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As a contractor or sub, you can expect to incur many costs during the course of a construction project. Materials, insurances, permits, payroll, and other typical costs are relatively simple to account for. However, there is one very expensive cost that isn’t so cut and dry: construction site theft.

Theft from construction sites is a serious issue, and it costs contractors a lot of money each year. Luckily, there are insurance policies that will replace the cost of the stolen goods, such as builders risk insurance. However, that reimbursement rarely makes up for the costs contractors incur due to the ripple effects caused by construction site theft.

Impact of construction site theft

Carrying builders insurance is a responsible decision, but it doesn’t always make up for the impacts contractors feel after a site theft. Whether it’s tools stolen from a job site or specialized materials or appliances, the impacts of construction site theft are expensive.

Insurance claims

Contractors carry insurance for a number of reasons, but they’d rather not use it if they don’t have to. Filing insurance claims for a construction site theft can increase the contractor’s premium, meaning they’ll have to pay more for coverage moving forward.

There are times when an insurance claim makes sense, such as when expensive or leased items roll off the construction site. But, on a smaller scale, it might not always behoove a contractor to file a claim against a $2,000 appliance. If the contractor is afraid of a premium hike that will cut into profits month after month, they might just pay for the item out of pocket.

Schedule delays

Schedule delays are some of the most damaging effects of construction site theft. Most things on a jobsite are essential, and when a thief nicks them off the site, they need replacing. In some cases, it can be as simple as sending someone to the supply house. In other cases, special ordered items need to be special ordered again.

The same applies for heavy machinery and appliances. When these items go missing, it can take days, weeks, or even months to replace them. If the job can’t continue, this theft will throw the entire project timeline for a loop. 

Restricted cash flow

Keeping the project on time while also recovering the value of the items stolen is important. In many cases, the contractor will buy the replacement materials out of pocket and then file a claim against the policy. This gets the item to the site faster, and the insurance company will write a check. 

Eventually.

It can be weeks or even months before the contractor receives their check. In the meantime, they extended themselves on the replacement item, and they’re out that cash. They might not be able to float a new job, slowing their company growth. And, if cash flow is tight that month, they might take out a line of credit and pay interest moving forward.

Learn more about cash flow in construction.

Higher costs

When a contractor bids a job, they should have a relatively solid idea of how much materials or equipment might cost them based on the current market. They roll that cost into the contract amount and the project owner agrees to pay them for it. When replacing stolen items, there’s no guarantee that the current market value isn’t higher than the amount accounted for in the original contract.

And, even if the insurance company is paying fair market value for these items, the contractor will need to buy them right away (before the check lands). There’s no telling what the price might do before the check arrives, and that’s a risk smart builders won’t take.

Slower payments

Another one of the most painful effects a construction site theft can have on a construction company is slowing down the payments. If the project can’t reach certain milestones because the equipment is missing, the contractor won’t receive progress payments.

While that’s bad enough, the real issue comes when the contractor’s cash flow is so tight that it can’t pay its subcontractors for their work. This can quickly develop into a payment dispute, and that dispute can result in a mechanics lien against the property or litigation.

How to prevent jobsite theft

Stopping thieves altogether can be difficult, but there are a few ways to deter these ne’er-do-wells.

Prequalify contractors

There’s an ugly truth that most theft happens internally, and subcontractors working on several sites know all the soft targets. Be sure to prequalify any contractors before working with them to ensure they’re on the up-and-up. Contractors and subs that steal are often repeat offenders, so there’s a good chance another contractor might know them and be more than willing to warn other folks in the business. 

Secure the site

The most obvious move is to secure the site. This might mean installing a tall fence, installing lighting, and even hiring night security to watch the site when the sun goes down and be a move worth trying. The challenge of getting in and out without getting caught might be enough to deter them from the start. 

Also, consider securing tools and equipment with GPS trackers and geofencing tech. These tracking systems aren’t physical barriers, but they can recover tools stolen from a jobsite.

Create and share a security plan

Develop a plan that works for your project. That plan should clearly outline what isn’t acceptable on a project and what is. And notes like “not allowed to remove scrap for personal use.” Be sure to distribute the plan so that all the subs have the same understanding of the plan in order to prevent convenient confusion.

Install a camera system

Cameras can not only deter a thief from stealing materials and tools from a jobsite, but they can also offer police and other authorities a lead to pursue a thief. Comparing theft footage from several job sites can help identify a pattern as well. And, since most thefts occur from within, there’s a good chance you’ll recognize the thief. 

If at all possible, position the cameras so the entire site is visible, but if not, target specific areas. Aim them toward lumber and materials piles and containers, heavy equipment, and entrances to the site and building. 

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Top 5 items stolen from construction jobsites

When it comes to construction site theft, there are a few specific items that tend to grow legs and walk off sites most often. And, with the cost of building materials skyrocketing, they’re more appealing to would-be thieves than ever. In fact, sites like Facebook Marketplace, Craigslist, and MaterialsXchange make great fences for pawning stolen goods in a hurry.

The following are 5 of the most common items stolen from construction sites.

1. Tools

Tools are one of the most common items stolen off of construction sites, and the reasons why aren’t all that shocking. Tools, particularly small hand and power tools, are incredibly easy to steal. They fit in small bags, jacket pockets, or even lunch boxes, making them very easy to walk away with. And, the secondary market is full of potential buyers looking for a discount.

2. Lumber

There’s nothing cheap about lumber these days, and piles of framing lumber that once could sit idly on a project are now prime targets for pilfering. Thieves will grab lumber overnight from empty construction sites and either resell it on secondary marketplaces or use it on their projects. 

3. Appliances

By day, contractors and subs install air handlers, AC units, furnaces, and water heaters in new construction buildings, but then they leave the site empty at night. Thieves know that no one is on site overnight, so they’re grabbing condensers, heaters, air handlers, and other units right off the site, and then selling or reusing them on jobs they run.

4. Copper

Copper is a valuable material, and it’s often fairly easy for a thief to steal once they’ve gained entry to the home. Thieves will target piles of old copper pipes and wire or grab the pipes right out of the walls, ceilings, and floors. This often results in significant water damage for the contractor to figure out, as well.

5. Heavy equipment

Heavy equipment isn’t as easy to steal as appliances or tools, but the profits for reselling backhoes, excavators, bulldozers, and skidsteers can be staggering. When one of these big-ticket items goes missing off a project site, the job can come to a screeching halt.

Construction theft isn’t new, but it can be manageable

Construction theft is anything but a new problem to contractors, but being smart about how it affects the job can mitigate its impact. And, with some new approaches like those outlined above, it’s possible to deter thieves from targeting your jobs and moving on to the next soft target.

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