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Understanding Construction Contracts - December 2017
Construction contracts can contain terms that impact your
company’s bottom line. Reviewing them carefully prior to signing is indispensable,
and can save your company time and money. This contract review guide is meant
to be a starting point for reviewing contracts in general. It highlights some
common contract terms and their potential impact. You can begin to understand which
terms are most often negotiated in contracts generally. Then, with the help of
licensed inside or outside counsel, analyze the commercial risks associated with
construction contracts in depth and understand terms and conditions to protect
your company’s assets.
Scope of the
Examine the definition of services to be provided to ensure
the language is clear enough for an unrelated third party to understand the
scope. The contract should include a time frame for completion of services. The
rights and obligations of both parties should be clearly outlined. Any mechanism
for changing the scope of the contract, as well as any of the terms, if allowed,
should also be outlined within the contract.
Terms of Payment
Terms of payment should be clearly listed within the contract
so that the expectations of both parties are clear. The contract should specify
the agreed payment schedule for goods received.
There are two types of warranties: express and implied. Both
types are assurances regarding particular issues, such as performance.
Express warranties are those that are defined specifically in
the contract. Implied warranties are based in statutory and/or common law, depending
upon your jurisdiction. They are two-fold: a warranty of merchantability, which
requires that goods/services must reasonably conform to an ordinary buyer’s
standards, and a warranty of fitness for a particular purpose, which states
that if a seller knows the intended purpose for the product or service, the act
of selling the product to that customer implies that it is fit for that
Be aware of warranty disclaimers and understand how the disclaimer
limits your statutory rights. If it disclaims all warranties, express and implied,
then you will likely be limited to the remedies in the contract for issues
related to things like performance. You should also examine any disclaimer in
the context of the contract. While it may require you to disclaim your
statutory rights, other contract language may give you adequate rights and remedies
regarding the points about which you are most concerned.
Damages, Limits of
Liability and Indemnification
These three items are often in close proximity to one another
in a contract, as they are interrelated. Damages may be defined as certain
types of losses that could create liability under the contract. A limit on
liability would restrict the amount of damages that a party would be required
to pay if found liable for such damages. Sometimes this may also include a limit
Indemnification provisions allocate risk and cost between the
parties. It is important to examine whether the party assuming the risk is the
party with the most control over that risk. For instance, when a company’s
employees are required to work at a customer’s location, the company is often
asked to release the customer from all liability relating to the employees
presence at the customer’s location.
In some cases, indemnification is limited to negligence or to
a specific dollar amount, under a heading of “limits of liability.”
Some contracts will contain minimum bodily injury and property
damage liability coverage amounts that the party must possess and also may
require that the customer is added as an additional insured on those coverages.
Prior to consenting to any contract, it is prudent to examine
insurance coverage against the amount of liability exposure in a particular
Terms and Conditions
It is also vital to examine any terms and conditions contained
in the contract:
- Governing Law & Jurisdiction – Look at the
governing law provision to make sure that you are comfortable with the
implications of the state law chosen by the drafter. This can impact the
interpretation of the contract from warranties to indemnification. Additionally, when specific statutes or
regulations are referenced in the body of a contract, it is as though that
statute or regulation is wholly contained within the contract itself. It is vital
to read and understand that language prior to giving your consent. This happens
regularly in government contracting situations.
- Dispute Resolution – This is another clause with
which you must be comfortable with the laws of the state or forum chosen by the
drafter. The rules chosen to govern dispute resolution can impact the outcome.
Additionally, you should consider whether dispute resolution is right for your
- Intellectual Property – When you are disclosing and/or
licensing your company’s intellectual property, be it trademarks, copyrights or
patents, it is important to include a clause that recognizes the owner of such
intellectual property and affirmatively states that the agreement does not
transfer any rights.
- Standard of Care – A standard of care clause may
appear in certain types of contracts. The standard of care that is provided by
the law should provide the minimum standard of care for the provision of services
under the contract.
- Term/Termination – The contract should provide both
parties with the right to terminate the contract. The situations in which
termination is allowed will vary from contract to contract. Some contracts will
allow the right to terminate in cases of dissatisfaction; others will allow it
with a specific notice, for no cause. It is important that you contemplate in
what cases you would want the right to terminate the contract. There should
also be language defining the term of the contract. Does it have a finite term?
Does it automatically renew each period?
- Right to Cure – Related to termination, some contracts
will contain a right to cure clause. This would give the defaulting party
notice of a breach and a finite period of time in which to remedy such a breach.
Unlike other industries, construction lacks a consistent set
of laws like the Uniform Commercial Code or a federal statutory scheme.
Contracts produced by professional and trade associations for architects (American
Institute of Architects), engineers (Engineers Joint Contract Documents
Committee) and commercial contractors (Associated General Contractors of
America) can serve as important references and benchmarks when drafting a new
contract. They are a good source of industry best practices, and using them can
greatly reduce drafting and review time, meaning lower overall transaction
costs for your company.
For all of their advantages, there are several things that you
should be cautious about when using standard form contracts. Note the following
cautions about standard forms before using them:
- Standard forms, which are written broadly to encompass
many different contexts, require transaction-specific and jurisdiction-specific
modifications. For example, certain states require that indemnities be written
in a certain way.
- Changes made to one part of the document, such
as definitions of words or terms, may affect other parts that make reference to
- Custom-drafted and industry-drafted forms are often
incompatible. Even industry-drafted forms from different publishers can be
- Standard forms always contain the bias of the drafter.
Use this bias; know when to use various standard forms published by different
Reviewing general terms and features of construction contracts
will help you grasp the consequences of its terms and conditions for your
business. In any case, to ensure its completeness and accuracy, it is necessary
to submit each contract you must sign to legal review.
Contractors Pollution Liability Insurance - November 2017
Contractors, no matter what industry they work in, face
environmental risks stemming from operations on a daily basis. For most
contractors, a single pollution incident or loss can seriously damage their
reputation, operations and even their balance sheet. Making matters worse,
pollution incidents can be sudden or occur gradually over time.
While many contractors assume that environmental claims will
be covered under their commercial general liability (CGL) policy, the
unfortunate reality is that most CGLs contain pollution exclusions that leave
contractors uninsured in the event of a pollution incident.
Thankfully, contractors are increasingly turning to
contractors pollution liability (CPL) insurance to ensure they have the right
coverage in place to remain secure and profitable.
CPL Coverage Basics
CPL policies provide contractor-based insurance for
third-party coverage for bodily injury, property damage, defense, and cleanup
as a result of sudden and gradual pollution incidents arising from contracting
operations performed by or on behalf of the contractor. CPL insurance is
intended to provide coverage to all types of contracting operations, including
contractors who are involved in building construction and environmental firms
that remediate polluted sites.
CPL policies are offered on either a claims-made or
occurrence basis. What’s more, CPL policies are nonstandard, meaning each
policy is different and can be modified to cover the various needs of the
contractor purchasing the policy. Policies can be offered on a project or
blanket program basis.
In some instances, CPL policies can also be used to cover
losses from civil fines, penalties and punitive damages.
Covered Pollution Incidents
Contractors should keep in mind
that CPL insurance policies differ in regard to the types of pollution
incidents that are covered. Two important considerations when evaluating CPL
insurance policies are:
- Whether or not the policy will
respond to gradual releases of pollutants, as opposed to sudden and accidental
- The types of substances that are
considered “pollutants” under the terms of the policy
Generally, policies that cover both gradual and sudden
releases of pollutants provide contractors with a broader scope of coverage. In
addition, policies that provide a broad definition of pollutants are considered
superior to those that contain a narrow definition. Accordingly, it is
important that contractors work with their broker to find a CPL policy that is
tailored to their needs.
CGL Pollution Exclusions
A primary reason why contractors obtain a CPL policy is due
to the various pollution exclusions contained in most CGL policies. The
pollution exclusions found in most CGL policies take one of two forms, either
“absolute” or “total.”
CGL policies with an absolute pollution exclusion remove
coverage for most pollution events that would occur in the course of an
insured's business operations. However, despite its name, an absolute pollution
exclusion may preserve coverage for certain incidental pollution damages,
products and completed operations liability, and certain off-premises work.
However, more commonly, CGL policies include a more
restrictive “total pollution exclusion.” This type of exclusion effectively
removes coverage for any event the insurer characterizes as a pollution
Contractual requirements serve as
another motivating factor that lead many contractors to obtain a CPL policy. In
many instances, project owners and general contractors will require contractors
to obtain pollution insurance that meets certain, predetermined standards.
From this perspective, having a CPL insurance policy in
place can serve as an upfront sales tool during the bidding process that
enables contractors to qualify for opportunities when such coverage is
Finding the Right Policy
Regardless of specialty, all
contractors should be mindful of the pollution risks associated with their
work. A CPL insurance policy can provide much-needed security in the event of a
pollution incident, even in the most unlikely of circumstances.
Let CMR Risk & Insurance Services, Inc. work with your
organization to find the CPL coverage that is right for you.
Hazards of Operating Unguarded Stonecutters and Splitters - October 2017
When used improperly or without proper training,
stonecutting machines can cause amputations and other serious injuries. Workers
can suffer eye and face injuries from flying rock fragments; amputations can
also occur when shears or stone cutters are not guarded properly and a worker's
hands or other body part is placed in the point of operation during operation.
The following measures will prevent or greatly reduce the
chance that a worker using a stone cutter or splitter will suffer an amputation
or other serious injury:
- Identify the hazards of powered stone cutters and splitters
prior to being used, asking questions such as the following:
- Does the equipment have machine guarding at the point of
- Can the guarding be easily removed or bypassed?
- Does the guarding keep the operator's hands, fingers and
body out of the danger area?
- Is there evidence that the machine guarding has been
tampered with or removed?
- Could changes be made on the machine to eliminate the point
of operation hazard entirely?
- Are the machine manufacturer's recommended safety procedures
available to the operator and being followed?
- Ensure stone cutters are equipped with machine guarding to
prevent worker access to the point of operation, as required by 29 CFR
1910.212(a)(3)(ii) and 1926.300(b)(4)(ii). A good system eliminates the possibility
of the operator or another worker placing parts of their bodies where they
could be injured by hazardous moving parts. Examples of machine guarding methods
include two-handed starting devices, barrier guards, remote-operator controls and
electronic safety devices.
- Conduct regular inspections and keep machinery clean and
properly maintained. Good inspection, maintenance and repair procedures
contribute significantly to the safety of the machine operator. Routinely
inspect and maintain machinery according to the manufacturer's recommendations
and good engineering practice.
- Identify other possible machine-related hazards that may
pose a risk of injury and necessitate the use of personal protective equipment
(PPE), as required by 29 CFR 1910.132(d) and 1926.95(a).
- Provide workers with PPE that adequately protects them from
recognized hazards and ensure that it is used properly, as required by 29 CFR
1910.132(d)(1) and 1926.95(a). For example, provide safety glasses with side
shields or face shields for workers exposed to eye hazards, face shields to
protect workers' faces from flying rock chips, or gloves to protect workers' hands
from cuts and abrasions from handling rock or stone.
- Train workers on the following topics:
- All hazards in the work area, including machine-specific
- Machine-operating procedures
- The purpose and proper use of machine guarding, including
instruction in the safe use and care of the machines
- Procedures for addressing unsafe conditions, such as
immediately reporting problems with machine guards
- Safe use of PPE, as required by 29 CFR 1910.132(f)
- Provide adequate supervision and reinforce safe practices by
ensuring the following:
- Only trained workers operate machinery
- Machine operators do not wear loose-fitting clothing,
jewelry or other items that could become entangled in the machinery
- All other workers are prohibited from being near the machine
during cutting operations
- For more information on keeping workers safe from stone-cutters,
or to examine the relevant OSHA standards, go to www.osha.gov.
Completed Operations Liability and Obligations - September 2017
Even quality workmanship is not immune to potential claims of property damage
or bodily injury. All operations carry the risk that injury or damage may occur
as a result of the work, leading to costly lawsuits. Considering the
complicated mix of contractors and subcontractors that contributes to each
project, who is liable for this risk?
In insurance terms, “your work” as used in an insurance
policy is a broadly defined term that includes operations performed by the
policyholder or on the policyholder’s behalf, including material, parts or
equipment in connection with the operations. Operations or work performed on
behalf of the policyholder means work done by a subcontractor is considered the
contractor’s work. Therefore, faulty electrical work performed by an
electrician that causes a fire or other damage could be considered the
contractor’s liability, but would be covered under a standard commercial
general liability (CGL) policy.
Because a contractor or other involved party could be held
liable for defects in a subcontractor’s work years after it has been completed,
and filing the claim under the contractor’s CGL policy could cause the premium
to rise, many construction contracts require subcontractors to provide
insurance coverage for claims resulting from their completed work for a finite
period of time, typically the one- to five-year range. Typical contracts also
require that the subcontractor name the owner, the architect, the general
contractor and other third parties as “additional insured” parties, entitled to
coverage under the insured subcontractor’s CGL policy. Naming additional
insured parties requires a separate endorsement to that policy.
This means that as a subcontractor, you can be held liable
for claims of property damage or bodily injury resulting from a defect in your
work. It is also critical to maintain this coverage into the future; failure to
do so could lead to a breach-of-contract lawsuit brought by the contractor or
It is important to understand this commitment when signing
the contract–the insurance commitment doesn’t end with the project.
Furthermore, in the event of a large claim, the subcontractor could be faced
with a substantial increase in premiums on the policy.
To avoid litigation, it is crucial to know local regulations
and adequately document proper performance. Know your company’s documentation
practices relative to each subcontract, and carefully keep records of all processes.
Respecting the Contract
It is crucial for subcontractors to respect this requirement
if included in the contract. Failure to do so could result in
breach-of-contract lawsuits. Naming additional insured parties can be
complicated, and it is very important to work closely with CMR Risk &
Insurance Services, Inc. to ensure that your contractual obligations are
Permit-required Confined Spaces and Emergency Responders - August 2017
OSHA recently developed a standard for
confined spaces in the construction industry (29
CFR 1926 Subpart AA). These spaces can present conditions that are
immediately dangerous to your workers’ lives or health if not properly
identified, evaluated, tested and controlled. As a result, preparing to respond
to an accident in a confined space is just as important as training workers to
One provision of the standard requires
employers to develop and implement procedures for summoning rescue and
emergency services in permit-required confined spaces. Any employer who relies
on local emergency services for assistance is required to meet the
applicable requirements of the OSHA standard.
However, not all rescue services or
emergency responders are trained or equipped to conduct rescues in confined
spaces. When you identify an off-site rescue service, it is critical that the
rescuers can protect your employees. The emergency services should be familiar
with the exact site location, the types of permit-required confined spaces and
the necessary rescue equipment.
Pre-planning for a rescue will ensure that
the emergency service is capable, available and prepared to save your workers.
Before the start of any rescue operation,
you must evaluate prospective emergency responders, and select one that has the
- Adequate equipment
for rescues, such as the following:
- Atmospheric monitors
- Fall protection
- Extraction equipment
breathing apparatus (SCBA) for the particular permit-required confined space
- The ability to
respond and conduct a rescue in a timely manner based on the site conditions,
and the capability to conduct a rescue if faced with potential hazards specific
to the space. These hazards may include the following:
- Atmospheric hazards
- Flooding or
- Poor lighting
- Chemical hazards
- The ability to
notify you in the event that the rescue team becomes unavailable.
To ensure the safety of your workers, you
must take a proactive role in securing the services of emergency responders.
This includes finding the most efficient way of contacting emergency
responders, conducting a tour of the project site with them and communicating
any changes made to the site before a rescue becomes necessary.
Talking with emergency responders about the
hazards they might encounter during a rescue will assist in preparing for the
situation. The following are some questions responders should be able to answer
when you request their services:
- Are you able to
respond and conduct a rescue in a timely manner based on the site conditions?
- Do you have the
appropriate equipment for response and rescue?
- Are you prepared for
the hazards identified at the project site?
- Are you aware of the
exact location of the work site?
This includes information on access routes, gates, site plans and GPS
- Can you visit the
site and hold a practice rescue?
- What is the best way
to contact you? How would I communicate any changes to site conditions
throughout the project?
- Could other
emergencies or group training preclude you from responding, and how will that
Complying with OSHA’s new standard will protect your
workers and save you from costly penalties. Contact us today at (619) 297-3160;
we can provide you with our comprehensive resource, “Permit-required Confined
Spaces in Construction Program and Training Materials.”
Preventing Heat-related Illness - July 2017
Helpful tips for beating the summer heat
Summer heat can be more than uncomfortable; it can be a
threat to your health. Unfortunately, you do not have much of a choice when it
comes to job site. Follow these tips to stay safe in the searing heat.
Heat exhaustion occurs when a person cannot sweat enough to
cool the body—usually the result of not drinking enough fluids during hot
weather. It generally develops when a person is playing, working or exercising
outside in extreme heat. Symptoms include:
- Dizziness, weakness,
nausea, headache and vomiting
- Blurry vision
- Body temperature rising to
- Sweaty skin
- Feeling hot and thirsty
- Difficulty speaking
A person suffering from heat exhaustion must move to a cool
place and drink plenty of water to avoid a more severe heat-related
Heat stroke is the result of untreated heat exhaustion.
- Sweating stops
- Unawareness of thirst and
Body temperature rising rapidly to above 101°F
- Confusion or delirium
- Possible loss of
consciousness or seizure
Heat stroke is a serious medical emergency that must be
treated quickly by a trained professional. Until help arrives, cool the person
down by placing ice on the neck, armpits and groin. If the person is awake and
able to swallow, have them drink a small glass of water every 15 minutes or
until help arrives.
Tips for Staying Cool
The combination of heat and humidity in the summer months
can be downright uncomfortable and even dangerous. Stay cool by following these
- Drink plenty of water. In
hot weather, drink enough water to quench your thirst. The average adult
needs eight 8-ounce glasses of water a day, and even more during hot
- Skip the caffeine and soda;
drink water instead.
- Dress for the weather.
When outside, wear lightweight clothing of natural fabric and a
- Eat light. Replace heavy
or hot meals with lighter, refreshing foods. And always eat smaller meals
before work or intense activity.
Controlling Workers’ Compensation Costs - June 2017
Has your construction business experienced rising workers’
compensation costs due to on-the-job accidents? If so, your first response was
most likely aimed at trying to reduce insurance costs and spending. While this
may seem like the best approach, a sound safety program designed to
continuously improve can yield significant savings by reducing injuries and
illnesses—ultimately reducing workers’ compensation costs in the long run.
5 Steps to Building a Solid Safety Program
You can control workers’ compensation costs with five easily
implementable steps designed to create a well-rounded safety program that
produces a safer job site, achieves OSHA compliance and reduces accidents—saving
your bottom line.
Develop Programs Required by OSHA Standards
- Develop safety programs required by the OSHA standards.
- Integrate those programs into daily operations.
- Investigate all injuries and illnesses.
- Provide training to develop safety competence in all
- Audit your programs and your worksite on a regular basis to
stimulate continuous improvement.
In addition to being a requirement for those in the
construction industry, OSHA standards provide a good pathway to incident
reductions. Many accidents stem from poorly developed or poorly implemented
OSHA programs: not using the proper fall restraint system when working at
heights more than 6 feet, improper use of personal protective equipment when
working with hazardous job site materials and poor lifting techniques resulting
in back strains are just a few examples.
OSHA construction standards require that written programs be
developed and then communicated to workers. Experience shows that companies
with thoroughly developed, OSHA-compliant programs have fewer accidents, more
productive employees and lower workers’ compensation costs.
Integrate Programs into Daily Operations
Policies alone won’t get results; your safety program must
move from paper to practice to impact your bottom line. Achieving this requires
a strategic plan clearly communicated to workers, good execution, and a culture
that both inspires and rewards people to do their best.
When developing your safety initiative, there must be an
emphasis on helping your site foreman succeed. If the site foreman understands
the safety program and is motivated to make it work, it succeeds; if not, the
program is a source of struggle and an endless drain on resources. Providing
your site foreman with knowledge and skills through training is critical to the
success of your safety program.
A solid OSHA program, integrated into your worksite’s daily
operation and led by competent site supervisors, is just the beginning.
Successful safety programs are also proactive instead of reactive.
Investigate All Injuries and Illnesses
Accident investigations provide an excellent source of
information on real or potential issues present on the job site. Because
workers’ compensation covers a worker’s wages for injuries or illnesses that
arise from or out of the course of employment, increasing claims drive up
workers’ compensation costs. To reduce costs, you must reduce accidents. And
the ability to reduce accidents is significantly enhanced when they are fully
investigated instead of simply being reported.
Accident reports cite facts; accident investigations go
deeper to uncover the root cause of an accident and make improvements to
prevent its reoccurrence. To stop your workers’ compensation costs from rising
unnecessarily, you must have an effective accident investigation process. Unless
you can determine the root cause of an accident, recommendations for
improvement will remain fruitless. Again, training proves beneficial because a
site supervisor skilled in incident analysis is a better problem solver for all
types of project management issues, not just safety.
All accidents should be investigated to find out what went
wrong and why. Some may suggest investigating every accident is a bit over the
top and only those that incur significant costs are worthy of scrutiny, but
this approach is shortsighted. If your emphasis is only on those incidents that
have to be recorded on the OSHA 300 log, you ignore the single largest accident
category: first aid-only incidents. Many firms focus solely on recordables or
lost-time accidents because of the significant costs involved, but they don’t
realize that the small costs and high numbers of first aid-only incidents
really add up.
Reducing serious accidents means you must reduce your overall
rate of all accidents—including first aid-only incidents. That only happens
when every incident is fully investigated, and corrective actions are
identified and integrated into daily job tasks.
Training and Auditing for Continuous Improvement
The final steps focus on training and auditing your program
for continuous improvement. Training plays a significant role in safety and in
reducing workers’ compensation costs. The goal of training is to develop
competent people who have the knowledge, skill and understanding to perform
assigned job responsibilities. Competence, more than anything else, will drive
down costs. Site supervisors must have the knowledge and ability to integrate
programs into each job on the job site so that employees know what is expected
Once the programs are developed and implemented, they must
be reviewed on a regular basis to make sure they are still relevant and
effective. This might require a significant change in how you manage your
safety program, but if your workers’ compensation rates are high, it may be
time to make this leap.
- Studies indicate there is a return on investment and that
firms see direct bottom-line benefits with a properly designed, implemented and
integrated safety program.
- A competency-based safety program is compliant with OSHA
construction requirements and therefore reduces the threat of OSHA fines.
- A competency-based safety program lowers accidents, which
reduces workers’ compensation costs. When incidents do occur, a
competency-based safety program fully evaluates the issue and finds the root
cause to prevent reoccurrence and provides a job site that is free from
- A safer job site creates better morale and improves employee
retention. Auditing keeps your programs fresh and effective, and drives
- A competency-based program produces people who are fully
engaged in every aspect of their job, producing high-quality craftsmanship.
How Can We Assist You?
At CMR Risk & Insurance Services, Inc., we are committed
to helping you establish a strong safety program that minimizes your workers’
compensation exposures. Contact us today at (619) 297-3160 to learn more about
our OSHA compliance and safety program resources.
Safety on Walking/Working Surfaces - May 2017
Slips, trips and falls account for many accidents and
accidental deaths on the worksite. These accidents are especially prevalent in
the construction and contracting industry because as the site changes, safety
hazards will evolve and change as well. Paying close attention to the areas
where we walk and work to eliminate the potential for slips, trips or falls is
essential to the success of our business.
On the job, there can be many different types of slip, trip
and fall hazards. For instance, material debris on the ground is just as
hazardous as cords or hoses lying in walking areas. Also, materials stored
improperly present spill hazards and can cause slips. The point is that there
are many different types of hazards that can be in our work areas. Being aware of
these hazards and addressing them is the first step to avoiding slip, trip and
fall injuries at the worksite.
What other types of situations do we need to look out for?
Here is a brief list of some of the common hazards seen frequently in working
lying on the ground or other walking areas
oil, lubricants or other liquids spilled on the ground or on elevated areas at
(pallets, boxes, etc.) stored in a walking area
stored near ladders or in machine traffic areas
lighting in walking or working areas
marked pedestrian or machine traffic only paths
Cords and Hoses
One of the biggest trip and electrical hazards comes from
cords and hoses, and both are commonly used in working areas. First, cords and
hoses should not be uncontrolled in walking areas because they pose trip
hazards. Secondly, cords and hoses need to be monitored so they don’t become
damaged. Cords that have broken insulation pose electrical shock and fire
Use extra caution when working with extension cords.
Extension cords should only be used on a temporary basis. Temporary means only
using the cord when you need additional power for a short period of time, such
as when operating a power tool. Extension cords may not be used as a substitute
for permanent wiring. Extension cords that are wrapped around poles or other
equipment are not being used on a temporary basis and are likely being used as
a substitute for permanent wiring. This use creates both trip and electrical
hazards. Look in your work area and see where extension cords are in use.
Report any misuse to your supervisor immediately to prevent trip, fall and
electrical hazards at the site.
Material Storage in Working Areas
Look around your work area and consider how materials are
stored. Look specifically at pallets, carts, trays and other material handling
or material holding equipment to see if the way it is stored creates a
Pallets should not be stored on end because they are not
stable in that position. They can easily tip over onto workers or equipment.
Storing boxed materials properly will prevent slips, trips and falls. Always
think about where material is stored and how it may create a trip hazard or
ignite because of what it is stored by.
Stacking materials in work areas is unavoidable, but can
also create hazards if materials are not stacked properly. It is important to
not stack boxes of materials too high to avoid tip-over hazards. Also, heavier
boxes should not be placed on top of lighter boxes for the same reason—even for
short periods of time. Whatever materials are needed at your site, stacking
them properly will help prevent tip or trip hazards.
Passageways and Other High-traffic Areas
Aisles and passageways are used by both workers and
motorized vehicles. Combining pedestrians with motorized vehicles can be
dangerous when safety procedures are not followed. When you are walking
anywhere in the workplace, be mindful of where you are walking and what traffic
is in the area.
Keeping Your Area Free From Hazards
Some of the most serious safety hazards found in walking or
working areas are due to poor housekeeping. As you look at your work area, keep
the following issues in mind.
work areas so dust and debris do not accumulate and create a trip or slip
- Clean up
spilled materials immediately.
- Don’t let
trash overflow in work areas.
store materials in passageways.
- Always be
mindful of powered equipment operations. As a pedestrian, watch for
traffic. As an operator, always be aware
of workers and civilians in the area.
store materials near ladders or machinery.
Walking and working surfaces can cause many different and
serious injuries when safety precautions are not followed. The more we pay
attention to the hazards in our work area, the better chance we have at
preventing injuries and keeping ourselves safe and healthy on the job.
The Value of Surety Bonds - April 2017
The way project owners
evaluate and manage risks on construction projects and make fiscally
responsible decisions to ensure timely project completion are crucial to their
success. Since private owners cannot afford to gamble on a contractor whose
reliability is uncertain or who could end up bankrupt halfway through the job,
a surety bond is a great safety net for the investment.
Suretyship is a
very specialized line of insurance that is created whenever one party
guarantees performance of an obligation by another party.
A surety bond is
a written agreement where one party, the surety, obligates itself to a second
party, the obligee, to answer for the default of a third party, the principal.
Types of Surety Bonds
- Contract (or Corporate) Surety Bond
The contract (or
corporate) surety bond provides financial security and construction assurance
for building and construction projects by assuring the project owner (obligee)
that the contractor (principal) will perform the work and compensate certain
subcontractors, laborers and material suppliers, as outlined via their
contract. Contract surety bonds include the following:
- Bid bonds provide financial assurance that the bid has
been submitted in good faith and that the contractor intends to enter into the
contract at the price bid and provide the required performance and payment bonds.
- Performance bonds protect
the owner from financial loss should the contractor fail to perform the contract in
accordance with its terms and conditions.
- Payment bonds guarantee
that the contractor will pay certain subcontractors, laborers and material
suppliers associated with the project.
- Maintenance bonds
guarantee against defective workmanship or materials for a specified period.
- Subdivision bonds
make guarantees to cities, counties or states that the principal will finance
and construct certain improvements such as streets, sidewalks, curbs, gutters,
sewers and drainage systems.
2. Commercial Surety Bond
surety bonds guarantee performance by the principal of the obligation or
undertaking described in the bond. Commercial surety bonds include:
- License and permit bonds are required by state law or
local regulations in order to obtain a license or permit to engage in
a particular business (contractors, motor vehicle dealers, securities dealers,
employment agencies, health spas, grain warehouses, liquor and sales tax).
- Judicial and probate
bonds, also referred to as fiduciary bonds, secure the performance on a
fiduciaries' duties and compliance with court orders (administrators,
executors, guardians, trustees of a will, liquidators, receivers and masters).
Judicial proceedings court bonds include injunction, appeal, indemnity to
sheriff, mechanic's lien, attachment, replevin and admiralty.
- Public official
bonds guarantee the performance of duty by a public official, (treasurers, tax
collectors, sheriffs, judges, court clerks and notaries).
(non-contract) bonds are required by the federal government (Medicare and
Medicaid providers, customs, immigrants, excise and alcoholic beverage).
- Miscellaneous bonds
include lost securities, lease, guarantee payment of utility bills, guarantee
employer contributions for union fringe benefits and workers’ compensation for
- The principal is the
party that undertakes the obligation.
- The surety company
guarantees the obligation will be performed.
- The obligee is the
party who receives the benefit of the bond.
It’s important to recognize the similarities between suretyship and other
forms of insurance:
- State insurance
commissioners regulate both suretyship and other insurance.
- They both provide a
safety net for financial loss.
- In traditional
insurance, the risk is transferred to the insurance company. However, in a
suretyship, the risk remains with the principal and the protection of the bond
is designated for the obligee.
- In traditional
insurance, the insurance company assumes that part of the premium for the
policy will be paid out in losses. Yet, in true suretyship, the premiums paid
are "service fees" charged for the use of the surety company’s
financial backing and guarantee.
- In underwriting
traditional insurance products, the goal is to "spread the risk,” while in
a suretyship, surety professionals view their underwriting as a form of credit.
Therefore, the emphasis is on the pre-qualification and selection process.
Since 1893, the U. S. Government has required
contractors on federal public works contracts to obtain surety bonds to
guarantee that they will perform such contracts and pay certain labor and
material bills. The current federal law on federal public works is known as the
Miller Act. It requires performance and payment bonds for all public work
contracts in excess of $100,000 and payment protection, with payment bonds the
preferred method, for contracts in excess of $25,000. Almost all 50 states, the
District of Columbia, Puerto Rico and most local jurisdictions have enacted
similar legislation requiring surety bonds on public works as well. These are
generally referred to as "Little Miller Acts."
bonds are mandated by law on public works projects to protect taxpayer dollars,
the use of surety bonds on privately-owned construction projects is at the owner's
discretion. Alternative forms of financial security, such as letters of credit
and self-insurance, don't guarantee performance or payment protection of a
surety bond or ensure that a contractor is competent. With a surety bond, the
risks of project completion are shifted from the owner to the surety company.
For that reason, many private owners require surety bonds from their
contractors to protect their company and shareholders from the enormous cost of
contractor failure. Subcontractors may be required to obtain bonds to help the
prime contractor manage risk, particularly if the subcontractor is completing a
significant part of the job or is a specialized contractor who is difficult to
Surety bonds are
issued through agents and brokers who are knowledgeable about the surety and
construction industries. Surety bond agents and brokers usually work for
companies that specialize in surety bonds or in insurance agencies that have a
sub-specialty in surety bonds.
surety bond agent or broker usually maintains a business relationship with
several surety companies, which enables them to match a contractor with an
appropriate surety company. Also, a solid surety company and producer will help
a contractor maintain and increase its capacity.
Hazard Communication Program – For Your Protection - March 2017
Through the course of your job duties, you may be required
to work with dangerous chemicals. [C_Officialname] is dedicated to ensuring
your safety, so we have a Hazard Communication Program in place. The goal of
this program is to make you aware of chemicals you may be in contact with on
the job and to help you understand the potential hazards of those chemicals.
This education is required by the Occupational Safety & Health Act (OSHA).
It is equally important to learn this information to keep customers safe in the
event they are exposed to any hazardous chemicals.
Safety Data Sheets
One important key to a Hazard Communication Program is the
Safety Data Sheet (SDS), which contains information broken down into 16
different categories. This sheet tells you everything you need to know about a
specific chemical, including:
- The health hazards associated with the chemical
- How flammable the product is, and at what
temperature it may ignite
- The reactivity of the chemical with water or
other agents and how likely it is to explode
- What personal protective equipment (PPE) is
needed to work with the chemical
- Other important aspects of the Hazard
Communication Program include:
- Accurate labeling of containers that contain
chemicals, including warning labels when applicable.
- Ensuring that labels are not removed.
- Employee training in accordance with your job
duties relating to chemicals.
Through our Hazard Communication Program, every employee
should learn the following information:
- What chemicals might I handle or be exposed to
on the job?
- Where are the SDSs kept for the chemicals I am
- What kinds of hazards do I face when I use, or
misuse, a particular chemical?
- Do I understand the emergency procedures to
follow in the event of a spill?
Though it is our goal to teach you the information you need,
it is your responsibility to learn it and ask questions if necessary. You should
follow all safety procedures when working around chemicals, keep in mind
potential hazards and always wear appropriate PPE. You are also entitled to
obtain a written copy of our Hazard Communication Program – simply ask your
It may seem overwhelming to learn about all the chemicals
you may handle or be exposed to, but it is important knowledge that all workers
should have. Always be sure to ask questions or reference the appropriate SDS
if you forget or have yet to learn about a certain chemical. Failing to do so
could result in an extremely hazardous situation for you, your co-workers and
Machine Guards are for Your Protection - February 2017
Machine guards are made to protect you when working with
dangerous equipment on the construction site. Unfortunately, many workers also
view them as an inconvenience or an obstacle to the task at hand. Regardless, guards
are for your protection, and using them properly is a safety requirement here at.
Specifically, machine guards are used to protect against:
- Direct contact with moving parts
- Flying debris
- Splashing of metal or harmful liquids
- Mechanical and electrical failures
- Any number of potential human errors
While guards may often appear to be a hindrance, overall
they have proven to be otherwise for both security and production. Greater
machine speeds are made possible through proper guarding, as work does not have
to stop due to injuries and employees can often work quicker knowing they have
the proper protection in place to do so safely.
Types of Guards
Two types of guards are used to protect machine operators:
fixed guards and interlocking guards. Fixed guards are most commonly used and
are generally preferred because they protect you from dangerous parts of
machines at all times. Interlocking guards are used if a fixed guard is not
practical. This type will not allow the machine to operate until dangerous
parts are guarded. The interlocking guard is designed to disconnect the source
of power from the machine.
Safety devices such as pullbacks, sweeps and electronic
devices are used where neither a fixed nor interlocking guard can be used
satisfactorily. Safety devices are operated by the machine itself. Regardless
of the type of guard or safety device used, all provide the operator with the
greatest possible protection while using the machine in question.
Make Safety Your Priority
Of course, no guard can do the job without the cooperation
of the person operating the machine. Machine guards are a part of our
workplace, and using them properly is your responsibility as an employee.
Please observe the following safety requirements:
- Do not adjust or remove a guard unless
permission is given by your supervisor or unless the adjustment is a normal and
accepted part of your job.
- Do not start machinery without the guards in
- If guards are missing or defective, report it to
your supervisor immediately.
- If guards are removed for repair or adjustment,
the power for the machine should be turned off and the main switch locked and
- Loose clothing, watches, rings and other jewelry
should not be worn around mechanical equipment, and long hair should be tied
Safety is our top priority at. To accomplish this, we need the commitment of
all employees to respect our safety rules and to use machine guards as
intended, to keep everyone on the job site safe and productive. If you have any
questions regarding guards or other safety issues, please ask your supervisor.