out
First, undertake preliminary risk assessment before
you approach a new project. Some considerations in this
regard are whether you have worked with this owner, contractor or
trade before. If so, was it a good and profitable experience?
Have you had payment, delay, or other issues with this
client? How much work do you have on your books already and will
that impact your ability to deliver a quality project or obtain
bonding if your bid is successful?
Second, consider the contract. What type
of contract is intended and do any unusual allocations of risk
exist within it?
In this regard, it is helpful to create a template risk matrix
that your company can use on every project that clearly identifies
the common areas of contract risk allocation (e.g. scheduling, site
conditions, payment clauses, indemnity provisions, etc.). That
matrix can then be used with the procurement specifications to
properly identify the risk assumed by the parties to the contract.
Once completed, the matrix can form the basis of discussion at the
management level of exactly what the risks you
are agreeing to undertake in a particular project;
are prepared to take as a company; and
what premium, if any, are you charging for that particular
Third, keep accurate and comprehensive records.
Care in ensuring that proper records are created, filed and
organized does requires a company-wide sensitivity to the
importance that good record keeping will have in resolving disputes
in your favour.
Good records give you an objective basis upon which to either
support or defend a claim. They also assist in the legal pursuit or
defence of that claim. The overriding objective of good record
keeping, however, is to prevent the issue from developing into
full-blown litigation in the first place. Good records can go a
long way to persuade the other party of the strength of your
position – thereby hopefully avoiding a lengthy dispute.
Fourth, communicate. The importance of
effective communication cannot be emphasized enough and care
should be taken to ensure that it is neutral, firm and always
followed up in writing. Finger-pointing and derogatory comments
should be avoided at all costs. Threatening letters or emails feel
good when they are written; however, they rarely assist in actually
resolving a dispute.
If, despite these measures, an issue looks like it is going
to spin out of control, do not underestimate the power of a
face-to-face meeting between the principals or senior management to
reach a resolution short of something costly and time
Finally, seek legal advice early into a problem. Don't try
and sort it out yourself, calling your lawyer only when you've
really made a mess. Like a late visit to a doctor, a late visit to
your lawyer can be a fatal error.
Risk cannot be avoided. But a proactive approach to
managing it can make a significant difference to your bottom
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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