You’ve finished your project. Inspections are completed, snag lists are closed and a full handover with all documentation has been passed to the client. But as all construction managers know, this doesn’t necessarily mean the end of the project. You might well hear from the client again. That’s where your builders warranty comes in.
New-build construction is complex. Even smaller projects are multi-faceted collaborations, requiring large teams with materials, equipment and people flowing through the site. Complex projects are prone to mistakes and even the most closely managed project can expect defects and faults.
Mistakes in installation, sub-standard workmanship and equipment faults can remain hidden and emerge after handover. Clients are likely to come knocking if a fault appears after handover, even years down the line. For this reason, construction firms must protect against remedial work, which often includes expensive contractor time and replacement equipment. Prevention is always best. Contractors do all they can to ensure that faults don’t appear, but when problems do occur, builder’s warranty insurance is the construction firm’s best friend.
What is a builders warranty?
A builders warranty, sometimes called builder’s warranty insurance, structural defects warranty or a builder’s guarantee, is an insurance policy that construction firms can take out to pay for any remedial work should post-handover faults occur. The builder’s warranty can last from around five to 20 years. It can cover any aspect of the building from structural elements to the workmanship, HVAC systems, plumbing, electrical fitting, light fixtures, roofing and more.
Depending on the building size, usage and the client, the scope and length of the builder’s warranty insurance will change. Construction businesses generally select an insurance provider at the beginning of the project, working with them to evaluate risks.
Of course, insurers will look at past and present portfolios to assess liability. Construction firms that can demonstrate high-quality work with low complaint levels are likely to agree to much lower insurance premiums for the same amount of cover. PlanRadar’s defect management tool can help to reduce risk during construction to achieve these low insurance premiums, but more on this later.
Why offer a builders warranty?
The BBC reported a rise in complaints about new build houses in 2019 and, although builders are expected to deal with snagging issues within the first two years of a new home’s life, taking longer-term builder’s warranty insurance, such that offered by the NHBC, can protect builders against longer-term complaints. Conversely, the NHBC mentions warranty claims continue to decrease, but insurance is critical should unforeseen issues emerge. When dealing with large commercial buildings and bespoke construction the risk variables increase, leaving builders without builder’s warranty exposed.
In essence, builders warranty insurance is a safety net for construction firms. Should an issue occur within the first 10 years of a building’s life, clients expect builders to solve these issues. If the fault is with HVAC, plumbing or equipment failure, you might need expensive third-party contractors to resolve issues. Should structural issues arise, rebuild costs may easily run into thousands, delaying new projects and putting a strain on teams and resources. Knowing that the structural defects warranty will pay out for the cost of remedial work will release a considerable amount of this strain.
From homeowners to property developers and commercial owners, builder’s guarantees are an expected part of the service. Builder’s warranty insurance is there to protect both the builder and the client.
Get it right first time and avoid high premiums
Although a builder’s warranty is necessary for every project, the real aim is to avoid claims in the first place. If your projects attract multiple claims, you can be sure that future insurance premiums will reflect this. The key to avoiding high premiums is to ensure high-quality construction.
This is where PlanRadar comes into its own. The app-based digital documentation and defect management tool tackles quality control at its core, right there on the construction site. PlanRadar provides a single source of truth for every element of construction, from digital plans to audits and site inspections to defect logging and resolution.
A full suite of quality control templates is available for customisation by managers, accessible by site inspectors through any smartphone. Managers can log inspections for a full audit trail. Users communicate any defects or safety issues so that they become part of an action list. These tickets are then assigned to a team member and tracked until resolved. Any worker can flag an issue during their day-to-day work that might cause a delay or a change. Every defect that users capture and resolve is one less problem to face post-handover.
If an issue is identified by the client after handover, the defect can be traced back to this process. You can then adjust quality control procedures to prevent incidents occurring in the future. This process of continuous improvement can help to drive down high insurance premiums and protect the business against reputational damage.
If an issue arises years after handover and any legal disputes follow, you can supply evidence of workmanship and defect resolution using PlanRadar’s audit trail.
Manage snags the PlanRadar way
In the March 2020 edition of the National New Homes Customer Satisfaction Survey (CSS) compiled by the Home Builders Federation, 97% of new-build homeowners reported snags to their builder. 25% of responders reported 16 or more snags. The management of these snags, although expected, also takes time.
You can easily resolve snagging issues using PlanRadar. It holds all project information in the Cloud-based system, keeping it accessible at the touch of a button. Contractors have everything they need to resolve the issue. They can append pictures and send messages via the task and digital floorplan to help cut straight to the centre of the problem.
Although builder’s warranty insurance is an important and necessary investment, if you are looking to limit your risk, real risk management starts during construction. By using defect management tools, like PlanRadar, construction firms can identify problems and fix them way before handover. They can also manage any post-handover snags easily and quickly. Above all, you can record every audit, inspection, defect and remedial action and provide a full audit trail in case of any disputes in the future.
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