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The Labor Risk Index
for Owners

The LRI enables owners to quickly determine a contractor’s labor risk profile for each project and drill deeper into the data for a more comprehensive risk analysis.

The Labor Risk Index
for Contractors

The LRI enables contractors to quickly identify and understand their potential risk on a project and use that information to plan effectively and win more work.

The Labor Risk Index
for Insurers

The LRI enables insurers to comprehensively determine a project’s labor risk exposure during underwriting and use the performance metrics to more effectively set premium cost.

Labor Risk Index

The Labor Risk Index (LRI) is the construction industry’s only transformative, leadership-driven solution for preemptively addressing the systemic project labor challenges which lead to labor shortages and increased risk. The LRI deploys cutting-edge industry thinking and technology to advance the owner commitment to only do business with contractors who invest in training, grow the skills of their workforce and continuously improve. Each contractor submits an LRI for a project during the RFP process enabling early risk identification around labor competency, safety, productivity, quality, and labor market shortage. Risk identification improves risk mitigation.

The only widely accepted key performance indicator (KPI) for construction has been the Experience Modification Rate (EMR), which is specific to safety performance only. The Labor Risk Index (LRI) enables KPI benchmarking by establishing a common metric for understanding labor risk on a project. It does this by combining risk experience and predicted risk to create a high-level, or detailed, project labor risk score.

The LRI is to project labor risk what the FICO score is to credit and lending, and what the EMR is to safety performance. Determining how competitors are preforming in key LRI areas increases opportunity to thrive as the construction market evolves over time. The first step toward improvement is measurement. It’s important to determine what needs improving and why, and then align these improvement opportunities with overall organizational tactics and strategies.

Project Labor Risk Management

Too often, contractors are selected based on lowest cost. This adversarial approach need to be replaced by a collaborative, transparent approach which selects and engages contractors early based on key risk and performance criteria. The timing of key stakeholder engagement is critical to increase the probability of project success. A 2016 Dodge Data & Analytics owners survey revealed 76% of the best (most successful) projects engaged key stakeholders before or during conceptualization. Predictive risk analytics are valuable and most useful when known and applied early in the project planning lifecycle.

The Labor Risk Management (LRM) program is designed to establish robust workforce development, training and risk reduction goals early during project planning and then facilitate accountability for meeting those goals.

Measure – The LRM measures project performance in five key areas of labor risk to determine if the standard of excellence is being met.
Benchmark – The LRM enables risk performance benchmarking against the construction industry overall and the competition.
Improve – The LRM lessens risk, improves certainty and drives project success. It also helps contractors protect their brand and win work.

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2020Sep30 Labor Risk Podcast with Daniel Groves

Project Labor Cost Risk

Econometric Cost Escalation Analytics - Based on client specifications, CIR produces compensation reports which integrate an empirical project data driven technique, along with regional economic prospects, construction activity, skilled labor supply/demand headcount, and projected escalation of wage and per diem rates. The report focuses on wage and per diem forecasts for the current year plus 4 full years out for the selected region. These comprehensive reports help create and maintain accurate estimates and prevent unforeseen cost increases.

Trend-Based Cost Escalation Analytics - We employ an exponential growth model to fit historical wage data and forecast future wage levels, using certain anticipated market growth assumptions within a state, region and industry. In addition to economic growth, our model recognizes and adjusts for the impact of supply and demand imbalance (CLMA analytics) on wage growth rates. Rates are displayed showing the 95th confidence interval bands for the projected future wage levels, enabling you to visualize potential rate fluctuation.

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Warning Signs Your Construction Project Is At Risk

Your career and the future of your company can depend on your ability to successfully and consistently deliver industrial construction projects safely, within budget and on time. The last thing you want is for your project to fall behind and face disruptions due to labor imbalances. Few things can bring a project to a halt faster than labor shortages, which is why it’s imperative that you recognize the warning signs and mitigate or prevent them all together.

To help you with this, we’ve assembled a resource to help you to recognize and overcome labor risk on your construction project. This report also covers exactly how these different types of risks can become long-term problems within your project if left unchecked. Use the information provided here to help further understand labor risks and to avoid slowdowns, delays, and costly mistakes in future projects.

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