Construction projects in the non-profit sector require careful consideration of various factors to ensure their success. We will explore five key factors that non-profit project owners should keep in mind when undertaking construction projects. By understanding and addressing these factors, non-profit organizations can enhance their project outcomes and align them with their mission and values.

  1. Contractor selection: Choosing the right contractor is crucial, especially when private investors and governmental funds are involved. Non-profits should conduct thorough due diligence when selecting a contractor, including checking references, verifying licensing and insurance coverage, and assessing experience with similar projects. It’s also important to avoid using uninsured or inexperienced contractors who may volunteer their services.
  2. Effective risk transfer: A good construction contract should include provisions for effective risk transfer. This means that the project owner transfers some of the construction risks to the general contractor. It’s important for project owners to verify that the general contractor’s insurance program has the necessary risk transfer endorsements that align with the contract provisions.
  3. Builder’s risk insurance: Whether it’s a new construction or renovation project there needs to be property insurance in place to cover the new and/or existing structures. This is typically done through a builder’s risk insurance policy. Non-profit organizations can either task their general contractor with purchasing the coverage or choose to procure their own insurance policies. It’s important to review all insurance quotes with an insurance broker to ensure that the owner’s interests are properly insured.
  4. Project delays: A good builder’s risk policy should include coverage for unexpected project delays caused by insured events. The policy should address potential loss of future rental income, additional fees for architects, engineers, financing, or legal services, and other expected expenses that may arise from a delay in completion due to covered property damage.
  5. Environmental considerations: Non-profit organizations often have a commitment to sustainability and eco-friendly practices. This includes considering eco-friendly construction practices, energy-efficient design, and eco-conscious waste management. It’s important to ensure that the builder’s risk program understands and supports these commitments and will settle property claims accordingly.

Each construction project is unique with varying risk factors that must be considered prior to project commencement. A risk management professional with expertise in the construction and non-profit sectors can provide valuable guidance tailored to your organizations specific needs and commitments.

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