Risk Management

  • Ward shares an experience where a customer contract had the potential to severely damage a balance sheet.
  • Don’t be afraid to admit that you do not understand contract language; if you do not, seek out legal assistance.
  • SBCA’s ORisk program can help with contract fundamentals.

Knowing what your Commercial General Liability (CGL) insurance policy can provide in terms of a construction defect lawsuit defense and payment is crucial. 

With many property owners still owing more than their properties are worth, combined with the run-up in construction in the mid-2000s and resulting poor quality in many instances, I am led to conclude that thousands of construction defect suits will likely be filed in the next two or three years. Anti-construction defect litigation statutes adopted in many states will have little effect in stemming the tide. Component manufacturers will be among the many in the construction chain having to figure out how to defend and extricate themselves from such suits. 

Knowing what your Commercial General Liability (CGL) insurance policy can provide in terms of a construction defect lawsuit defense and payment is crucial. Understanding the degree to which many insurance companies will go to neither defend nor pay on construction defect claims is even more important. Far too many construction subcontractors and suppliers, including component manufacturers, are, in my opinion, naive when it comes to knowing what to expect from, and how to effectively manage, their insurance companies over a construction defect lawsuit.


  • In just under 10 years, BCSI has evolved from the booklet into Summary Sheets, JOBSITE PACKAGES, online courses and the much larger book.
  • Including the JOBSITE PACKAGE or BCSI book on invoices is an excellent best practice in case a project heads in the wrong direction.
  • SBCA Chapters have developed great relationships and reaped many benefits for their time and effort through BCSI educational programs in their markets.
  • Be proactive and develop a plan to strategize how you might deal with a truss collapse and the subsequent investigation.
  • Information is critical; visit the site, take lots of photos and document as much as you can.
  • Remember that the only company looking out for your company’s best interests is your own. Take action with this in mind, and ultimately, it will save everyone money and time.
  • Not stating a SOW can also subject a CM to the prospect of increased claims and liability. 
  • A manufacturer should strongly consider developing a SOW template that can be used in its bids or proposals and as an addendum or attachment to the customer contracts it signs.
  • President Steve Stroder gives an example of how SCORE helped reduce accidents at one of his company’s facilities.
  • Collectively, the industry can raise the bar on safety through the SCORE program.
  • The goal of SCORE is to provide industry best practices and generate data to help CMs track and manage their facility, following the belief that, if you measure something, improvement will follow. 
  • The beginning of the year is a great time to ensure your forklift drivers are up-to-date on their training.
  • For several years, OSHA has been pursuing more stringent regulations for the collection and disposal of “combustible dust,” including sawdust.
  • Hearing conservation is a very serious concern, and one that can affect the component manufacturing industry.
  • Only scaffold-grade lumber should be used for erecting scaffolds.
  • Scaffold-grade lumber meets strength criteria determined by the grading rules set by a recognized lumber grading agency or independent lumber inspection agency and meet the minimum requirements of OSHA standard 29 CFR 1926.
  • The characteristics required for scaffold-grade lumber, such as number and size of knots, slope of grain and juvenile wood, are higher and more stringent than those for construction lumber.

As of June 16, OSHA intends to begin enforcing residential fall protection guidelines first put in place in 1994. The change comes from a 2010 decision to lift a set of interim guidelines OSHA imposed in December 1995.

So much has changed in just a few short years for component manufacturers supplying single and multi-family residential construction projects. It’s no surprise that the legal landscape we face while operating our businesses in this volatile market has changed as well. As you refocus to take advantage of opportunities as the housing market recovers, I encourage you to consider these legal trends.