Contract Issues & Construction Safety Management

Studies recommend various safety requirements that should be included in contracts to improve safety performance (Gambatese, 2000; Hinze, 1997; Huang, 2003). Specification of safety requirements in contract documents has been found to be an important strategy that has a positive effect on safety.

Hinze (1997) suggests that owners should include the following safety requirements in contracts:

*submittal of a project-specific safety plan;

*preparation of job hazard analyses;

*regular safety meetings with supervisory personnel;

*a designated project safety coordinator;

*mandatory reporting of incidents, safety inspections and safety meetings;

*inclusion of subcontractors in the safety program;

*compliance with the owner's safety guidelines;

*establishment of an effective worker orientation program.

Gambatese (2000) reports that addressing safety in construction contracts is one way project owners can address safety. Similar to Hinze (1997), Gambatese also suggests including several requirements in construction contracts to promote safety:

*a requirement that the contractor abide by all applicable safety laws and regulations;

*delineation of the responsibility for safety on the job site;

*submission of a written contractor safety program before work begins;

*a requirement to conduct a substance abuse program;

*submission of an emergency plan and incident reporting procedure.

Huang (2003) investigated how owners affect construction safety and concludes that owner involvement can significantly influence project safety performance. Huang suggests that the owner should include the following five contractual requirements to experience improved safety performance:

1) Contractor must assign at least one full-time safety representative to the project.

2) Contractor must submit the resumes of key safety personnel for the owner's review and approval.

3) Contractor must provide specified minimum safety training for the workers.

4) Contractor must submit a site-specific safety plan.

5) Contractor must submit a safety policy signed by its CEO.

These research efforts provide a list of safety requirements to be included in construction contracts to improve safety performance. However, no guidance exists within the literature about how to avoid contract issues specific to safety management. Furthermore, the literature does not report a list of common safety contract issues encountered during a construction project, which, if it existed, would be a great guidance document for contractors to prevent contract issues and serve as a checklist. Finally, the literature is lacking information regarding the frequency and the severity of contract issues relative to safety management.

The authors' primary objective was to identify the most common construction contract issues related to safety management. This list can then serve as a checklist for contract managers and safety profesáonals when writing the safety section of the contracts. Consequently, it will eliminate or minimize disputes during the construction phase.

The secondary objective was to investigate the frequency and severity of contract issues relative to safety management. For the purpose of this article, frequency was measured as the percentage of a company's contract issues attributed to safety management. The authors defined severity as the amount of money spent to resolve safety-management-related contract issues. This new knowledge will hopefully focus senior management's attention on dispute avoidance related to safety management issues.

Study Methods

Data collected for the study included both quantitative and qualitative information. The authors developed a questionnaire as the data-collection tool. Surveys have been a common tool used to gather information for similar studies (Fink & Kosecoff, 1985). Moreover, given the diverse group of participants, it was decided that a survey was the most economical option. The three-section survey requested information about:

1) survey participants and their demographics;

2) contract dispute information;

3) common contract issues.

The first section was used to gather data about each participant's employer type (owner, general contractor or subcontractor), construction specialization area (e.g., electrical, mechanical, structural steel), annual revenues, project type (e.g., education, healthcare), project delivery method and contract delivery method.

The second section collected data about frequency and severity of contract issues associated with safety management. The following questions were posed:

*What percentage of your company's contract disputes can be attributed to safety issues?

*How much time (%) does your company spend annually resolving contract issues pertaining to safety-related areas?

*How much cost (%) does your company incur annually resolving contract issues pertaining to safety-related areas?

*Compared to all other contract issues, what is your perception of time and financial resources expended on contract issues pertaining to safetyrelated areas-far less than average, average or far more than average?

The third section requested information about common safety-management-related contract issues that participants and their companies have faced. They were asked to respond for various trade specialties such as demolition; site work (e.g., drilling, pipework, excavation, asphalt paving, landscape); structural concrete; structural steel; reinforcing steel; mechanical (e.g., steam fitters, plumbers, sheet metal, sprinkler fitters); electrical; architectural; and general issues pertaining to all trades.

Construction contractors in the northwestern U.S. were the primary study population. The survey was administrated through a secure online website. The authors sent the survey links to safety professionals and project managers working for owners, general contractors and subcontractors. The authors requested that participants respond based on their experience with construction projects. Participants were informed that all responses would remain anonymous (no self-identifying information was attached to the survey).

The authors did not use random sampling to select participants. The survey was sent to personal contacts in the construction industry as well as to members of two construction contractor groups located in the Pacific Northwest. This method of dissemination did not allow the authors to accurately calculate the number of surveys distributed. Hence, the survey response rate is not reported in this article. The authors note that this is a major limitation of the study. Survey responses were automatically recorded in the website database. The study met all criteria of an Institutional Review Board through the Human Subjects Review committee affiliated with Central Washington University.

Descriptive statistics were used to analyze the survey data. All data analysis was completed using Statistical Program for the Social Sciences (SPSS) 19.0. Open-ended questions were analyzed qualitatively.

Study Limitations

1) Study participants included only construction safety professionals and project managers from the northwestern U.S. who were not randomly selected; therefore, results cannot be generalized to the entire U.S. construction industry. The authors recommend further study with a larger, more diverse population from across the country to address this limitation.

2) The small sample size (N=46) limits the ability to generalize the results to the entire construction industry. The authors recommend further study with a larger number of projects and firms to address this limitation and achieve statistical validity.

3) The survey questionnaire was not pilot tested; hence, the quality of the questionnaire is a limitation. The authors recommend a future study with a properly piloted survey to improve the quality of the questionnaire.

4) Another limitation is the difficulty in estimating the number of questionnaires distributed. Survey administrators did not keep track of how many questionnaires were circulated among the safety professionals and project managers; therefore, a valid response rate is not included in the article.

Results & Discussion

Despite the limitations noted, this is a new study that departs from the current body of literature. The study's prime objectives are to: 1) develop a list of common contract issues related to safety management; and 2) quantify the frequency and severity of safety-management-related contract issues.

Demographics

The~ a.ithors received a total of 46 completed questionnaires, of which 68% were completed by safety professionals and 32% by project managers or related title holders. Annual company revenues ranged from $500,000 to $6 billion (mean = $490 million), and the companies provided construction services worldwide. As one might expect, most of the companies represented regularly performed work in the northwestern U.S. One firm built international projects in Europe, Asia and Africa, and another firm has performed work in all 50 states. Individual respondents were highly experienced, with more than 80% having worked in the construction industry for more than 10 years. Table 1 presents a summary of demographic information.

Contract Issues & Safety Management: Frequency & Severity

Contract issue frequency and severity was assessed using the four questions previously noted. One survey question asked what percentage of a respondent's company's contract disputes were attributed to safety management issues. These responses ranged from 0% to 25% (mean = 4.8%; SD = 7.7%).

Another question requested information about how much time a participant's company spent resolving contract issues related to safety management issues per year. For example, if a company spent 1,000 hours on overall construction contract disputes, and safety issues accounted for 100 hours, then the response would be 10%. Answers ranged from 0% to 25% (mean = 4.6%; SD = 5.9%).

The third question asked how much cost a respondent's company incurred annually resolving contract issues pertaining to safety management issues. This cost ranged from 0% to 25% (mean = 4.7%; SD= 6.4%).

Responses to the three questions were then summarized based on demographic variables such as employer type, project delivery method and contract delivery method to see whether any trends emerged. A statistical summary of frequency and severity data is reported in Table 2.

The data summarized in Table 2 suggest several possible trends. For example, the employer type grouping shows that general contractor respondents reported the largest values in all categories, project owners reported the next largest values and subcontractors reported the smallest values.

A possible reason for this trend is that the general contractor group works with both project owners and subcontractors on a contractual basis. On one áde, project owners:

1) are motivated by their own safety culture to expect safe operations by others over whom they have some control;

2) are encouraged to mandate safety practices because of the contingent liability they assume;

3) are driven by a desire to avoid adverse public relations resulting from lapses in safety practices.

General contractors, on the other hand, must establish and administer not only their own safety management programs, but often those of subcontractors as well. Subcontractors tend to be smaller, focused more on productivity and less sophisticated in their project management abilities than general contractors. Parenthetically, it is interesting to note that the values for the general contractor group in two of the three categories are approximately equal to the sum of the values for the other two groups. This might suggest that the party caught in the middle is higher because of the time and effort spent dealing with the two bordering parties.

Analysis of survey results grouped by project delivery method indicates that the design-build mode of delivery results in the greatest amount of time and cost expended on contract issues related to safety management. Reasons for this result may relate to the differing control levels that the project owner exercises over the design professional for each method. Project owners generally have a closer and more controlling relationship with the design professional in design-bid-build projects, less control in a construction management mode, and the least amount of control with a design-build method of project delivery.

Survey results for the third grouping, contract delivery methods, is less consistent than for the other two groupings. The highest values for frequency and severity values occur for negotiated unit price and cost-plus-fee projects. The higher values may relate to budget levels included in the negotiated fixed unit price or allowed as a reimbursable cost by the project owner. Determination of any realistic trends, if any exist, calls for additional research before valid results can be proposed.

The fourth and final question asked respondents to compare their perceptions of time and financial resources expended on safety-management-related contract issues to all other contract issues.

As the summary of the responses (Table 3, p. 59) indicates, fully two-thirds of respondents believe that lessthan-average levels of resources were expended to solve safety-related contract issues. While the immediate reaction to this data is to ask, "Why are safety issues so unimportant to construction projects?" a closer look at the data in Tables 2 and 3 indicates that the responses are indeed consistent between both tables. Table 2 concludes that 88% to 98% of the time or cost expended is consumed by issues other than safety-related contract disputes. This is certainly less than average.

Common Contract Issues

The third section of the survey requested information about common safety-related contract issues that participants have faced. This was an open-ended question and participants responded based on their experiences in the construction industry. Tables 4a and 4b summarize common issues identified for each specialty. Formatting the list of issues as a checklist will help contract managers and safety professionals remember to include appropriate items in the final contract.

Recommended Strategies to Eliminate Contract Issues

In addition to the checklist, safety professionals could be tasked in many ways to reduce the number of contract issues in construction. Primary strategies include:

*Marketing: Safety professionals should be involved with marketing departments early in the process to avoid commitment of unrealistic or unnecessary safety resource levels in an attempt to win a project.

*Owner: An owner should clearly communicate its safety expectations for the project so contractors can allocate resources appropriately in the bid. Construction safety professionals must understand the owner's SH&E processes as well as their own.

*Request for proposal (RFP)/invitations to bid: Safety professionals should actively participate in the project procurement process as early as the RFP/invitation-to-bid stage.

*Prebid meetings and communications: Safety professionals should take an active role in prebid meetings and communications.

* Preaward meetings: Safety professionals should continue their involvement in early project stages by actively participating in preaward meetings.

*Contracts: As proposed in this article, safety professionals should ensure that appropriate contractual requirements and responsibility assignment clauses are included in the final contract.

*Mobilization meetings: A safety professional's active participation must continue into and through the mobilization meetings phase of bringing a new project online.

*Craft orientation: The project's craft orientation should include a review of basic OSHA standards as well as an explanation of projectspecific requirements.

*Major pretask plans: As a part of the ongoing project safety program, safety issues unique to high-hazard, low-frequency activities and sitespecific protocols should be an active part of the pretask planning effort.

Conculsions & Recommendations

As stated, safety issues can lead to contract issues. The study participants indicated that an average of 4.8% of their company contract disputes can be attributed to safety management issues.

A safety checklist, such as the one shown in Tables 4a and 4b, is one technique to identify unique safety issues to be considered for inclusion in a contract.

Safety issues specified in the contract should focus on those issues that go beyond basic OSHA requirements, as those are generally well covered within existing reference specifications.

Safety issues that are particularly troublesome and unique to construction should be researched further to refine the checklist.

Construction safety professionals should be involved during the project proposal phase, contract management phase, preaward and premobilization meetings to ensure that safety management expectâtions are clearly identified and communicated to help reduce the possibility of safety management related claims. PS

IN BRIEF

*This article identifies the most common construction contract issues related to safety management, and investigates the frequency and severity of contract issues relative to safety management.

*The findings presented are based on a survey of 46 construction safety professionals and project managers, who reported that 4.8% of their company contract disputes can be attributed to safety management issues.

*The article also recommends actions that contract managers and safety professionals can reference when writing the safety sections of construction contracts.

Controlling Employer

Congress enacted the OSH Act of 1970 to ensure a safe and healthful working environment for every working person in the nation. As early as 1971, OSHA published a Field Operations Manual (FOM) containing a multiemployer worksite policy including both creating employer and exposing employer citation policies. By 1981, a correcting employer citation policy had been added to the FOM, and in 1994 the multiemployer worksite policy was formally amended to add a controlling employer citation policy to the FOM replacement, Field Inspection Reference Manual. During the past 4 decades, the secretary of labor, Occupational Safety and Health Review Commission and various U.S. Circuit Courts of Appeal have all accepted the propriety of the controlling employer concept. As a result, the current multiemployer worksite policy now contains citation policies for creating employer, exposing employer, correcting employer and controlling employer situations.

While almost any subcontractor or contractor on a construction áte may find itself on the receiving end of a citation as a creating, exposing or correcting employer, only the general contractor is likely to receive a controlling employer citation. This is because only the general contractor has "supervisory authority over the worksite, including the power to correct safety and health violations itself or require others to correct them." Avoiding a controlling employer citation requires that the contractor "exercise reasonable care to prevent and detect violations on the site." Further:

This duty of reasonable care is less than what is required of an employer with respect to protecting its own employees. This means that the controlling employer is not normally required to inspect for hazards as frequently or to have the same level of knowledge of the applicable standards or of trade expertise as the employer it has hired. (OSHA, 1999)

Selecting subcontractors based on past safety performance, and inclusion of the safety-related contractual language may not only help the contractor avoid safety requirement disputes, but may also help meet the reasonable care standard by improving the subcontractor's safety practices, reducing the likelihood of noncompliance and creating a graduated system of onsite safety enforcement. At a minimum, the contract should include verbiage such as "the subcontractor shall develop and implement, and be responsible for, a comprehensive safety program that complies with all applicable (environmental, health and safety) federal, state, local, contractor and owner requirements while performing work on the project or facility."

References

Gebken II, R.J. (2006). Quantification of transactional dispute resolution costs for the U.S. construction industry. University of Texas at Austin, May 2006. Retrieved from http://repositories.lib.utexas.edu/handle/2152/2484

Fink, A. & Kosecoff, J. (1985). How to conduct surveys: A step-by-step guide. Beverly Hills, CA: Sage Publications.

EC Harris. (2012). Global construction disputes: Moving in die right direction. Retrieved from www.echarris.com/pdf/ ech_gl ob al_constructi on_disputes_r ep ort_2012.p df

Gambatese, J. (2000). Owner involvement in construction site safety. Proceedings of Construction Congress VI, ASCE, Orlando, FL, 661-669.

Hinze, J. (1997). Construction safety. Upper Saddle River, NJ: Prentice Hall.

Huang, J. (2003). The owner's role in construction safety. Ph.D. Dissertation, 2003, University of Florida, Gainesville, FL.

OSHA. (1999). Multi-employer citation policy [Directive No. CPL 2-0.124]. Retrieved from www.osha.gov/ pls/oshaweb/owadisp.show_document?p_table=dir ectives&p_id=2024

Sathy Rajendran, Ph.D., M.S., CSP, LEED AP, CRIS, is an assistant professor and program coordinator in the safety and health management program within the Engineering Technologies, Safety and Construction Department at Central Washington University. Prior to this, he was a construction safety manager with Hoffman Construction Co. Rajendran has managed safety programs for construction projects, and his experience includes a wide variety of buildings, including hospitals, a biopharmaceutical facility, high-rise condominiums and office buildings, airport projects, parking garages and a hotel. He holds a Ph.D. and an M.S. in Civil Engineering from Oregon State University and a B.E. in Civil Engineering from Anna University in India.

Brian Clarke, CSP, is managing partner, G.E.W. LLC Safety Solutions. Earlier in his career, he was corporate safety director for Hoffman Construction Co. and a senior loss control representative for Continental Insurance. A professional member of ASSE's ColumbiaWillamette Chapter, Clarke served on ASSE's Board of Directors from 1999 to 2003. He received the Gary Bird Horizon Award from International Risk Management Institute in 2003 for Excellence in Innovative Risk Management Techniques and Processes in the Construction Industry. Clarke holds a B.S. in Occupational Safety and Health from Central Washington University.

Michael L. Whelan, Ph.D., is an associate professor of construction management in the Engineering Technologies, Safety and Construction Department at Central Washington University. Whelan has held faculty appointments in engineering or construction management programs at multiple universities. He has worked as an estimator, field engineer and office engineer for a commercial building contractor, and has experience as a consultant, expert witness, arbitrator and special investigator in engineering and construction situations. He holds a Ph.D. in Engineering Valuation from Iowa State University, as well as M.S. and B.S. degrees in Civil Engineering from University of New Mexico.