The UK recession may be officially over, but the economy is a long way from recovery. Fears of a “double dip” and the increasing reluctance of the banks to grant business loans means that almost every sector is still feeling the effects of the downturn, and few more so than the construction industry.
On the upside, construction, while badly hit during the recession, grew for a third consecutive month according to the Markit/CIPS purchasing managers' index (PMI) in May, and Howard Archer, chief UK economist at IHS Global Insight, has recently commented on the hope that the sector is "now on the mend after suffering deep, extended recession".
However, there are fears that the construction industry will be badly hit by the far-reaching spending cuts to be introduced by the coalition government in its effort to decrease Britain's £156bn deficit. It is expected that public sector spending on infrastructure and buildings will be cut over a number of years as part of the process.
"The recovery is so fragile that (the construction sector) will be extremely vulnerable to the impending public sector cuts and it is unclear whether the recovery is robust enough to cope with such knock backs," said David Noble, Chief Executive of CIPS.
What all this means is that while there is a tentative improvement in the sector, cost reduction is still a central concern for many construction businesses. When companies need to reduce costs, one of the elements they will look at is the cost associated with risk. And while looking at ways insurance premiums might be reduced is one element of this process, there are also other risk management strategies that can help keep budgets down.
A full risk management strategy involves a range of activities, such as making sure you get full references for job applicants prior to recruiting them, regularly reviewing Human Resource policies, which will help reduce the risk of disputes, carrying out Health & Safety risk assessments whenever there is a change (in staff, equipment, location or organisation), and limiting the risk of bad debt by performing a credit check before dealing with buyers.
By taking action to reduce risk in this way, a company is not only less likely to be hit by costly incidents, it can also often reduce the cost of its insurance premiums, since it is considered less of a financial liability in the eyes of its insurer. However, in these difficult times, businesses in the construction sector may also face problems in terms of securing adequate and appropriate coverage.
Oval has a wealth of experience in reviewing construction company’s needs and responsibilities and the specialist construction team’s experience has been built across the sector from general builders to civil engineers to niche specialists such as directional drillers and piling contractors.
For more information, please contact Jon Simpkin on 01924 433156 or email jon.simpkin@theovalgroup.com