Canadian Underwriter

Key challenges facing your construction industry clients

April 6, 2022   by Jason Contant

Architect and engineer talking on a construction site

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An ongoing labour shortage, exacerbated by the COVID-19 pandemic, is one of the key issues facing the construction industry in general, says the head of risk control with Travelers Canada.

“I think the biggest prolonged challenge that comes around, seems to be every decade or so, is really around the shortage of qualified trades,” says Paul Gallately, assistant vice president of risk control with Travelers Canada. “You see it because of COVID, you see it because of retirement, you see it because of changing construction methodologies. There are various reasons why we see that.”

The last couple of years have also seen people change careers and make significant life changes, and this is occurring in every industry, not just construction, Gallately says. There are also changes in how projects are built.

“And so, trades are having to pivot and learn these [new construction methodologies]. They don’t necessarily have that experience or they’re trying to pick up on revenue loss over the last couple of years,” Gallately says. “It really circles back to making sure that you have a proper training program in place and are hiring from reputable sources so that if there is a lack of experience or training in any one area, then you have the ability to support [tradespeople].”

Lanny Hoang, managing director of construction and oil & gas with Travelers Canada, adds it’s important to work with an insurance broker that is knowledgeable to ensure the client has proper contractual risk transfers in place and is not assuming any additional liabilities within contracts.

Building under construction

Gallately and Hoang spoke with Canadian Underwriter about a number of topics, including key challenges facing the industry, the importance of risk management, and managing project delays.

Managing project delays is always crucial for the construction industry. But as the COVID pandemic stretches past the second year, will these delays become less of an issue in the industry as projects start to open up again?

Hoang says these delays will continue to create additional competition for construction materials, which have already seen challenges around supply and rising costs. “The projects that are already in the pipeline that have been delayed because of COVID are coming back online or picking up pace,” he adds. “But also, because it is an economic generator, we can also see high increases in bidding and opportunities to work on projects.”

To help mitigate delays, Gallately says clients need to take into account and ensure they are working with suitable, adequate and realistic timelines, especially on larger projects.

The last stages of a project are particularly important. In addition to understanding their coverage, clients should know about changes that may have occurred over the last few years. “Be able to manage extensions on those policies,” Gallately says. “Make sure that the broker is aware of those ahead of time, and communicate with the insurer ahead of time, so that there are no challenges or issues…. and coverage is appropriate to the phase that they’re at.”

Clients should also enhance any controls, such as on-site security, fire protection, and check that any equipment that remained dormant over the last little while is working properly. If (sub)contractors are trying to catch up on lost time by increasing shift lengths or working on the weekend, for example, ensure proper supervision is in place, Gallately adds. He points to instances where subcontractors may have not proper supervision on the weekend, which can increase opportunities for losses.

“Ultimately, it’s just making sure that you have a full risk management plan in place,” Gallately says. “Develop risk management plans, identify exposure, and make sure [workers] pay attention to the contracts that they’re entered into and understand the methodologies and materials that they’re using.”


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