The Worst Construction Mistakes Ever Made

Forgetting one hurricane tie before drywalling probably isn’t going to see a house going up in a tornado like in The Wizard of Oz. Some mistakes aren’t that big a deal. Others… well, here are some of the biggest mistakes ever made in construction, engineering and architecture:

The Aon Center

The Aon Center, completed in 1973, was known for its beautiful exterior made of Italian Carrara marble. A fetching addition to the Chicago skyline, it turns out that there’s a reason they don’t use Carrara marble on most buildings. It’s a very thin material. Just one year after the building was completed, pieces started to crack and fall off, one of them smashing through the roof of the nearby Prudential Center. Replacing the exterior with granite cost over $80 million. There’s something to be said for using the right materials the first time.

NASA and Lockheed Martin’s Mars Orbiter

Long story short: in 1999, Lockheed Martin used the English system of measurement on a project with NASA, while NASA used the metric system. The Mars orbiter was then unable to transfer its coordinates to the lab in California. Now there’s a $125 million chunk of useless metal floating around the galaxy. You might not be building a satellite any time soon, but it’s important to get on the same page with your crew and your client when it comes to how many inches are in a meter.

Vdara Hotel & Car Dashboard

The Vdara Hotel & Spa is a classic example of a designer putting form before function. All those reflective surfaces on the windows surrounding the pool looked absolutely stunning, but at mid-day, they created a sort of magnifying-lens-on-an-ant effect, scorching people in the swimming pool and turning the whole area into a car dashboard on a Summer afternoon. One man even claims to have had some hair singed right off his head while going for a swim.

Piper Bravo Oil Rig

The smallest mistakes can have major complications. The Piper Bravo Oil Rig exploded, killing 167 people, simply because safety inspectors forgot to replace a single safety valve after a routine check of the rig. The repairs cost more than $3 billion in 1994 USD. This is something worth thinking about the next time a worker decides that he doesn’t need to wear his goggles if he’s only going to be using the table saw for a couple minutes.

The Origins of Workers’ Compensation

Read about how workers were treated in the old days and it can be a little scary. Few industries were as brutal for the worker as mining, but it’s generally safe to say that companies didn’t really care about the people who worked for them 150 years ago.

That being said, we tend to think of progress as being a straight line: Things used to be bad, now they’re not so bad. In truth, worker’s compensation is a very old concept. As far back as 2050 B.C., ancient Sumerian law dictated that workers be compensated for injuries, with each body part being valued differently. For instance, a thumb was worth only half what a finger was worth.

In the mid-1600’s, the famous pirate Captain Henry Morgan would compensate injured men to the tune of 600 pieces of eight for the right arm, 500 for the left, 500 for the right leg, and 400 for the left. If you’re wondering: Yes, that’s the same Captain Morgan from the rum bottle. Bet you didn’t know he was a working class hero, huh?

Modern worker’s comp laws have their beginnings with Prussian Chancellor Otto von Bismarck. von Bismarck created the Employer’s Liability Law of 1871 in order to settle social unrest. By 1884 he would establish Workers’ Accident Insurance, providing monetary compensation as well as medical and rehabilitory considerations. The intention of these laws was primarily to ensure that employers not be hit with civil lawsuits. By giving workers a way to recover and to seek compensation without harming the financial well-being or reputation of their employers.

In the US, modern worker’s compensation dates back to the early 20th Century. With industrialization, workplace injuries began to rise, and worker’s compensation laws proved an effective way to address this. Authors like Upton Sinclair are often cited as major proponents in the push for safer working conditions and worker’s compensation for the American laborer. Sinclair’s book The Jungle detailed fact-based accounts of workers falling into meat grinders and being served to the public… leading to the Food and Drug Administration Act of 1906. The shift in public attitudes was slow going at first, with people showing more concern for their food than for the people producing it.

In 1910, a conference was held in Chicago where the guidelines for compensation law were first established, and then passed into law, first in Wisconsin, in 1911, and spreading to other states, ending with Mississippi in 1948.

Worker’s compensation has been a fundamental principle in most industrialized nations. Many historians actually consider it odd that the US took so long to enact such laws to protect workers.

Cyber Liability – Protect Your On-Site Computers

cyber liabilityConstruction sites provide a golden opportunity for cyberspace mischief makers and thieves alike. Contractors and subcontractors share huge data sets including pictures, drawings, submittals, photographs and various other files where viruses and spy ware hides.

And, if the site is WiFi friendly, hackers and the disgruntled gain easy access to everyone else’s computers.

Even with the normal defenses, firewalls, anti-viral software and password protection, the legal responsibility in most states is absolute – you must protect data from compromise. Think about smaller subcontractors that may keep employee personal identification information on their job site laptop.

The costs associated with a breach of sensitive data includes:

  1. Public relations – a nightmare
  2. Forensic analysis – determine the extent, cause and source of the breach
  3. Revenue loss
  4. Business disruption – can you continue to build or plan securely
  5. Legal – defense costs
  6. Notification to any party potentially affected

The cost to rectify these factors approaches $200 per record. According to the Travelers website, in large companies, the average claim is over five million dollars.

Too small for a cyber attack? Over one quarter of all attacks are against companies with fewer than one hundred employees. Those laptops are a goldmine of personal data.

It’s wise to think about using dedicated computers for shared job site communications which do not access personal or company sensitive data.

Buy Cyber Liability coverage to insure the costs associated with:

* Network and information security liability
* Communications and media liability
* Regulatory defense expenses which pays for fines and penalties.

Cyber liability can often be purchased as an add-on coverage in a package or as a single policy. This coverage is an important part of your risk management plan, particularly when sharing massive data with other stakeholders.

And, cyber breaches occur more frequently every day — up over 40% this year. A claim like this could bankrupt your company. Use every avoidance risk management technique to avoid the loss, but insure to avoid disaster.

For more tips on protecting yourself with regard to cyber liability, see our article on cyber liability and prevention planning.

Completed Operations – Defined

Operations concerns work in progress such as constructing the steel for a bridge. Completed operations is the finished process or scope of work put into its intended use by someone other than another contractor.

The steel skeleton is an operation when the concrete subcontractor pours the decks. It’s a completed operation when traffic begins to flow, whether or not the guardrails are functional.Completed operations liability covers the consequences of faulty work: not damage to the faulty work, but bodily injury and property damage as a result of the faulty work. The steel isn’t covered, but the car it lands on is. completed operationsThree tests must be met to secure completed operations coverage for a specific claim:

1. The bodily injury or property damage must arise from your work product or completed operation.

2. The claim occurs away from insured premises owned or rented.

3. The work must be completed or abandoned when the injury occurs.

The subcontractor exception can be difficult to understand:

1. The exclusion does not apply to work done by subcontractors.

2. The exclusion does not apply if the damage arises out of work by a subcontractor.

If your general contracting company installs an HVAC system incorrectly that burns the building down, your work will not be reimbursed by your insurance carrier, but the work of your subcontractors will.

If a subcontractor installed the faulty system, all the work will be reimbursed by your insurance company. Of course, your company will likely subrogate (that is sue), the subcontractor.

The best risk management technique for this exposure is only perform work within your expertise and subcontract the balance of the contract, and perform quality control inspections on your work and that of your subcontractors. Document specific work completed by your subcontractor. Test your materials and fix defects as you work on the project.

Make sure your work is completed correctly to your satisfaction before releasing the project for its final use.

OSHA – Embrace the Mission

OSHA safetyThe Occupational Safety and Health Administration (OSHA) mission concerns the reduction and elimination of workplace conditions which lead to accidents and illness.

OSHA is rumored to be feared by many contractors for surprise inspections and handing out steep fines. We recently noted some of these in our post about new OSHA reporting requirements for 2015.
OSHA, however, administers safety and health more than policing it. If you embrace their mission, OSHA becomes a great partner.

Use OSHA Research
OSHA has libraries of manuals and fliers regarding on the job hazards and alerts for newly discovered perils. The publications, available on their website, bring awareness and solutions to potentially dangerous job conditions.
The literal A to Z coverage of dangerous chemicals and occupational risks can be found at in English or Spanish.

Use OSHA Paper work and Forms
Some are mandatory anyway, so adapt the forms to your reporting purposes and cut back on data entry. Their injury log organizes essential data for injury occurrences on the job. Add to these data by keeping records of near misses, prevention responses, or any in house data or follow up within your own safety culture.
Read and review OSHA forms to mine ideas regarding your own programs. OSHA responds to general safety and health needs, but you can tailor ideas to fit your specific conditions.

Use OSHA Spanish Language Signs and Instructions
OSHA serves as a built-in interpreter for essential safety communications which require a specialty lexicon. Non-English speaking labor does not automatically know the United States standards of or tolerance for safety. OSHA helps with the teaching.
Some signs serve as a reminder of important employee rights and procedures. OSHA has these signs available in Spanish to assure your compliance.

Use OSHA Training Classes
HAZMAT response may be a specialty occupation, but most laborers should have basic knowledge of how to spot a potential toxic chemical spill. OSHA certified training is quite good in this area.
If you’ve been cited unfairly or just don’t like the idea of OSHA site inspections, don’t deprive yourself of OSHA research, posters, language help or ideas. Embrace the health and safety aspects for your employees. You have that in common.

Contractual Liability

contractual liabilityContractual liability concerns accepting grey-area responsibility through agreements with other business stakeholders.

Standard liability policies exclude damages as a result of the insured’s agreement to accept liabilities through certain contracts, such as hold harmless or indemnity agreements.In order to be covered, the insured must pay a premium to remove the exclusions so that those obligations are paid as general liability claims.Keeping the exclusion in the insurance policy does not relieve the insurance company from liability if a court would find the insured responsible in the absence of the contract. Removing the contractual exclusions does not remove the exclusions to the general liability coverage. For example, a claim from a contract which anticipates bodily injury will not be paid.

It’s complicated. Certain contracts fit the definition of insured contracts under standard CGL language:

1. Real estate leases except indemnification clauses for fire damage, which must be insured

through property coverage

2. Railroad sidetrack agreements

3. Easement or license agreements (except construction or demolition within fifty feet of a

railroad track)

4. Contracts with municipalities

5. Elevator maintenance agreements

6. Blanket tort liability, as opposed to warranties or guarantees

Some companies remove the blanket terminology to limit contractual liability.

Legal fees and costs become part of the limit of liability under the contractual liability unless the insured would be held responsible in the absence of the contract. In that case, legal fees and costs are covered in addition to the limit of liability.

As business became more complex and contract oriented, this clause has been added to and modified to meet the contemporary demand. Now, it’s like Dr. Frankenstein’s clause. It’s alive, but not as simple as it could be.

Seek advice from your attorney and insurance agent when contemplating agreements with transfers of liability. These scenarios are very complex under general liability policies. While you should always have an attorney review your contracts, we can also give guidance relative to the insurance requirements and how the contract may (or may not) protect you. Give us a call!

Forklift Safety

forklift safetyForklifts have revolutionized the construction industry, but they have also created the risk of serious injury and death for drivers, other employees, and pedestrians.

Although following the rules for forklift safety operation – safety checks, maintenance inspections, and so on –are time consuming, they’re essential for workplace safety.

To help ensure that your construction projects stay productive and accident-free, we’d recommend these guidelines:

· Designate walking and driving paths. Many accidents happen because a worker was in the wrong place at the wrong time. Help prevent such incidents by clearly marking paths for foot traffic and forklift lanes. Yellow tape is easier to notice than signs, and won’t become covered with dirt or debris like floor marks.

· Have the right tires. A blowout could cause an accident or halt productivity. The type of tire is perhaps the most important difference between forklifts that only operate indoors and those used outdoors. While indoor forklift-tire sizes relate to truck weight, aisle and lift height, tires for outdoor lifts aim to prevent punctures.

· Identify gradient inconsistencies. The floor gradient is an important consideration because slight changes can cause a tip-over. This is the number one cause of death and serious injury to forklift operators.

· Because forklift designs vary significantly, choose the appropriate model. The first factor to consider is the maximum load. Trying to lift a load that exceeds this capacity can damage the arms or cause a tip-over. When possible, assign drivers who have experience with the model you’re using. If this isn’t an option, make sure the driver understands the limitations of this forklift and can do pre- and post-operation maintenance checks.

Our agency’s specialists are happy to help keep your staff and equipment safe on the job. Forklift safety is an important part of risk management. Interested in learning more? Read our article on 7 Construction Safety Myths. As always, feel free to give us a call to discuss any questions or concerns. We’re here for you.

Prevent Cold Weather Injuries

The winter months are the most dangerous for people who work outdoors. Often workers succumb to cold weather illness when working outside. However, employees in other industries also have ongoing cold exposure as well.

These workers include:

  • cold weatherDelivery People
  • Postal Workers
  • Maritime employees
  • Food Processing Workers
  • Cold storage industry
  • Supermarket worker
  • Tow truck operators

Cold is punishing to people and exposure to cold has many negative effects that include dehydration, frostbite, numbness, shivering, hypothermia and immersion foot disease.

What Ongoing Cold Exposure Does


Continued cold exposure first affects the limbs, toes and fingers and then progresses deeper into the body tissues and the core of the body. If the core temperature of the body dips below 95 degrees F, the worker has hypothermia. Hypothermia is a dangerous illness and along with frostbite is one of the two most dangerous dangers of working in a cold environment – inside or out.


When a person’s skin is has a severe reaction to cold, frostbite can occur. Frostbite freezes the skin and makes crystals of the body fluids including blood. The chilling effect of frostbite is permanent damage to hands and feet, ears, and the nose. When frostbite is severe, the worker may have to undergo an amputation.

Other Dangerous Illnesses

Frostbite and Hypothermia are the two most common cold environment illnesses workers get from cold exposure. Other significant cold weather injuries include:

  • Cold Immersion
  • Chilblains
  • Trench Foot

Prevention of Cold Weather Injuries

Keeping feet warm and dry is the best prevention measure against trench foot and frostbite of the foot. Boots that have insulation and are waterproof is one type of the many personal protection equipment available for cold weather injury prevention. Other measures include long johns that have insulation, cold weather outer coats, space heaters where possible and other appropriate cold climate measures.

Preventing cold weather injuries is better than treating them and having your construction company’s worker compensation rates rise. Make sure that you take all reasonable measures to prevent these types of injury. For more protective measures, see our Cold Weather Checklist, and also check out this article by Juan Rodriguez – good stuff.

Have a Safe and Happy Thanksgiving!

Thanksgiving is just around the corner, and that means kitchens all around America are ready to see some serious action. According to the National Fire Protection Association (NFPA), Thanksgiving is the leading day for home fires involving cooking equipment, with 3 times the average number.

Here are some Thanksgiving safety tips to help you stay safe while you whip up all that delicious goodness next week…

  1. Thanksgiving safety tipsWatch it like a hawk – errr… turkey. Don’t leave your stovetop unattended. Keep an eye on those burners!
  2. Keep the kids occupied. Your stove is going to be hot, and kids should stay at least 3 feet away. Plan to have some cool activities ready for them to help keep them out of the kitchen while you cook.
  3. Check the floor. Try to keep your floor clear of anything that might get tripped over in the chaos of getting everything ready. There’s nothing worse than dropping that dish of Grandma’s mashed potatoes just before it’s time to eat!
  4. Wind it up. We use all kinds of appliances on Thanksgiving – electric knife, coffee maker, mixer, etc. Don’t let those cords dangle off the counter in easy reach of a child.
  5. Arm the Alarms. Check your smoke detectors in advance of the craziness to be sure they have fresh batteries and are functioning properly.

Check out the NFPA website for more Thanksgiving safety tips. You can also download the tips here.

Who’s Your Star?

key man insurance

Small and medium-sized businesses often have employees that are “stars.” Sometimes the star is the CEO or president, other times there is a salesperson who consistently outsells every other sales team member by a two to one margin. Maybe you’re a software company that has a star coder whose ideas led to your product being a number one editor’s choice. The point is that most companies have an employee or two that helps their business thrive. What happens to your business in the short-term if a star employee, referred to by the insurance industry as a “key man,” dies?

According to a study conducted by the National Association of Insurance Commissioners (NAIC), only 22% of small businesses carry this type of coverage.

Death is an issue that most people do not like discussing, so many small and medium-sized businesses do not have detailed succession plans, and key person life insurance remains an unresolved issue. It is a discussion that helps your company survive the difficult times that can follow the death of a key person.

What is Key Person Life Insurance?

Key man life insurance protects a business from economic loss relating to the death of a key employee. The company buys the insurance, owns the policy, and is the beneficiary of the policy in the event of the sudden death of the insured. Payment from the insurance company to the business is a lump sum, and there are no restrictions on how the company can use the money. Most companies use the money to stabilize the business until they find the key person’s replacement.

Types of Key man Life Insurance

Businesses gravitate to two kinds of policies for key employee life insurance.

Term Life Insurance. Startups favor this type of policy. Startups always try to conserve cash, term life insurance is cheaper than any other kind of personal life insurance.

Policies that build cash value. Whole life or universal life insurance builds cash value that increases the cash value of the policy and is an asset on the company’s book. The company can get access to the excess cash value of the policy at any time for any purpose since the money from the cash buildup belongs to them.

Life insurance premiums vary between companies and smart companies comparison shop for the best insurance program.

The discussion is uncomfortable, but if you do not have key man insurance, it’s worth talking about. Give us a call.