Continuity for Construction Firms
An Overview of Continuity for Construction Firms
Every business, regardless of size, should have a continuity plan. The necessity of continuity plans is evident in the time after natural disasters—many business don’t survive events that happen thousands of miles away because they have no continuity plan. For a construction project owner in San Jose, the impact of events worldwide could affect their plans if the contractor doesn’t have a continuity plan in place.
Continuity Plans are Important to Your Surety Program
When a construction firm fills out an application or questionnaire for a surety bond, it is asked for detailed information on experience with a certain type of construction, personnel available, length of time in business, and credit, as well as key personnel and management. The reason for this is that contractor failure is attributed mostly to factors related to those questions, and attribute almost 30% of the failures to lack of business continuity, according to a review of 86 claims by the Surety and Fidelity Association of America.
On of the criteria a contractor is judged upon by the surety is the business plan, which includes provisions for replacement of crucial employees. For instance, a construction firm that has a manager die while working on a project needs to have a procedure to replace him or her in a seamless way so as not to disrupt the flow and progress of the work.
The continuity plans should also provide for any company shakeups or major leadership changes. Often a company has internal issues that can only be solved by a change in the cornerstones of management. The construction firm needs to have a proper plan for replacement of those persons, as well as some kind of procedure designed to cover any possible repercussions of the loss and transition.
Causes for Business Disruption
Because disruptions in a construction project often happen without warning, as with most businesses, a contractor needs to be prepared ahead of time. It isn’t just loss of personnel that can disrupt continuity of a construction business. Other possible sources of work interruptions include:
- Natural disasters
- Civil disasters
- Environmental disasters
- Equipment malfunctions and theft
- Local utility service failure
- Security problems and crime
Although not all possible problems can be thought through before they happen, having a plan in place for many of them will help a construction firm work smoothly through calamities. This process could also help a surety provider see a construction business as a serious firm deserving of a construction surety bond.
Generally, to ensure continuity a construction business should have plans in place for all key personnel. For personnel in the office, this includes the board of directors if there is one, senior management, and middle management. These particular employees should all be responsible for helping draft and develop the continuity plan. For a construction firm in particular, there should be plans for onsite managers and supervisors. A lost supervisor can leave several people without leadership. This loss can create a work slowdown as well as physical dangers for the leaderless construction crews.
Steps for Planning Ahead
The Business Continuity Institute is an organization dedicated to helping businesses create best practice procedures for their disaster management needs. The institute has created a list of ten standards for professional business continuity managers that can help all businesses with their plans even if they are not seeking certification. These steps are:
- Initiation and Management.
Determine the need for the plan, set objectives, and get management buy-in.
- Business Impact Analysis.
Consider possible disasters and how they will affect the construction business and individual projects.
- Risk Evaluation and Control.
Define how possible disasters can affect your business and what you can do to minimize the disruption.
- Developing Business Continuity Management Strategies.
Decide on possible strategies to implement the recovery activities.
- Emergency Response and Operations.
Build a plan to re