Contractor Oversight

According to the U.S. Bureau of Labor Statistics, 5,071 fatal work injuries were reported in the United States in 2008. This represents a rate of 3.6 fatal accidents per 100,000 full-time equivalent workers, and an improvement from the rate of 4.0 per 100 recorded in 2007.

The use of contractors in your workplace may be intended as short-term, but the effects of injuries, property damage or liability claims resulting from any accidents could last far beyond the expected life of the project.

About one-quarter of all workplace fatalities involved transportation or material movement, and fatalities among those occupations fell 12 percent in 2008.

Basic Questions

Long before the project begins, your risk management strategy should start with potential contractors and their safety records. It’s important to choose contractors who are not only good at their specialty, but also have a demonstrated commitment to worker safety and training.

It’s also vital to obtain certificates of liability and workers’ compensation insurance, and to make sure that those policies have appropriate limits for the type of work scheduled. Have your company listed as an additional named insured on the contractor’s policy, and make sure the policy limit hasn’t been exhausted by previous claims.

You should also coordinate with the contractor to make sure the project doesn’t introduce new risks into your work environment. For example, the movement of equipment, materials (especially any hazardous materials) and subcontractors within your facility should be coordinated to avoid disrupting your normal production schedule or employee traffic patterns.

Be sure to determine if your project could require utilities or other critical systems to be powered down, or how the project would affect your company’s existing emergency plans.

Similarly, ensure that all vehicles used by the contractor within your facility are maintained properly and suited for the work being performed. For instance, a Texas contractor settled wrongful death litigation after a worker being lifted into the upper floors of a worksite by a forklift was killed when a box in which he was riding fell from the forklift.

Depending on the scope of the project, it may be a good idea to assign a company worker to oversee and coordinate the contractor’s activities within your facility. Your project manager can add specialized knowledge about your facility and production flows that can help the contractor avoid accidents. In addition, the project manager can help document any accidents or injuries, which could help reduce your liability exposure.

Addressing Contractual Liability

Another important aspect in reducing potential liability associated with projects is making sure the contracts and plans clearly define the project, procedures, timelines and specific responsibilities, as well as procedures for resolving any dispute. You may be able to establish financial penalties for missing project deadlines.

As with any legal document, retaining an attorney to draft or review a potential project contract can help identify confusing or ambiguous language that could undermine your defenses following an accident or dispute. In most cases, it’s easier to resolve any potential disagreements before either party has a financial stake in how unclear language is interpreted.

Defining responsibilities and working to address potential hazards before a project begins can help reduce the chances of accident or injury, and will also help everyone involved bring the project to a successful conclusion with minimal delays.

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