It was a successful project, indeed. Your general contracting firm won the
bid to renovate seven 4-story buildings that were over 75 years old in a
large commercial complex located in a rural area in the south. Your staff of
architects and engineers did the design, drew up the plans, and checked field
shop drawings. Your project managers, superintendents, and foremen provided
the field oversight. You hired some competent subcontractors to do the
geotechnical, plumbing, heating, ventilation, air conditioning, electrical,
roofing, masonry, drywall, and painting. Best of all, you came in 15 days
under schedule and $50,000 under budget.
Per the contract, you kept a percentage of the windfall. Everybody
celebrated this win, as the challenges were rather large, given the age of
the structures and the old materials of construction that had to be managed,
such as lead-based paint, asbestos, and even some historic masonry.
The celebration did not last long. Just 6 months after completion, the
owner’s attorney called the project manager and informed him that during
utility excavation for new road construction beyond where the work was done,
a dozen leaking 5-gallon buckets of roofing tar, and 15 single gallon cans of
paint solvent used to clean oil-based paint guns were uncovered in five
different locations. There were even dozens of partially used cans of
metallic paint buried in several other locations. Worse, the solvent leaked
and had migrated through the sandy soils and porous limestone into the
groundwater and was detected in two drinking water wells offsite. Not only
was the property owner upset, the state environmental agency was banging on
the owner's door, imminent endangerment papers in hand.
Could This Happen to You?
When we take on construction projects, we often wonder if there are
any environmental concerns, especially if we are doing new
construction with state-of-the-art materials and water-based latex paints and
sealants. However, more often than not, the unused countless lubricants,
oils, diesel fuel from heavy equipment, and many other sealants, solvents,
glues, etc., can end up buried onsite—or offsite.
Sure, your contracts stipulate that all subcontractors must account for
hazardous materials brought onsite, and taken offsite. You require extensive
mass-balance calculations that measure: what HAZMAT came onsite, minus what
stayed in/on the building, which equals what HAZMAT left the site. What if
the subcontractor didn’t realize that the 5-gallon buckets of carpet adhesive
contained solvent? Yes, I know he should have smelled it, but he did not
account for it. Yes, I know the contract also requires proper disposal.
It’s funny how construction rubble, including illegally disposed hazardous
materials, sometimes ends up buried on farmland at night. It’s not funny when
the hazardous metals and chemicals in that construction rubble end up in
drinking water wells. Guess what? If the products are tied back to your
subcontractor and your construction site, you get to clean it up and pay for
drinking water substitutes and pay fines and go to jail.
Environmentally Managing Subcontractors
If your field team does all it can to avoid environmental releases and
exposures, that means the challenge may rest with some of your
subcontractors. How can we environmentally manage our subcontractors? Here
are a few tips.
- Write contract language that requires that they account for
any material that requires a material safety data sheet (MSDS)
from the time it crosses the property boundary until it leaves.
- Have the subcontractor provide you with a list of all materials that
require a MSDS, so that you are prepared if a 5-gallon can of waste
"ethyl methyl terrible" ends up in a ditch offsite. Maybe
consideration should be given to the types of products that are being used
on the jobsite. Can certain products be replaced with "environmentally
safe" products? Has the subcontractor investigated the availability
and cost associated with such products?
- Hire a subcontractor that you trust, and who has already proven to be
knowledgeable of hazardous material and hazardous waste minimization and
management practices. Modify your subcontractor prequalification
questionnaire to include issues involving environmental conditions.
- Review the subcontract’s current protocol in the event waste or other
hazardous materials are encountered. Do they have a mold management or
response program? Have they developed a storm water runoff program? Do they
have anything that looks like an environmental management program?
- Are any of your subcontractors trained in accordance with hazardous
materials handling—29CFR 1910.120—also known as HAZWOPER training? Someone
within the organization should be responsible for identifying possible
"red flags."
- What about contractual risk transfer? The indemnity is only as good as
the financial strength of the indemnitor, but it is a solid first line of
defense. Ensure your indemnity is broad enough to encompass environmental
conditions. Second, the contract should establish who will perform any
environmental work when it arises. The contract should spell out whether
the subcontractor is responsible for the remediation—hiring of a qualified
subcontractor—or will you or the owner contract for that work?
- What about requiring the subcontractor to evidence environmental
insurance? It’s not going to prevent an incident, but it will pay for one.
Nowadays, contractor’s pollution liability or CPL insurance is much more
affordable and is much broader in scope of coverage than it was in prior
years. Actually, if the subcontractor could evidence CPL coverage, that
speaks volumes about the quality of the company since the environmental
underwriting process is viewed by some as quite rigorous.
Conclusion
When it comes to environmental risk management, the construction industry
has come a long way in the past 10 years. It appears contractors of all
shapes and sizes have seen and witnessed the negative impact that
environmental incidents could have on their reputations and their
organizations. We are even starting to see the old "knock-on-wood"
type of risk management disappear. However, prudent contractors still need to
protect themselves, and without proper protocol in place, one small oversight
could lead to one big mess. The cost to prevent such mess is minimal when
compared to the catastrophic result it could bring.
Mitch Cohen,
PE, is a Syndicator for Aon Environmental in Atlanta. He works with
construction companies to help them manage environmental risk. Mr. Cohen can
be contacted at (404) 452-8438 or via email.