Builders Warranty – Evaluating the risk of not managing risk
For builders, it is important to take stock in your successes and evaluate any challenges that you have faced throughout the previous year. Shedding light on a subject that may assist in upcoming profits and reducing risk, you want a software tool that is part of your Risk Management plan in the event of Structural Failure on any of your projects. With PlanRadar and the right warranty in place, it is a very concrete example of the way you stand behind the service for your customers.
Here are six reasons why PlanRadar adds the perfect layer of safety in addition to your warranties:
- Builder warranty – Protect your investment
- PlanRadar gives you leverage
- Problems aren’t always visible immediately
- Manage your risks with PlanRadar
- The problem with bad craftsmanship
- Avoid having your dream project become a nightmare
1. Builder warranty – Protect your investment
Your new built real estate passed inspection and was deemed fit for usage. But as all owners know this doesn’t mean you won’t experience any problems. Because defects caused by bad craftsmanship sometimes appear only later in time. That is why a builder warranty can range from 5 to 20 years. What you want is a warranty that covers workmanship, structural elements, heating and air, plumbing and electrical, light fixtures, roofing, and more. Who is going to give you all these warranties?
Building Trades Warranties – Total Claims Paid per Sector (in US$ millions, 2003-2011). Quelle: www.warrantyweek.com
A study made by ”Warranty Week“ tried to take a look at both the amount of pay for warranties in the building trades sector and the percentage of sales that those payments represent. As you can see in the figure above it’s clear that HVAC and appliances dominate the group, exceeding even the net claims payments by the builders themselves. Part of the reason has to be because owners don’t learn from past projects. Avoid losing money on HVAC, electrical and plumbing fixtures by using PlanRadar and keeping track of your defects from past and present projects. By documenting all of your defects from past projects you minimize the risk of repeating them. If you are an owner that has no knowledge in building engineering, don’t give in to the illusion that working with a craftsman guarantees you a building free of defects.
With inspecting a building one of the first steps to assessing risks is to search for defects and document them. Try our 30-day free trial and see how you can not only record defects immediately on site, but furthermore take notes, evaluate their risks and immediately assign them to the right project member. Builders, owners, and investors have a need to get their risks covered. Contact us to learn more about the warranties PlanRadar is going to give you in the construction process. Warranties are essential to all participants involved in a project.
2. Leverage in negotiating warranty terms and prices
Are you building a school? A hospital? Or maybe a skyscraper? Whatever it is, planning your project and seeing it through to completion can be an exciting experience.
Hopefully, your contractor or builder will do a great job and your dream will become reality without any major hitches. But things can and do go wrong and, if your contractor doesn’t deliver the finished product or their work is of low quality, it can cost you a lot of money. The insurance companies know this and accordingly set their prices as high as possible. An insurance builds up systems for coverage which supports homeowners and secures against shoddy workmanship. But what happens if claims accrue years after the expiration of your warranty period? You as a builder or owner aren´t covered anymore and have to search for new solutions. Homeowners will try to contact the planner or the contractor to report shortcomings in workmanship. The attribution of blame will roam from builder to planner and planner to owner…
So how do you go about this as an owner or builder? Clearly, the best way to prevent claims is to have no claims to prevent! This is where PlanRadar comes into play. So if you can show your insurance company that you have had less and fewer claims over the last few years because of using the right defect management tool you can leverage better premium payments for future projects. PlanRadar provides its customers with the ability to leverage better deals with their insurers by showing a decline in claims and therefore in risks. Because Insurers stake their reputations and financial stability on the quality and efficiency of their claim operations, but if you take a big part of that away you can use this as an argument to achieve more advantageous terms and less expensive premiums. Utilize our software to its full potential and see your project- and risk management improve. So in the future, you can show insurers your history of great defect management and how you managed to minimize your risk with every project.
3. Problems aren’t always visible immediately
Often, structural issues don’t become apparent until after the work has been completed and the building has been lived in for a while. Statistics from a recent NAHB survey tell us that 25% of homes will show some sort of structural distress over their lifetime. The highest percentages of claims were found to be due to foundation failures, most due to soil settlement. Framing claims attributed to approximately 20% of structural claims, most prevalently in the form of roofing and flooring failures. Statistically, the average cost of a structural failure is $42,000 to investigate and repair. The study also reported that, on average, it isn’t until after the fourth year (or later) when most of these claims are discovered. The discovery of defects is not only a case for soil settlement but for other things as well. Many builders think they will not be one of these statistics until it is too late. This mindset can cause you as a builder/owner to fail to protect your assets with a risk management program until it is too late. The simple addition of PlanRadar for your construction project and hereinafter choosing the right warranty will assist in protecting you.
When you’ve lived in something for a while, it’s natural to notice things that weren’t apparent at first glance. And if you do notice later that something is wrong, you’ll be hard-pressed to get the contractor to do anything … unless you have a warranty. If you have a builder warranty, the contractor would be required to return and finish their work or provide the owner with a refund for the work that they carried out. A way to give you even more leverage as an owner in this situation is by letting your contractors work with PlanRadar. That not only lets them work more efficiently, but more importantly provides you with a real-time overview of your project. Because it is a cloud-based web platform it not only works on your laptop, but also on your smartphone and tablet (Apple/Android/Windows). This way you always see the current status of your construction project. Software systems like PlanRadar will cover you from all the disasters which aren´t covered through insurance or warranty.
4. Take control of your risks
There are generally a couple of typical problems that arise from new-building construction, all of which a warranty could cover: floor creaks due to structural components, cracks in fixtures, problems with pipes and electrical systems, defective materials and landscaping issues. But to have further peace of mind over your real estate project you should try our free 30-day trial and see how PlanRadar and its features help you assess risk in real time and simplify your daily work. Keep track of all the current tasks regarding your investment. Let your project members, builders and planners record defects and keep track of all the open tasks anytime and from anywhere. The cloud-based web platform provides them with a current overview of all the things that still have to be done. But more importantly it lets the project leaders and the owner have the overview needed to evaluate the current situation and assess possible risks in real time.
But what about the risk of defects that only appear later in time, even after the building has been completed and the construction companies have moved on? For example: Each state has a statute of repose that designates a period of time in which a lawsuit must be filed for a structural defect. With PlanRadar you have a feature that lets you generate a chronological overview of all past defects. This way of historically tracking defects, as well as tasks, minimize the legal risks that often come with insufficient documentation.
5. New constructions can be rushed
Ideally, your contractor will treat your project as if they were building their own home. But just as you might miss something or take a shortcut at work after a long day, so can your contractor. In addition, some materials (e.g. concrete after it is poured into the foundation) need time to settle. For concrete to fully cure it can take two to four weeks. Construction contractors with aggressive schedules often feel pressured to move forward earlier than they should.
It’s also possible that your main contractor assigns work to subcontractors that employ people who aren‘t specialized in building construction. Inexperienced subcontractors might omit steps that more seasoned contractors wouldn’t, such as blocking off vents to the HVAC system, which keeps construction dust from clogging the unit. Maybe a water heater wasn’t installed correctly, or the wiring of the building was not completed correctly. For these cases, it’s best to have a builder warranty.
Warranties are usually divided into different terms, such as a one-year warranty to cover materials and labor; a two-year warranty to cover plumbing, electrical, heating, and air; and a 10- or 20-year warranty that covers structural defects that include foundations and load-bearing walls.
6. Stop contractors that turn dream projects into nightmares – Use PlanRadar
The practice has shown that even if you have already built 10 hospitals. The 11th hospital project can still turn into a nightmare. Unscrupulous contractors may skimp on materials, hire low-cost craftsmen or keep a sizeable share of the contract price for themselves. Eventually, owners have to pass these situations on to their legal department to resolve. Seeing your dream project turn into a legal case is not what you as an owner imagined. Very soon you find yourself confronted with costly legal proceedings. All this trouble only to hold these low-cost craftsmen accountable for their shoddy work. A way to avoid this is to provide your subcontractors and builders with PlanRadar. You can easily generate a customized list of elicited defects from past projects. This way you can show them the findings from your past projects so that they know what problems to avoid. Not only do you provide them with a tool that gives them a complete overview of the project, but also lets you track their tasks anytime anywhere.
Take control now!
Help your contractors, subcontractors, and craftsmen, but more importantly yourself, benefit from PlanRadar and all its features. Use the free 30-day trial and see how this easy to use management tool is able to always provide you with an overview of your project in real-time.
Your goal is to keep the people happy that your construction was made for. Happy clients bring future referrals. You also want to be assured that all parties involved in your projects have the same goals in mind and that there are no “hidden defects.”
Taking the extra steps to include PlanRadar in your project management strategy, will ultimately protect your company. Heaps of homeowners, builders and investors contact us every day to learn more about a new comprehensive way to secure their work, buildings, and homes.