Loss Control Best Practices

Construction Equipment Security

Chapter Four

By Larry Barnet, P.E. Florida Partnership for Safety and Health

P.O. Box 46182 Tampa, FL 33647
Produced by the

Public Entity Risk Institute

11350 Random Hills Road, #210 Fairfax, VA 22030

With a grant from the

Construction Equipment Security What Public Entities Need to Know about Security on a Building Project
Pre-test questions 1) What time of day is most common for thieves to steal equipment? 2) What are the two sources of equipment theft? 3) What three forms of identification should a contractor require from people who deliver packages, materials, and equipment to a job site? 4) When double-stamping tools and equipment with an identification number, what do you use as a numbering system? 5) How wide should a clear zone be around fencing that protects equipment and tools at a job site? 6) Name four types of anti-theft devices that should be used on all equipment. 7) What type of paint should be used on all tools used at a construction site? 8) Give two reasons why a public entity should hold a preconstruction meeting with contractors. 9) What is the average time for thieves to enter a job site, load a piece of equipment, and steal the equipment? 10) What type of incentives should a contractor offer workers to prevent equipment theft from job sites?

2003 by the Florida Partnership for Safety and Health

Introduction Loss of construction equipment from theft makes construction projects more expensive. Contractors get hit with the loss but eventually incorporate it into their cost of doing business. When the lowest bidder includes a cost for equipment and construction-material loss, who actually pays for the loss? Public entities! This chapter will help public entities (towns, cities, counties, school districts, etc.) ensure that contractors and subcontractors maintain a complete security and losscontrol program while constructing buildings for public entities. Public-entity representatives who oversee contractors and subcontractors include public works directors, utilities directors, city engineers, county engineers, project engineers, project coordinators, project managers, and construction managers. These representatives are responsible for ensuring that all security and loss-control measures are in place and working correctly during construction projects.

2003 by the Florida Partnership for Safety and Health

Security and Loss Control Equipment theft is a major source of loss to all contractors. While insurance may offset some of the financial costs of this loss, many uninsured costs are paid by all contractors (general and subcontractors). These costs include insurance deductibles, replacing depreciated items with new equipment, and production delays, paperwork and time in reporting and replacing stolen equipment. Uninsured costs often exceed the cost paid by insurance and add to contractors overall operating expenses. These costs must be offset by increased pricing. The bottom line is that equipment theft costs contractors money and impairs their ability to offer competitive pricing for various construction projects. More importantly, some contractor equipment is worth tens of thousands of dollars. Large contractors can have equipment worth hundreds of thousands of dollars. Secure equipment means secure business. Contractors with inadequate equipment security are easy theft targets. Their major concern is to protect against tool and equipment theft. In some cases, the difference between profit and loss on construction projects depends on successfully preventing theft losses. Good planning and programming are essential to construction-site security. This is important to control loss by preventing theft of valuable construction materials and tools. Contractors can prevent theft from a construction site through several areas of ensuring security and loss control. Equipment theft has many potential sources, but the two main sources are: 1) the public or 2) workers (present and former) at job sites, during transportation, or at contractors home office. When to Address These Problems Public-entity representatives should address contractors security and loss-control policy during a preconstruction meeting to discuss all requirements that contractors must meet during a building project. Before a preconstruction meeting, contractors will be required to submit a variety of documents for review by a public-entity representative. Public Entity Preconstruction Submittal Requirements1 Before starting any work at a site, contractors for building projects must submit successful bids and be accepted. Contractors must submit the following: 1) preliminary work schedule; 2) list of subcontractors; 3) schedule of values; 4) proposed schedule to submit shop drawing; 5) staff forecast; 6) cash-flow projections for the project; and 7) a copy of written security and loss-control policy.
1

City of Orlando, Florida, Construction Management Manual, p. 27. 3

2003 by the Florida Partnership for Safety and Health

Requiring contractors to submit these items before a preconstruction meeting will: 1) ensure that they have realistic plans, including security and loss-control policies, to perform a construction project; 2) ensure that contractors understand the scope of a project; 3) show that contractors are committed to a project; 4) cause contractors to take early action obtaining subcontractors and ensuring each subcontractor has a written security and loss-control policy; 5) ensure that contractors have realistically planned their labor force; 6) ensure that their billing items are related to the scheduled work activities; 7) ensure that expected cash flow corresponds with the work schedule. Once public-entity representatives review the submitted documents, they can schedule a preconstruction meeting. Preconstruction Meeting Public-entity representatives notify contractors and all parties involved with the building project of the time and place of a preconstruction meeting within 30 days of the agreement approval and before work begins. The notice to proceed should be accompanied with an agenda of the preconstruction meeting. A preconstruction meeting will: 1) establish that contractors should communicate officially only with public-entity representatives; 2) ensure that contractors understand procedures required by public entities to execute contract and project work; 3) acquaint contractors with all participating parties; 4) ensure that contractors understand a public entitys rules and regulations in the day-to-day operation at the site; and 5) review the preconstruction submittals, including security and loss-control policy for contractors and subcontractors. Public-entity representatives should prepare an agenda (see Example 1) for the preconstruction meeting. EXAMPLE 1 Preconstruction Meeting Agenda2 1) Introduction of participants 2) Explanation of responsibilities of various parties 3) Minority- and Women-owned Business Enterprise (MBE/WBE) requirements 4) Environmental Protection Agency requirements 5) Occupational Safety and Health Administration requirements 6) Discussion of construction site (a) Mobilization of contractors office (b) Public-entity representatives office (c) Site access-storage and lay-down areas (d) Cleanup 7) Contract data
2

City of Orlando, Florida, Construction Management Manual, p. 31. 4

2003 by the Florida Partnership for Safety and Health

(e) Date of notice to proceed (f) Date of substantial completion (g) Date of final inspection (h) Liquidated damages 8) Submittals before construction (a) Preliminary progress schedule (b) Schedule of shop drawing submissions (c) Schedule of values 9) Permits 10) Hours of work 11) All correspondence by contractor will be directed to public-entity representative 12) Contractor submissions (a) Daily force reports (b) Substitutions (c) Shop drawings: (i) No work to be started until contractor has an approved shop drawing in hand (ii) Shop drawing submittal procedure 13) Construction schedule 14) Record documents 15) Progress payments 16) Progress meetings 17) Request for Information (RFI) procedures 18) Change order procedures 19) Substantial completion and final inspection 20) Safety and security of employees and job site 21) Copies of drawing and specifications 22) Emergency contact list 23) Traffic plan around and in job site When all agenda items have been discussed and the contractor receives the notice to proceed with a start date, the contractor and all subcontractors will immediately put into action their security and loss-control policy. Common Characteristics of Equipment Theft Situations3 Thieves are fairly lazy people looking for an easy way to make a few dollars. The more difficult it is to steal equipment, the more likely it is that thieves will look for easier targets. A potential thief may case premises or equipment-storage areas often and at different times to determine a routine and identify any security measures in place. Most thefts occur in the evening, usually within an hour after the workday has ended, or on weekends. Most thieves will not try to steal if they cannot enter the site, load the equipment, and be clear of the site in less than 10 minutes. A buyer for specific equipment is usually identified before a theft is perpetrated.
3

Everest National Insurance Co., Construction Site Security, Loss Control Alert, p. 2. 5

2003 by the Florida Partnership for Safety and Health

Theft Prevention Measures: Ways to Plan and Manage Theft Prevention Efforts4 Effective theft prevention requires commitment. If contractors do not make it a priority, nobody else will either. Establish theft-prevention policies and clearly communicate it to all workers including all subcontractors and their workers. Hold all supervisors and workers accountable for their part in a theft-prevention program. Offer financial incentives to supervisors and workers for practicing theft prevention, including prompt reporting of suspicious activity or persons around a work area. Offer rewards to workers and the public with information about theft and regularly reinforce a theft-prevention policy with frequent verbal and written reminders. Develop a system to verify the identity of people who deliver packages, materials, and equipment. The best way is to require three forms of identification: a drivers license, a company identification card with a photograph, and a credit card. With these forms of identification, one can be reasonably certain someone is who he says he is. If in doubt, call that persons company and verify employment.5 Monitor and analyze equipment-theft losses to identify patterns and to measure the effectiveness of overall efforts and periodically visit work crews to review their theftprevention practices. Ways to Minimize Theft of Contractor Equipment Establish an inventory-control system for all equipment and tools. Assign equipment by serial number to work teams or supervisors and hold supervisors and team members accountable for its safe return. Implement a documented check-out/check-in system for all tools and equipment. Assign work crews with the equipment they will need for the day. Do not oversupply crews with equipment. Theft-prevention plans are essential to protecting construction equipment. Follow a checklist dont leave prevention to chance. Take the following checklist on a tour of a construction site especially after non-working hours in the evening or early in the morning before workers arrive. Theft-Prevention Walkabout Checklist 1) Lock and immobilize equipment during non-working hours. Attach anti-theft devices, such as steering-wheel locks; kill switches, tire and wheel/axle locks, locked hood side plates, and locking fuel caps. Where practical, all operating levers, handles, etc., should be locked in place or placed under securely locked covers or lids.6
4 5

Everest National Insurance Co., Construction Site Security, Loss Control Alert, p. 2. Terrorism and Safety, Occupational Hazards Magazine, November 2002, p. 54. 6 Construction Site Security, New Zealand Security, p. 1.
2003 by the Florida Partnership for Safety and Health

2) Lock and protect with an alarm system all major pieces of equipment and trailers containing tools. Install padlock shields on storage trailers or converted shipping containers to make padlocks more tamper resistant and inaccessible to bolt cutters. Install trailer-wheel and hitch locks. 3) Double stamp all tools, equipment, and attachments with an identification number, one conspicuous and the other hidden. For example, engrave the last four digits of the contractor-license number or drivers license on equipment. Warning signs on equipment should indicate that identification and serial numbers are recorded. 4) Put reward decals on equipment. 5) Paint tools and equipment with bright, easily recognizable colors to identify them from a distance. Use aerosol-applied microtagger thermostat plastic coatings that contain coded pigments or metal particles. 6) Stencil or bead-weld the company logo or other identifying marks on equipment. Ways to Maximize Theft Protection of Storage Areas In some cases, theft happens with parties interested in specialized material, such as copper piping and electrical wiring. In other cases, it is petty theft of equipment left on site by subcontractors. That makes storage areas easy targets for thieves. But several things can deter theft. 1) Avoid storing equipment off premises overnight unless it is in a secured area. If equipment must be stored overnight, consider leasing or renting space at a secure self-storage facility. 2) Store equipment on premises in a locked building equipped with double-cylinder dead bolts and monitored security alarm. Some contractors store equipment in converted overseas shipping containers. Make sure they are padlocked and protected by padlock shields.7 3) In high-crime areas, consider hiring a security guard or use closed-circuit television surveillance systems. Watch dogs can be used when accompanied by a trained handler. 4) Enclose each equipment storage area with a security fence. Good fencing is an essential element in good site security, and all construction sites should be securely fenced. But remember, good fencing requires constant monitoring and maintenance. The fence should be installed to nationally recognized standards (ASTM F567-93,

Everest National Insurance Co., Construction Site Security, Loss Control Alert, p. 3. 7

2003 by the Florida Partnership for Safety and Health

Standard for the installation of Chain-Link Fence). A clear zone of at least 5 feet should be maintained around all fencing.8 5) Restrict access to equipment storage areas to designated workers. Provide security keys stamped do not duplicate to these workers. 6) Keep equipment storage buildings and surrounding areas well lit and free of hiding places, such as shrubbery, trees or other visual obstructions.9 Nighttime lighting is essential. Lighting should be elevated to eliminate dark areas and should be visible from adjacent streets. Where possible, position lighting so that it does not limit the view or create glare problems to persons who routinely check the area. 7) During large projects, have tool-and-stores depots permanently staffed. Require workers to sign in and out when tools are required. Use an identification pass card to identify people working on and visiting the site. Ways Contractors Should Investigate All Theft Losses Dont wait until an equipment theft occurs before establishing reporting procedures. These should include immediate contact with area police and key personnel within a contractors organization. Train supervisors and team leaders in the steps to take when a theft is suspected. Contact local police for training assistance.10 Establish a list of names and telephone numbers of key personnel and area police and provide it to each work crew. Good relationships with law-enforcement agencies are very important. Provide information regarding previous theft losses to investigating police and request their input to prevent future losses. Determine if stolen equipment recovered by area police is available for examination. Periodically visit police impound or evidence compounds to identify your stolen equipment.11 Equipment stolen from a construction site might be found at informal sales locations in the region. Periodically spot check area swap meets or auction houses for items fitting the description of stolen equipment. If any stolen equipment is recognized, contact law enforcement immediately. Prosecute thieves apprehended by police to the fullest extent possible. Set an example and send a message that equipment theft will not be tolerated.

8 9

Everest National Insurance Co., Construction Site Security, Loss Control Alert, p. 4. American Road & Transportation Builders Association, Where are Thefts Happening? http://www.artba.org/ner_anti_theft.htm. 10 Loss Control, CGU Group Canada, Ltd., http://www.cgu.ca/english/2/4.html. 11 ) Farm and Construction Equipment Theft Prevention, California Highway Patrol, http://www.chp.ca.gov/html/farmconstruction.html.
2003 by the Florida Partnership for Safety and Health

The most often stolen type of equipment is:12

EQUIPMENT Case Construction Backhoe/Loader John Deere Construction Backhoe/Loader Ford Construction Loader Case Construction Track Loader Caterpillar Wheel Construction Loader John Deere Construction Track Loader Clark Skid Steer Construction Loader Ford Backhoe Construction Loader Caterpillar Construction Track Loader Massey-Ferguson Construction Loader 580 510 445 885 996 450 743 555 943 30 MODEL

To identify stolen equipment, use an information sheet (Example 2) and keep in a secure place with a photograph of each piece of equipment: EXAMPLE 2 CONTRACTORS EQUIPMENT INFORMATION SHEET13 Machine make and model: Product identification number: Component/attachment or part: Engine: Loader number: Additional attachment(s), including serial number(s): Dealer/seller name: Dealer telephone number: Police telephone number: Insurance agent name: Insurance agent telephone number:

12

Farm and Construction Equipment Theft Prevention, California Highway Patrol, http://www.chp.ca.gov/html/farmconstruction.html. 13 Farm and Construction Equipment Theft Prevention, California Highway Patrol, http://www.chp.ca.gov/html/farmconstruction.html.
2003 by the Florida Partnership for Safety and Health

How Contractors can Maintain Security A project with tight completion dates and where subcontractors work extended hours pose a significant risk to site security (locking the sheds and perimeter gates, etc.), as these become the responsibility of subcontractors or their representatives on site. Write security provisions into subcontractor agreement and also site-specific safety plans whereby it becomes a specific persons responsibility to ensure that the project is secure on completion of the days activities. All public-entity representatives should use the following checklist (Example 3) to ensure that all contractors maintain the best security and loss-control measures on projects.
EXAMPLE 3 CONSTRUCTION COMPANY SECURITY & LOSS CONTROL CHECKLIST

DATE:______________, 20___ Public Entity Name:____________________________________________ Address:_________________________________________________ __________________________________________________ Public Entity Representative(s):_________________________________________________ __________________________________________________ Construction Company Name:____________________________________________ Address:_________________________________________________ __________________________________________________ Contractor Representative(s):____________________________________________________ _____________________________________________________

CHECKLIST ITEMS:
GENERAL THEFT PREVENTION MEASURES
Does contractor have a written "Theft Prevention Policy"? Did contractor issue written "Theft Prevention Policy" to employees? Do all Subcontractors have a written "Theft Prevention Policy"? Does contractor hold all supervisors and workers accountable? Does contractor offer financial incentives for preventing theft? Will contractor monitor and analyze equipment theft? Management visits crews to check theft prevention practices? Contractor has developed method to verify ID of all delivery people? Do you ask for three forms of ID? Driver's license of the individual? Company photo ID card with a photo? Ask for a credit card?

YES

NO

N/A

2003 by the Florida Partnership for Safety and Health

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EQUIPMENT THEFT PREVENTION MEASURES

Contractor locks and immobilizes equipment on non-working time? Contractor attaches anti-theft devices to equipment? Steering wheel locks? Kill switches? Tire and wheel/axle locks? Hitch locks? Locked hood plates? Locking fuel filler caps? All operating levers, handles are locked in place? All tools and equipment are double stamped with ID number? ID number in a conspicuous place on item? ID number in a hidden place on item?

YES

NO

N/A

EQUIPMENT THEFT PREVENTION MEASURES (Continued)

Is ID number last four digits of contractor license No.? Contractor places reward decals on all equipment? Contractor has painted all tools? Apply"microtagger" thermostat plastic coating? "Microtagger" coating contains coded pigments? "Microtagger" coating contains metal particles? Contractor has list of all employee's with equipment master keys? All contractors employee's with master keys? All Subcontractors employee's with master keys? Contractor stencil or bead-weld company's logo on equipment? Contractor has developed an inventory control system? Assign equipment by serial number to work teams? Assign equipment by serial number to supervisor's? Team or supervisor's are held accountable for return? Documented check-out/check-in system for tools? Documented check-out/check-in system for equipment? Give work crews only tools they need for one day? Over supplying crews with tools or equipment?

YES

NO

N/A

STORAGE AREAS THEFT PREVENTION MEASURES

Permanent storage of equipment off-premises in secured area? Overnight storage of equipment off-premises in secured area? Uses secure "Self Storage" facility for equipment? Leasing space for equipment? Renting space for equipment? Equipment stored on site in locked buildings? Buildings locked with double cylinder dead bolts? Buildings monitored with security alarm system? Buildings has complete lighting coverage? Buildings are permanently manned at all times? Uses on-site trailer for storage of equipment? Trailer is padlocked/protected with padlock shields? All trailers have complete lighting coverage?

YES

NO

N/A

2003 by the Florida Partnership for Safety and Health

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Uses on-site overseas shipping containers? Containers are padlocked/with padlocked shields? Containers have complete lighting coverage? Contractor storage area has a security fence? Maintain clear zone of five feet around all fenced areas? Restrict access to storage areas to designated workers only? Provide security keys to designated workers? Security keys are stamped "Do Not Duplicate"?

Security guards are used in equipment storage areas? Closed circuit television surveillance system installed? Contractor has theft reporting procedures in place? Supervisors are trained in using procedures? Team leaders are trained in using procedures?

2003 by the Florida Partnership for Safety and Health

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