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Essential Risk Management Guidelines

March 24, 2023
Protecting your business and your livelihood should be at the forefront of everything you do.

Projects in the PHC industry require the utmost care when it comes to risk management because so many things can go wrong. As a contractor, you are guaranteed to be blamed for almost anything that goes wrong. Because of that unfortunate reality, you should go the extra mile when it comes to managing the risk in your projects. Protecting your business and your livelihood should be at the forefront of everything you do before getting into any client relationships.

One bad client could sink your business and your reputation. That dangerous reality necessitates careful risk management in all phases of your project development. There should be essential guidelines you follow to help you minimize the chance of anything going wrong when working with specific clients. Because projects can be so complicated, you should always do things by the book to ensure that nothing negative falls on your shoulders.

Research the Client

One of the first things to do is to look deeply at the potential customer. Analyze who the client is and how they respond when things go wrong. Look back at projects they have done in the past, as those can give a good view of how easy or difficult they are to work with. This step is significant because it can save you a massive headache by avoiding a client that could potentially become a liability in the future.

The worst thing is to do a good job and still not get paid. Having this research completed is a crucial step because it will help you take the jobs that fit your specific business. Many contractors only focus on the monetary value of a job. This is a massive mistake; the headaches you get from working with certain clients will never be worth the money you make.

On top of that, it is most likely that you wouldn't even make any money because the client could ask for a refund after things have been completed. You might even end up in legal disputes because you did not take the time to vet clients successfully.

Assess Your Own Capability Honestly

Conducting an honest assessment of your capabilities is crucial when conducting client research. Don't get greedy and focus only on the dollar signs the project might potentially pay out. Look at whether this client and this project will be a fit for your specific skills. If not, it might be better to refer this client to someone you know and trust. This can work to make the client trust you more. They will see that you are willing to give up work to deliver a better end result for them.

When bidding on a project, you might want to avoid going ahead when you see that it isn't going to work with your skillset. Being truthful in this step will save time and effort; no one wants to start a project and end up doing a bad job. This is just another way contractors ruin their reputation for money.

Get a Construction Bond

Some projects will require a construction bond. This is a critical step because it gives you more authority in the industry. Many people will only trust you after you show them that you have a construction bond. Many government authorities will require that contractors have construction bonds in place before they can bid on a project. It protects you and opens you up to a huge world of contracts you would not be eligible for before.

Meet All Regulatory Standards

You will inevitably need to comply with many standards and codes when working on projects. It is critical to do everything right here to avoid being blamed for problems in the future. As long as you maintain these standards, you can point to that fact at a later date. Additionally, the standards ensure that everyone performing the work is following best practices. These have been time-tested to ensure that things are done in the best way possible.

You could have problems in the future if your client gets blamed for a regulation you did not follow. For example, the Environmental Protection Agency (EPA) maintains certain emission standards, and your client would then be at fault when you finish the job. Obviously, they could then file a lawsuit, causing problems for everyone. Avoid issues like these by strictly adhering to all known codes and standards.

Choose Subcontractors Wisely

As a contractor, one of the biggest risks is choosing subcontractors to work on your project. A bad subcontractor can be the difference between a good or bad reputation. Research subcontractors as you would clients. The great thing about choosing good subcontractors is that they will want to work with you in the future again. It means your future projects will be more straightforward because for having built a great relationship that you are both able to rely on. You each will make more money, and the results will be better for the client.

Go With Reliability and Efficiency

Reliability and efficiency are the two traits that clients love the most. No one likes knowing the system broke down again, but they also don't want to pay massive energy bills because the system is not as efficient as it could be. By focusing on efficiency, you put yourself ahead of the pack. The issue is that many contractors try to use cheap systems for the project because they want to pocket the difference. It is always better to deliver value for clients.

Go the Extra Mile

Going the extra mile when servicing is crucial to risk management. It positions you as the excellent contractor that does more without being paid extra. It means that clients are less likely to complain, and will have less to complain about.

There will always be risks. Follow these simple rules to minimize the chance of anything going wrong in your future projects.

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