3D Printing and the Construction Industry

Posted on November 15, 2022November 8, 2022 by Shield Insurance Agency

Liberty Mutual | 10/24/2022 | 3D Printing | Business Insurance

3D printing and the construction industry: 4 risks to manage

Additive manufacturing (AM) — more commonly known as 3D printing — is the practice of constructing objects using computer-aided drawings (CADs) and 3D printers to create materials that can be used in constructing buildings. The technology for AM is improving every day, with more printing methods and materials being developed for these types of construction. Additionally, load-bearing structures for the civil construction sector may be one of the next innovations in the AM space.

Residential construction has paved the way in 3D printing, but commercial construction, while less common, seems to be gaining ground. For contractors interested in investing in 3D-printing technology, it’s important to understand the risks of this breakthrough innovation — and what you can do to help protect your company.

As technology has improved, so too has demand. The market for 3D homes is expected to increase due to post-COVID-19 pandemic-related supply chain and labor shortages, which have increased timelines and costs for traditional construction. Meanwhile, factors such as increased rental prices and limited inventory have put housing demand on the rise.

Contractors are already starting on residential multistory 3D-printed homes , which could help test use cases for commercial work. One result could be multiuse structures, with retail and office spaces on the ground level and habitational units above. Additionally, the creation of 3D-printed infrastructure, such as this 40-foot steel pedestrian bridge recently unveiled in Amsterdam, could become more common.

However, the increased prevalence of AM in construction also brings increased risk for contractors and builders. In this article, we’ll explain the risks of this breakthrough innovation — and what you can do to help protect your company.

1. Managing contract liability and insurance challenges due to 3D Printing

Projects that leverage 3D printing typically entail partnerships between construction companies, technology firms, and manufacturers specializing in this type of production.

These partnerships are often formalized through a joint venture (JV) agreement. In a joint venture, each party has “joint and several liability,” which means that each member is jointly and severally liable for any damages on the project, regardless of which party causes them.

Projects that leverage 3D printing typically entail partnerships between construction companies, technology firms, and manufacturers. These partnerships are often formalized via a joint venture agreement, which can introduce contractual and insurance challenges.

Joint ventures can introduce contractual and insurance challenges, especially when leveraging a newer technology such as 3D printing, so it is important to understand the risk-management nuances of this type of arrangement.

For example, potential challenges to consider include:

What happens if 3D-printed work products don’t meet aesthetic and engineered expectations of the project owner? If 3D-printed work products cause harm to someone or damage property, how will the JV respond to injuries and claims?
How will the JV cover “rework” costs if the project owner does not approve of the 3D-printed aspects of the build?
As industry standards for 3D-printed building construction are in their infancy, who is responsible for ensuring that the 3D-printed building methods meet the standards outlined by the International Code Council?
What happens if a claim is filed after the JV is terminated?

Ways to manage contract- and insurance-related challenges include:

Developing a formal JV contract that clearly outlines:
- the purpose of the joint venture
- the management structure and legal duties of each partner
- the financial arrangements such as capital expenditures and profit distributions
- the anticipated time frame and how and when the contract will terminate

Establishing how to insure the joint venture. There are different options to consider, which can vary based on cost and impact to each member’s individual policies.
Working with your legal department and insurance carrier and broker partners to review all contracts and insurance needs

2. Reducing the risk of occupational diseases and workers compensation claims

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5 tips for contractors moving from nonstandard to standard surety

Posted on July 20, 2021January 22, 2025 by Shield Insurance Agency

Moving from nonstandard to standard surety

It’s been a challenging and uncertain year for the construction industry. According to Deloitte, construction was finally returning to pre-recession levels of employment and economic growth in February 2020. Then COVID-19 hit, and the industry lost more than $60 billion in gross domestic profits and nearly one million jobs. Although 2021 projections are looking up, this unprecedented economic situation put many contractors in a tough spot, with uncertain financials making them only eligible for more expensive nonsurety bonds.

While it’s not always a quick fix to move back into standard surety eligibility, there are concrete steps you can take. The ultimate goal of any underwriter is to help contractors move back to standard surety — whether you’re new to the industry or you’re an experienced business owner going through a period of financial difficulty. In this piece, we’ll share five best practices for a return to the standard market.

1. Clean up your financials.

In general, it’s a best practice for contractors to work with a trusted CPA to maintain clean books. As Brian O’Neal, director of Liberty Mutual Surety Vista, a specific program for nonstandard contract accounts, says, “Multiple irregularities or errors in a contractor’s financials are going to raise red flags.” To move out of nonstandard surety, underwriters need to see that contractors are doing their due diligence to improve accounting procedures and correct these irregularities.

Often, these errors and inconsistencies occur because of poor internal controls. Along with providing a CPA-reviewed Percentage of Completion statement, contractors should work with their CPA to improve their internal processes. Those processes will vary based on the size and scope of the business.

2. Maintain quality Work in Progress reports.

Work in Progress reports, or WIPs, are critical pieces of information to help underwriters determine the current state of a contractor’s business. WIPs include ongoing projects and income for the current period and help underwriters evaluate future profits, on-time payments, and cash flow. Contractors need to keep WIPs up to date and ensure the data they include accurately reflects the current state of their business. After all, a report is only as good as the data it contains.

3. Understand loan requirements.

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How technology is transforming the construction industry

Posted on May 1, 2021January 15, 2025 by Shield Insurance Agency

In today’s construction industry market, there’s little doubt that technology holds transformative power.

Not only have new technological advancements led to greater efficiency in day-to-day operations, but they’ve also created new opportunities for companies to gain a competitive edge and focus on strategic growth.

There are several ways technology is making positive impacts on key priorities within the construction industry, including workforce, safety and risk management, and operational efficiency.

Finding solutions for construction industry labor challenges

Labor shortages in the construction industry remain significant and widespread. A new survey by the Associated General Contractors of America (AGC) found that 80 percent of construction companies report having a tough time filling hourly craft positions, representing the bulk of the construction workforce. On top of that, 56 percent also are finding it difficult to fill salaried positions. According to AGC, preparing, attracting, and re-skilling the future workforce are necessary steps in reducing that figure – and technology can help bridge the gap.

How can technology help with labor shortages? First, investing in cutting-edge approaches can help recruit and retain more young adults from tech-savvy generations into construction careers. Second, technology can streamline labor needs. By adopting tech methods to reduce on-site work time, such as using virtual construction tools like Building Information Modeling (BIM) and automating inventories and the ordering process, a contractor can better manage productivity levels and its workforce.

Addressing construction industry safety and risk

According to the latest Construction Technology Report by JBKnowledge, almost 50 percent of today’s contractors now have dedicated IT departments, and more construction companies are using technology solutions to internally manage workflows like estimating, project scheduling, and project management as well as to improve safety. Here are some of the ways technology is helping with efficiency and safety:

Wearables.

With wearable technology’s popularity and growth in consumer markets, the construction industry is now considering how to use different features to improve worksite safety. Some potential applications for wearable technology include monitoring an employee’s movements or vitals and providing real-time alerts if work conditions become dangerous. Smart helmets, for example, turn traditional hardhats into on-the-ground safety systems that can detect a worker’s level of fatigue or a worksite’s carbon monoxide level or temperature.

Smart helmets turn traditional hardhats into on-the-ground safety systems that can detect a worker’s level of fatigue or a worksite’s carbon monoxide level or temperature.

As another example, gear like augmented-reality glasses can provide workers with real-time guidance and detect errors before an accident, which, along with the proper training, could help improve productivity and safety.

Plusses like these will likely fuel more experimentation with wearables and research on their effectiveness at improving safety. Nearly two-thirds of insurers, for example, expect wearable technologies to have a significant impact in coming years, according to a survey of more than 200 insurance executives.

Mobile devices.

The importance of mobile capabilities has soared, the JBKnowledge report shows, with 83 percent of firms surveyed saying mobile is “important” or “very important” to their operations vs. just 59 percent who thought so in 2012.

The daily use of laptops in the construction field also has increased, from 64 percent in 2015 to 78 percent in 2017. And the use of smartphones, tablets, and other portable devices is quickly streamlining much of the construction process, from creating and approving blueprints to post-construction monitoring.

In terms of safety benefits, the adoption of mobile technologies enables real-time communication with all members of a construction team as well as faster incident reporting and injury documentation, all of which can help reduce the risk of injuries and the cost of worker’s compensation claims.