Independent Contractors: Boost Your Risk Management Tactics

Independent contractors play a crucial role in various industries, offering specialised skills and services that are vital to the economy. But with great responsibility comes the need for effective risk management.

Independent contractors make up about 7.5% of the employed workforce, say the Australian Bureau of Statistics, putting their numbers at about one million.

Whether you’re a general contractor overseeing construction projects or a specialty contractor focusing on specific tasks, understanding and managing the unique risks of your work is essential for your success and longevity.

In this article we scope the unique risks you face and how to manage them with time-tested strategies.

Understanding the Unique Risks Each Type of Contractor Faces

General Contractors

They’re the backbone of any construction project, responsible for overseeing from start to finish. General contractors coordinate various trades, manage timelines, and ensure everything runs smoothly. Significant risks include project delays, budget overruns, and depending on subcontractors. So, if the latter fails to deliver on time, it delays the whole project, eating into the profit margin and resulting in possible legal issues.

Independent Contractors

These contractors work across industries, often overseeing large projects and handling specific tasks or projects on their own. Their risks could be irregular workflows, direct liability, and limited resources. As well, such contractors take care of their own insurance, equipment, and client relations.

Specialty Contractors

Such contractors focus on specific construction areas, including plumbing, carpentry or electrical work, so have specialised risks. Technical errors can result in costly repairs or maybe safety hazards. Malfunctioning tools and other equipment-related risks could mean delays and higher costs. Continuous education is vital to keep updated with industry standards and compliance issues.

Subcontractors

Subbies perform specific tasks for larger projects, typically with general contractors supervising them. Subcontractors can be specialised, too. They may depend on external contracts, so any industry ebbs and flows can affect work availability and income. Sometimes a project’s requirements expand beyond the initial agreement, leading to a higher workload without any extra income.

Time-tested Risk Management Strategies

1. Safety is Your Top Priority

Implement robust safety protocols and run regular training to shrink the risk of accidents and injuries on the job. Comply with safety regulations, including those local authorities set. This helps protect your team buffers your business from legal and financial fallout.

2. Regulatory & Legal Compliance

Keep updated about local, state, and federal regulations to avoid legal pitfalls. Consult with legal experts regularly for visibility about construction laws and labour regulations. Aim to keep compliant to help protect your business against potential lawsuits.

3. Clear and Comprehensive Contracting

Draft comprehensive contracts to spell out the scope of work, payment terms, deadlines, and responsibilities to slim your chances of disputes. Consider such contractors as protection and a path to resolve possible conflicts that could happen.

4. Assessing Risks & Contingency Planning

Regularly assess risks to pinpoint potential vulnerabilities in your operations. Consider what KPMG lists as major challenges facing the construction industry: skilled labour shortage, rising costs, supply chain disruptions and missing data connections across the value chain. Don’t forget red tape, too. Then, create contingency plans, including a financial nest egg and alternative suppliers. Build your buffer against unexpected challenges.

5. Financial Stability & Resiliency

Weather the volatility of the contracting world and market competition with rigorous practices. Aim for diligent budgeting, keep an eye on your cashflow, and weigh up before investing. Financial resilience muscles up your business to ride out slow periods and unexpected costs without sinking your business.

6. Continuous Professional Development

Invest time in ongoing learning through industry workshops, higher certifications, and active participation in professional organisations. If digital literacy isn’t one of your superpowers, reach out to get up to speed. Check out this website for inspiration. Get a birds-eye view of these digital skills needed in the construction sector, too.

7. Insurance Solutions to Tackle Your Liabilities

The above strategies work well in tandem with appropriate insurance coverage. As your broker or adviser, we can help customise a solution that snugly fits the specific liabilities you face in your line of work. Bundling your policies into a package can also earn premium discounts.

Implementing these risk management strategies is crucial for independent contractors to protect their businesses and ensure long-term success. Let us help you reduce your business exposures and give you peace of mind about risk management.

123 Insurance Pty Ltd ABN 67 621 727 722 ATF for 123 Insurance Unit Trust ABN 46 332 885 229 trading as Bell Partners Insurance is an authorised representative 1259573 of Insurance House Pty Ltd ABN 33 006 500 072 AFSL 240954.
This advice has been prepared without taking into account your personal objectives, financial situation or needs. You should therefore consider the appropriateness of the advice, in light of your objectives, financial situation or needs before following the advice. Please obtain a copy of, and consider the Product Disclosure Statement applicable to the general insurance product before making any decision.