The Role and Place of Risk Management
in Pile Driving Companies
Specialty subcontractors need to give their risk manager
a better seat at the table
By WAlexander Filotti, M.B.A, P.E and Richard D. Kalson, Esq. ithout having empirical data, we can confidently
report that the attendees at the last PDCA conference
in Orlando, Fla., were quite happy with
the business environment for the pile driving industry, but a shadow
was cast over this optimistic picture of the industry as many
attendees were complaining about profit margins. Deterioration of
profit margins in the pile driving industry and the deep foundation
industry at large started to slide in 2009 during the Great Recession
and this trend has never fully reversed itself. One of the primary
reasons for this negative impact on margins is that financial institutions,
developers and large general contractors and construction
managers have learned how to better understand risk and
successfully developed a multitude of methods of risk avoidance
by transferring the risk to the lower participants, such as specialty
subcontractors and their sub-subcontractors.
Our industry has been pretty slow in recognizing the vital
importance of risk. Even those companies that have a designated
person as the risk manager have rarely provided that person with a
PDCA CONTRACTS & RISK COMMITTEE
voice at the top levels of corporate management. The position of a
risk manager is similar to the position of the information manager
in the 1990s, when everybody was recognizing the need for a highlevel
information officer, but because attributes of this position
were the prerogative of the CEO, the delegation of this power went
very slowly and with resulting tremendous cost for corporations.
In the construction industry, the ultimate risk decisions are
made by the president of the company and/or the vice presidents
of operations and estimating. This makes the work of the risk manager
very difficult because no high-level executive likes to share
prerogatives with a lower level manager. Most of the time, this
creates a situation where the estimating of risks is not shared with
the risk manager. In this way, risks that should have shaped the
estimate are signaled later (e.g., proposal, contract negotiations,
etc.) and are perceived as a direct affront by the chief estimator.
Therefore, in many instances, the risks are simply dismissed. This
situation creates a difficult work environment for the risk manager
who has to cautiously navigate between the officers of the
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