Growth for your contracting business can be exciting – bringing opportunity, building complexity and allowing your business to scale. But as you grow, so do the risks. More crews, larger projects and multi-site operations can expose you to liabilities you likely haven’t had to grapple with on smaller jobs.
The following risk checklist can help you identify potential vulnerabilities before they cause issues, so you can take proactive steps to protect your business.
☐ Contracts
Contracts are crucial for every size of business, but as your business grows, you must formalize the process and review contracts carefully to ensure nothing is overlooked.
- Review Contract Composition
Don’t leave expectations unwritten. Ensure your contracts cover important elements such as location and scope of work, scheduling expectations, payment conditions, scope of authority, liability-indemnification agreements, insurance requirements, workmanship guarantees and penalties if contract terms are breached. Having clear contracts can help you provide consistent expectations for your workers and other professionals you partner with. It also serves as a roadmap for resolution if things go wrong.
- Formalize Contract Review and Ownership Process
As your operations scale and more contracts are required, what used to be a small part of operations can begin to take on additional complexity and require more attention. Ensure each person in your organization understands their role in contract management, review and upkeep.
- Examine Indemnity Clauses
Indemnity clauses are designed to allocate risk. They detail specifically who bears responsibility for claims, damages and legal costs arising from work performed. Review indemnity language carefully. Broad or poorly negotiated terms can create significant exposure. It’s also wise to consider differences by state. Language allowed in one state may be prohibited in another. Align contracts with local statutes and insurance requirements to protect your company and maintain compliance.
☐ Insurance Coverage
As your business grows, insurance coverage can become more complex. Proactively adjusting your coverage can help you avoid unexpected costs, maintain protection and avoid budget surprises. Working with an independent insurance agent can help ensure any gaps are taken care of.
- Review Worker Classification
As you add new roles or shift responsibilities, it’s important to confirm that every worker is classified correctly for insurance purposes. Workers’ compensation premiums are based on job duties, and misclassification can lead to incorrect costs or gaps in coverage. For example, if a laborer starts operating machinery or a supervisor takes on field work, their classification may need to change. Regularly review job descriptions and consult your insurance agent to make sure your policy matches your workforce. This helps you avoid unexpected premium fluctuations and ensures everyone is protected.
- Verify Who Is Covered
As you grow, you may need to expand the type of workers you’re using in your business. Subcontractors, temporary workers, and independent contractors may need to be included in your coverage, depending on state law. To stay compliant, keep certificates of insurance on file for all subcontractors and routinely check that everyone working on your behalf is properly insured. This may include more people than you think.
- Update Vehicle and Equipment Listings
When you purchase new vehicles or equipment, add them to your insurance policy as soon as possible. Unlisted assets may not be covered if there’s an accident or theft. Make sure your commercial auto coverage reflects your vehicles and drivers accurately.
- Protect Valuable Equipment
Take steps to safeguard high-value equipment from theft and make sure it’s properly insured. Theft is a common risk on jobsites, and coverage for tools and equipment can vary. Make sure your insurance policy provides coverage for your equipment.
- Align Liability Limits with Project Size
Larger jobs and multiple projects may require higher limits or additional coverage. Review your liability limits to match the scope of your work and avoid being underinsured. Assess your projects and discuss with your agent whether you need umbrella policies, builders risk coverage or per-project aggregates.
☐ Jobsite Safety
As work scales, jobsite safety protocols can become less consistent across operations. Formalizing expectations and consistently documenting safety efforts can prove diligence and strengthen your defensibility if an incident occurs.
- Train All Workers to Your Safety Standard
As you grow, you will likely need to bring in additional employees. When onboarding experienced workers, it may be tempting to assume they’ve been trained by their previous employer – don’t make that mistake. Always do your due diligence to ensure you’re conducting your own training to your standard. This can impact both safety and compliance. For example, OSHA expects each employer to conduct training for mobile equipment regardless of previous work experience. Assumptions about prior training and safety can be costly.
- Follow up on Training
Create a process for checking in with employees. Regular connections with employees give them an opportunity to ask questions and you an opportunity to check in. If you’re used to assigning your most complex tasks to experienced employees, this may not always be possible as your business grows. Allowing an unskilled worker to perform a task can lead to significant trouble in the long run. Make sure workers are sufficiently trained for any task they are given. Taking additional time at the start can help you avoid quality control issues and safety mishaps that can come with growing too quickly.
- Understand Hazards Present on Multi-employer Jobsites
With growth also comes the likelihood of being on a jobsite with multiple contractors working at once. On sites with multiple employers, keeping track of housekeeping and closely managing equipment can help prevent accidents and confusion. Allowing another company’s employees to operate your equipment can lead to liability. Train your employees to protect the business and always consult a supervisor if someone asks to borrow equipment. If jobsite conditions become too crowded or unsafe, empower your workers to stop work and notify a supervisor. In the eyes of OSHA, it’s not only your responsibility to control your equipment, but you also need to not create hazards for others and not let your employees be exposed to hazards created by others.
- Document Your Efforts.
Maintaining clear records of inspections and training is essential. If OSHA conducts an inspection, they may ask about training and inspections processes. Being able to show compliance officer training and inspection documentation can demonstrate your commitment to safety, verify compliance with regulatory requirements and help avoid potential citations or penalties. These records also serve a critical role if an incident occurs.
☐ Operations
As your business expands, operational gaps can cause costly mistakes. Addressing these areas early can help prevent disruptions.
- Promote Intentionally
It’s common for growing businesses to promote from within for supervisor positions. This can be a great way to provide career advancement and improve worker morale but just because someone is excellent in one role, doesn’t mean they will be an excellent supervisor. Take time to prepare employees for a change in role, don’t assume they’ll pick up the new job by proxy. Some industry associations and insurance companies offer leadership classes through their loss control and risk management services. The OSHA training institute has education centers around the country where employees can take safety management classes.
- Research local regulations before bidding
Understand local building codes and any state‑specific OSHA or DOT requirements. Several states enforce standards even more stringent than federal rules. Don’t assume what works in one state or region will work across a broader footprint. Understanding these differences ahead can be the difference between an accurate bid, and an unprofitable one.
☐ Risk Management
Growth can amplify existing exposure and create new ones. Working with safety professionals can mitigate some of these risks.
- Schedule consultations with loss control teams
Work with your insurance carrier and agent to reduce your risk. Some insurance companies only offer loss control services once your business hits a certain size; others offer these services to all their policyholders. Check to see if you qualify for loss control services from your carrier and if you do, work with them on building a plan for your businesses. These loss control professionals often have decades of experience helping businesses reduce their risk and work safely.
- Use available training materials
You are likely to have access to more resources than you realize. Insurance companies will often provide resources including risk checklists, trainings, sample subcontractor contracts, safety posters and safety talks. OSHA.gov has a multitude of free resources. If you belong to any industry association, check out the member section as many will offer online or in person classes.
- Audit your improvements
If you take the time to implement changes, prioritize auditing your new programs and processes, especially in the early stages. Continuous review ensures that improvements don’t fade into the background or get overshadowed by old habits.
Grow the Right Way
Growth should be a sign of success, not a source of stress. Address these risks early to protect your business, your workforce and your reputation. Remember, lasting success isn’t just about making changes; it’s about sustaining them.
