Departments — March/April 2007

Environmental Management Reducing Risk with Stronger Oversight

More commitment and accountability help builders stay environmentally compliant and build a competitive edge

Bill Robinson President Bill Robinson is a founder and president of Stormwater Risk Management LLC, Denver. SRM created one of the first state- and EPA-endorsed industry-self-policing compliance programs in the nation, called the Colorado Stormwater Excellence Program. Robinson graduated from Washington State University in 1984 with a BS in construction management and has 27 years of experience in a broad range of construction industry roles. Email: bill@stormwaterrm.com

Construction companies must  develop superior risk-management skills to achieve long-term success. Less predictable risk factors such as weather, cost of materials, labor availability, project budgets, cash flow, worker safety, subcontractor performance and building department approvals cannot be controlled but still must be managed. The construction industry changes often and continually poses new risk-management challenges. One change that began in the mid-1990s was the increased focus on sustainability and compliance with environmental regulations, and many in the building industries have been slow to respond.

Often overlooked is the everyday risk of costly regulatory enforcement actions or lawsuits from failure to comply with jobsite environmental requirements. To make matters worse, the cost to the violator no longer ends with just a fine or a monetary settlement.

Owners, especially on state and federally funded projects, are beginning to demand that companies have a clean environmental history as a prerequisite for bidding. Additionally, the U.S. Environmental Protection Agency’s Expedited Settlement Offer program offers rapid settlements and reduced fines, but only for first-time violators. What seems like a minor compliance enforcement action today could cost your company for years to come.

Step One

Make a top-level corporate commitment to regulatory compliance. Companies without a strong corporate policy toward regulatory compliance display a wide range of compliance levels between individual jobsites. Some project teams may pay attention to regulatory compliance while others do not. Murphy’s Law dictates that a company’s worst-performing jobsite will be the one visited by regulators at the worst possible time. Ignoring compliance on just one project can be a very costly oversight.

Corporate environmental policy should lead to a standard approach for consistent compliance across all sites. Without this top-level corporate commitment, there is little natural motivation for jobsite personnel to stay compliant now and over the long term.

Step Two

Establish strong accountability systems. These should assure that the corporate compliance policy is applied on all jobsites. Effective accountability must start by communicating reasonable performance expectations, defining clear roles and responsibilities and establishing a standard way to measure and report performance. Accountability remains effective over time only when upper management provides regular performance feedback in sync with corporate expectations.

Few companies have established a political structure that encourages effective internal self-policing and unbiased reporting. Underlying politics that may not be outwardly visible often affect internal compliance reporting and cast doubt on the accuracy of the results. This undermines the foundation of the accountability system.

The strongest accountability and best results will be achieved when the data comes from an outside reporter with no political stake in the company. Company executives must be reasonably certain that compliance performance data is being accurately reported so they can provide appropriate feedback to project teams.

When executives regularly give feedback to their employees based on credible performance data tied to corporate expectations, impressive performance improvements usually follow. With effective accountability systems in place, employees will be motivated to seek the training and knowledge they need to perform at or above corporate expectations.

Step Three

Implement a standardized compliance assistance system company wide. A standardized system should convey corporate expectations, clearly define roles and responsibilities and supply the basic information and tools needed to maintain project compliance. Developing such a system is not that difficult, even for national firms, because almost all environmental regulations are based on federal requirements, with only minor adjustments for state or local ones.

One additional step a company can take is to participate in an environmental excellence program and raise minimum compliance to a level that becomes a competitive advantage. EPA and most states offer programs such as Performance Track, the details of which can be found on their Websites.

These programs usually require a company to create and implement an environmental management system. Implementing an EMS successfully, however, can be cumbersome and requires a very high level of corporate commitment. The AGC of America has produced an excellent resource guide to help contractors with the process, it’s called “Constructing an Environmental Management System,” which is available through the AGC Website bookstore at www.agc.org.

Innovative, pre-packaged alternatives such as the EMS-based Colorado Stormwater Excellence Program are also gaining industry and regulatory acceptance.