Customers refusing to pay or cancelling jobs at the last minute has been identified as the most serious business survival risk according to a survey of builders carried out by construction risk specialist Builtin.
The survey, conducted at the end of July, asked over 100 mainly residential builders in Auckland to identify the top 5 risks that would impact the survivability of their business.
Accidents on site came second on the list. Aside from the physical and emotional trauma that arises from a serious incident, the financial impact of a site being shut down while an accident is investigated, and the potential time and money involved in any resulting WorkSafe prosecution, would weigh heavily on the business and its owners.
Third was poor service or poor quality or defective work performed by subcontractors. Builders worried that subcontractors who do poor work may not be around to remedy it, with liability falling squarely back on the builder.
The impact of natural disasters came in fourth place. The destruction caused by Cyclone Gabrielle and the flooding in large parts of Auckland in early 2023 was still fresh in the minds of many.
Rounding out the top 5 in equal place are serious illness affecting the business owner and defective work performed by the company’s own staff.
Ben Rickard, Director of Builtin, said that the results were unprompted and consistent across the participants. “The top 5 risks represented over half of all responses. This tells us that builders have a lot of risks in common.”
The survey, conducted via a series of focus groups, also asked participants to identify solutions to mitigate the risks they identified. “None of these solutions will be a surprise to anyone, it’s not rocket science. Unfortunately, it’s the application and implementation of risk treatment measures where builders typically fall down. So, even though they know the issues and can put forward solutions, putting them into practice is another matter”, said Builtin’s Rickard. “We find this usually comes down to the time involved, the fact that the work required is often outside of a builder’s skill set and comfort zone, or they have a poor appreciation of the cost-benefit outcome from investing in risk mitigation measures.”
Builtin’s Construction Risk Management Programme aims to change this. By making it affordable and easy for builders to create and maintain their own risk register, Rickard hopes that builders will be able to take a more structured approach to managing their risks. The programme involves an initial risk assessment workshop with business owners and key staff, where key risks are identified, quantified and mitigation measures developed (if they don’t already exist). This also helps business owners to identify and close gaps in their existing risk management practices. An easy-to-use, affordable online portal then allows the business to assign owners to each risk, with regular review dates scheduled, so that nothing falls through the cracks.
Find out more and register your interest here: www.builtin.co.nz/risk
Use our risk checklist to audit your next project: www.builtin.co.nz/key-risks-checklist
The full list of risks identified by builders
| 1 | Customer Not Paying or Cancelling Job |
| 2 | Accident on Site |
| 3 | Subcontractor Insolvency or Defective Work |
| 4 | Natural Disaster |
| 5= | Key Person Illness |
| 5= | Defective Work by Staff |
| 7 | Theft of Tools |
| 8 | Staff Reliability |
| 9 | Product Failure |
| 10 | Damage to Reputation |
| 11 | Financial Strain |
| 12 | Supply Chain Issues |
| 13 | Property Damage (eg. Fire) |
| 14 | Recession |
| 15 | Under Insurance |
| 16 | Regulation/Legislation |
| 17 | LBP Complaint |
| 18 | Defective Design or Engineering |
| 19 | Competitors Under Pricing |
| 20 | Mental Health |
