Coordination Between Contractors, OHES Professionals and Underwriters for Risk Reduction in Renovation and Demolition Projects

Subtitle: Risk Reduction from Environmental Hazards of Asbestos, Lead and Mold

Introduction - When construction projects are underwritten involving renovation of existing buildings the contractor must engage in management planning with the owner and insurer. The key components are a plan by the project designer consistent with project specifications and a means to provide any additional detail to the contractor on how to avoid or resolve risk issues. When risks exist that will impact personnel and property, including asbestos, lead and mold, the biggest issue to the contractor is variability of costs. Usually coordinating ‘clean demolition’ with ‘dirty demolition’ involves inherent risks. This includes cost increases, schedule delays and hiring subcontractors that are unfamiliar with the project scope. When a project is based on a Design and Build contract, all these unforeseen risks are borne by the contractor during the onset of a project. An occupational, health, environmental and safety (OHES) professional can stem costs and assure risks are controlled.

The building owner is faced with a separate set of problems. They tend to think of the activities involving environmental hazards as different silos of work. They are less concerned about time management and more concerned about liability.

Insurers who underwrite builders risk insurance face contractual, operational, and environmental coverage issues. Unlike safety hazard underwriting, unforeseen environmental contamination such as asbestos or lead contamination or ongoing water damage pose serious impacts on costs, schedules, and performance of the policy. A decision to avoid, transfer, mitigate or accept the risks within project coverage that poses serious consequences needs to be made.

The failure to manage risks results in cost escalation, legal consequences, and potential exposure. Lack of planning will result in increased mitigation costs and construction delays.

In all cases, risks must be managed. Typically, a third-party consultant, including a licensed asbestos consultant, a professional environmental engineer or certified industrial hygienist are considered OHES professionals. They can perform oversight, carry the risk, and reduce the cost of overseeing skilled labors who are performing asbestos abatement, lead removal or mold remediation. They need to weigh the types of insurance coverage with the nature of work planned, so they are not simply providing evidence of coverage.