Audits: The Devil is in the Details!

 

In Part 11: How to Successfully Implement an OCIP, we reviewed the critical success factors for the implementation of a successful OCIP. In this section, we will make the case for not only monitoring the OCIP administration process, but the need for audits during the course of construction. In addition to periodic audits, these should be a final audit done. A final audit will determine whether the OCIP was a success or a failure.

 

The Importance of Audits

 

OCIPs are usually implemented on projects to improve safety, reduce losses, and achieve specific financial results. To accomplish these goals, the OCIP administrator needs to complete these specified implementation and administrative tasks. Periodic audits can help ensure that the quality of OCIP administration is maintained and that potential OCIP savings are being achieved.

 

Audits should be done annually, preferably at the same time each year prior to the anniversary date of the OCIP, and also at the completion of the project. The Audit should review documented practices and procedures related to the following:

 

  • Binding insurance coverage, issuing certificates of insurance, and issuing insurance policies to contractors and subcontractors.

 

  • Contractor and subcontractor enrollment.

 

  • Collection of contractor and subcontractor exposure data (such as EMRs) and other information required to calculate bid and change-order deductions for OCIP-provided insurance coverages.

 

  • Verification of completeness and accuracy of all contractor and subcontractor required OCIP forms and documentation. This includes, verification of proper filing and maintenance of these documents by the OCIP administrator.

 

  • Workers’ compensation and GL claims reporting, i.e. quality of claims handling and administrative services provided to enrolled contractors and subcontractors.

 

  • Compliance with all state and federal laws, e.g. policies related to safety and loss control, accident prevention, and drug and alcohol abuse testing.

 

  • Quality of status reports, delineating all OCIP costs incurred and credits obtained from contractor and subcontractor bids and subsequent change orders.

 

  • Verification of insurance bills and OCIP premium adjustments.

 

 

To be effective, audits will frequently require formal interviews with representatives of the project owner, GC, contractors and subcontractors, OCIP insurance broker, OCIP administrator, and the OCIP insurer(s).

 

 

Hope you enjoyed this post. I will look forward to your comments. I will share more Insights in future posts.

In OCIP 2.0 – Part 13, we will review some final thoughts and be wrapping up the OCIP, i.e. we will wrap it up!

Thank you for visiting and reading C-Risk Insights.

Until next time…

Best,

David

 

David Grenier is the Managing Director and Principal Consultant at C-RISK, LLC.

C-Risk is a risk management consulting company that provides strategies and insights on wrap-up insurance programs to help project owners in the public and private sector who are involved with large capital construction projects.

 

Why settle for less than a complete Risk Management Solution?

 

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