Risk warning for contractors

The level of project risk and financial liability is on the up for construction companies in the North West, according to research from law firm Weightmans.

According to a survey of 72 firms in the region, 82% said that risk was increasing and insurance was no longer considered a reliable safety net.

Over one third of those interviewed thought that there would be casualties in the sector as a result of escalating risk issues.

Risk is the likelihood of something going wrong in a project, leading to a financial loss for which the construction firm would be liable.

In other findings, 80% complained that contractual obligations were more onerous and complex, while 48% said they did not have systems in place for ensuring trading conditions did not conflict with details of the insurance contract.

Mike Grant, head of professional risk at Weightmans in Liverpool, said: "The issue of risk, and how to identify it and reduce it, is a key issue for all those involved in the industry. Getting it right means increased efficiency and profitability. Getting it wrong or ignoring risk can lead to disaster.

"It is vital to ensure that a risk vetting process and insurance review takes place before projects commence in order that the full extent of the risk is known and understood. That includes recognition of the extent of any uninsured exposure. We have seen many cases where such an exercise could have avoided costly and reputation damaging litigation."

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