The Ultimate Guide to Understanding Construction Compliance

Why is Compliance in Construction Important?

Compliance in construction is essential for upholding safety, quality, and legal standards during the building process. In 2016, a construction firm based in the UK was charged £25 million ($34 million) for health and safety-related violations. Construction companies can avoid these costly fines and legal problems by following regulations and codes in their country or region.

Compliance also protects the health and well-being of workers and the community. Additionally, adhering to guidelines and regulations can boost a construction company’s reputation, creating more growth and success opportunities in the industry.

Types of Construction Compliance Requirements

Construction companies must comply with different compliance requirements depending on the type of project and its location. Some common types of construction compliance requirements include:

• Building Codes – Most countries have specific building codes outlining the minimum safety, health, and sustainability standards. These codes cover various aspects of construction, including structural requirements, fire safety measures, energy efficiency standards, and more.
• Lien Requirements – Lien laws allow construction companies to file a lien against a property if they are unpaid. These requirements vary by state and country, so it’s crucial to research and follow them accordingly.
• Safety Regulations – Health and safety regulations exist in many countries at the federal and state levels. These regulations outline specific requirements for construction sites, including personal protective equipment (PPE), hazard communication, fall protection, and more.
• Contractual Agreements – Construction companies must adhere to contractual agreements with clients, subcontractors, and suppliers. This includes meeting project timelines, quality standards, and payment terms.
• Credit and Background Checks – Companies must conduct credit and background checks on their clients, partners, and employees. These checks help mitigate financial and legal risks by ensuring the legitimacy of the involved parties.
• Insurance and Bonding Requirements – Most construction projects require specific insurance coverage, such as general liability and workers’ compensation. Bonding requirements may also be necessary to ensure financial responsibility and project completion.
• Wage and Union Payroll Agreements – Construction companies must comply with federal, state, and local wage laws and pay agreements with labor unions. Failure to comply may result in legal action or fines.

Standards and Regulations in the Construction Industry

There are several standards and regulations that construction companies should adhere to grow their business, mitigate compliance and liability risks, and run a safe and responsive operation. Some of these compliance in construction include:

Occupational Safety and Health Administration (OSHA)

In the US, OSHA introduced a specific set of standards called 29 CFR 1926, which includes 27 subparts, to address the inherent hazards present in the construction industry. The standard requires construction companies to comply with specific safety and health standards, which include fall protection, hazard communication, scaffolding, electrical safety, hazardous materials handling, and more.

International Organization for Standardization (ISO)

The ISO has developed several international standards related to the construction industry. Some of these include:

• ISO 9001:2015 (Quality Management Systems) – This standard offers a framework for aligning health and safety, energy use, and asset management with an organization’s business goals.
• ISO 14001:2015 (Environmental Management Systems) – This standard offers a framework to help companies lessen their environmental impact, boost efficiency, and meet regulations.
• ISO 50001 (Energy Management) – This standard offers a straightforward approach to enhancing energy use by developing an energy management system.
• ISO 45001:2018 (Occupational Health and Safety Management Systems) – This standard provides a clear framework for preventing and responding to health and safety incidents.

Construction Design and Management (CDM) Regulations 2015

The CDM regulation seeks to enhance health, safety, and welfare within the UK’s construction industry during project execution. Its primary objective is to minimize the risk of harm to those involved in building, utilizing, and maintaining structures. By encouraging organizations to plan their work thoughtfully, the regulation ensures that associated risks are effectively managed from start to finish.

National Construction Code (NCC)

The NCC is the leading technical guide for designing and constructing buildings in Australia. It sets the minimum standards for safety, health, comfort, accessibility, and sustainability. Updated every three years, the NCC is a performance-based code that offers flexibility in meeting compliance as long as the minimum requirements are satisfied.

Compliance Risks in Construction

Construction remains the most dangerous industry in terms of health and safety, contributing to more than half of all work-related deaths in 2023/24, according to the UK Health and Safety Executive (HSE). The industry also has the second-highest level of workplace injuries.

Construction companies need to focus on these five critical areas due to higher levels of risk.

• Building & Environmental – Employees need training on different building regulations, waste management practices, pollution prevention measures, environmental impact assessments, and the safe handling and disposal of hazardous substances.
• Health & Safety – Companies should train their employees about their obligations under various health and safety regulations, including conducting risk assessments, developing construction phase plans, coordinating with other duty holders, and ensuring worker safety.
• Employees – Employees are the backbone of construction projects, and compliance with employment laws is crucial. This includes offering fair wages, safe working conditions, appropriate accommodations, adhering to working hour limits, and following immigration laws.
• Financial Crimes – Construction companies must adhere to anti-money laundering laws, bribery and corruption regulations, and fraud prevention measures. This involves conducting due diligence on clients and partners to verify legitimacy, monitoring financial transactions for suspicious activity, and maintaining strict record-keeping.
• Legal – The construction industry is subject to many laws, including contract law, property law, planning and zoning regulations, tax laws, and more. Compliance with these laws ensures the smooth operation of projects and mitigates legal risks.

How to Streamline Compliance with a Software Solution

Compliance software has become a critical tool for construction companies to streamline compliance processes with various standards and regulations. Some of the benefits of using a compliance software include:

• Reduce Paperwork – Compliance software helps companies digitize and centralize all their compliance documents, making organizing, accessing, and updating information easier.
• Automate Processes – This type of software automates many processes, such as issuing alerts for upcoming deadlines or conducting risk assessments. It reduces the time spent on manual tasks and ensures timely compliance.
• Ensure On-Site Reporting and Visibility – Mobile apps allow workers to report incidents, complete inspections, and access safety information on-site. This real-time visibility enables proactive risk management and improves overall safety culture.
• Streamline Audits – Companies like Link Contracting have significantly benefited from using compliance software to manage their audits. The software helps them easily track and record audit data, making the process more efficient and reliable.
• Simplify Asset Tracking and Management – Companies can use compliance software to track and manage their assets, including equipment and personnel certifications. It helps ensure that all assets meet compliance standards and lowers the risk of penalties for non-compliance.