Part 3 of our video series on construction litigation best practices
Forty percent of construction companies lack visibility into their own corporate risks due to poor contract management — a blind spot that can prove financially devastating. In this blog, Jerry Crawford of KGC Consulting reveals risk management strategies for construction litigation that keep projects on track and out of court.
Understanding the risk in modern construction
In the third episode of our “Building the Case” video series, Brett Burney of Nextpoint reconnects with Jerry Crawford, Principal Director of KGC Consulting, to explore risk management in construction litigation and how proactive strategies can keep projects out of court.
As construction becomes increasingly complex with heightened regulatory requirements, emerging technologies, and evolving legal standards, effective risk management has shifted from optional best practice to business necessity.
The three categories of risk management
Jerry frames risk management around three fundamental approaches that every construction stakeholder should understand:
Risk avoidance: Eliminate risk entirely through different approaches, materials, or methods.
Risk allocation: Determine who is best positioned to manage specific risks among owners, contractors, trades, and design professionals.
Risk reduction: Minimize impact when risks cannot be avoided or transferred.
“The challenge can often lie in determining who is the best stakeholder to manage that risk,” Jerry explains, noting the trend to “download as much risk as possible” doesn’t always align with capability.
The expanding risk landscape
Today’s construction environment presents significantly more risk than in previous decades. Jerry outlines several categories that have intensified:
Financial: Cost overruns, payment disputes, and funding challenges
Regulatory: Fifty years of evolving legislation create complex compliance requirements
Environmental: Sustainability requirements and climate considerations
Technology: Untested products and services creating performance uncertainty
Safety and governance: Heavy fines that “escalate up the chain to the executive in charge”
The stakes have risen dramatically. What might seem like trivial risk to one party could be a “company breaker” for another organization, making comprehensive risk assessment essential.
The critical role of risk registers
Risk registers have become invaluable tools for tracking and managing the myriad risks inherent in construction projects. Yet Jerry observes a troubling gap: “So often I see in many large projects, medium size and certainly small projects, there’s no good risk register at all. It doesn’t exist.”
A risk register helps project managers list risks, their priority level, mitigation strategies, and the risk owner so everybody on the project team knows how to respond to project risk.
For projects that do maintain risk registers, Jerry stresses the importance of input from multiple stakeholders. Different parties bring different perspectives on potential risks, and what one organization views as manageable might represent critical exposure for another.
5 steps to build your construction risk register
If your organization doesn’t have a risk register — or needs to improve an existing one — mastering risk management in construction litigation starts with these essential steps:
1. Start with stakeholder input sessions. Gather representatives from all parties involved in the project: owners, contractors, subcontractors, design professionals, and facility managers. What seems trivial to one party may be critical to another.
2. Engage your insurance provider early. Schedule a candid conversation with your insurance broker about hot button risks. Jerry emphasizes that insurance professionals “are only too happy to share their knowledge in terms of the dos and don’ts, whether it’s cybersecurity risk or other issues that have emerged in the last few years, or expanding risk profile based on court cases.”
3. Document risks in real time as they emerge. Don’t wait for problems to escalate. Create detailed entries that include dates, times, parties involved, conditions, and thorough descriptions — similar to documenting a car accident.
4. Assign clear ownership for each risk. Identify who is responsible for monitoring and managing each specific risk. This prevents the assumption that “someone else” is handling critical issues.
5. Schedule regular review and update cycles. Construction projects are never static. Build in weekly or bi-weekly risk register reviews to capture new risks and update the status of existing ones as the project evolves.
A well-maintained risk register should be a living document, evolving as the project progresses. “As the project evolves, your processes to manage that risk need to pivot and change as you’re going through your completion of your projects,” Jerry advises.
Insurance and liability considerations
Jerry provides several practical considerations for managing insurance-related risks:
✓ Review disclaimers and ensure limitation clauses align with your insurance coverage
✓ Assess vicarious liability when retaining subcontractors, especially for high-risk work
✓ Exercise extra caution on occupied buildings (torch work, roof repairs, sprinkler modifications)
✓ Keep indemnification clauses simple, specific, and restricted to your actual liability
✓ Stay within your expertise boundaries — don’t overextend
✓ Report incidents immediately — delays can jeopardize coverage
Common risk management failures
Drawing on his 44 years of experience, Jerry identifies several recurring failures in construction risk management:
Wishful Thinking: Organizations assume “my problem will get better next week” rather than documenting and addressing risks immediately.
Poor Documentation: Without detailed real-time records (dates, times, parties, conditions), defending claims becomes exponentially harder.
Disorganized Files: Keep attorney-client privilege materials separate from project documentation.
Blind Spots: 40% of companies lack visibility into corporate risk due to poor contract management — leaving them vulnerable to unknown exposures.
Standard of Care Failures: Post-pandemic workforce changes have led to inexperienced staff being “tasked with responsibilities above their knowledge level,” creating an emerging litigation issue.
The legal perspective on risk management
Comprehensive risk management creates several advantages for construction litigators:
- Stronger defensive positions: Well-documented risk identification and mitigation efforts demonstrate good faith and professional standards.
- Better evidence trails: Organized risk documentation provides the evidentiary foundation needed when disputes arise.
- Proactive problem-solving: Identifying risks early enables resolution before they escalate into litigation.
Insurance claims support: Proper documentation and timely reporting strengthen insurance claims and coverage positions.
Watch the full conversation between Brett and Jerry below:
The bottom line
Effective risk management in construction requires more than identifying potential problems. It demands systematic documentation, clear allocation of responsibilities, continuous monitoring, and proactive mitigation strategies.
As Jerry emphasizes, the starting point for many organizations should be simply creating a risk register if one doesn’t exist. From there, engaging with insurance providers, documenting issues in real time, and maintaining organized records positions organizations to manage risks effectively rather than scrambling to reconstruct events after disputes arise.
In an environment where regulatory requirements continue to intensify, project complexity increases, and the workforce composition shifts, robust risk management has become non-negotiable for construction stakeholders at every level.
★ Want to Learn More?
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