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How to build a solid contractual risk-transfer program

The use of subcontractors helps insure construction projects are completed in a timely and efficient manner, but it also creates a range of contractual risks.

By Tommy Williams | Updated on November 09, 2017
Without a properly structured risk-transfer program, a general contractor (GC), owner or property manager would assume financial responsibility unnecessarily for losses caused by a third-party subcontractor. (Photo: iStock)

In this age of outsourcing and specialization, construction companies have to depend heavily on subcontractors and other third party providers on most projects. The use of subcontractors helps to ensure projects are completed in a timely and efficient manner, but it also creates a wide range of contractual risks.

Without a properly structured risk-transfer program, a general contractor (GC), owner or property manager would assume financial responsibility unnecessarily for losses caused by a third party, who is contractually obligated to control or prevent those losses. The financial impact could be significant — more so in certain jurisdictions.

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