Site Security Issues for Constructors

Introduction

Construction site security is an increasingly important concern for constructors.  One of the reasons why this area is important concerns the financial ramifications of poor site security.  The National Equipment Register (NER) has estimated that just equipment theft and its indirect expenses cost the U.S. construction industry up to $1 billion per year.  Moreover, the construction theft problem has been growing.  In 2003, NER had 4,000 equipment theft reports.  For 2004, the NER reported figures increased by 25% (Loehendorf, 2005).  Statistics for 2005 are not yet available.  In addition to equipment theft, substantial quantities of construction materials are stolen from jobsites from pipe and lumber to appliances.  Some builders have estimated that construction site theft adds 1% to 2% onto the cost of the average home (Loehndorf, 2005).  A contractor realizing a 2% net profit before taxes on a $2 million job could easily see this $40,000 profit evaporate from site security lapses.  Since one goal of the constructor is to protect the bottom line from the inception of the project, site security is part of this economic concern.  Unprotected construction sites provide ready targets such as high value tools, equipment, and material for criminal activity.  Construction sites can be protected through a variety of measures from physical security to improved policies and procedures.  Losses due to site security breaches are important from not only a direct cost standpoint but also an indirect cost standpoint.  Often the indirect costs due to work and schedule interruption are more significant than those direct costs (Earnshaw, 1985).  Contractors ultimately need to balance the cost of losses with the cost of providing improved security including increased labor time involved with protective measures (Bradley, 2005).

Construction contractors often have poor inventory and internal controls practices (Adrian, 1999).  Therefore, these contractors may not be aware of the impact of construction theft.  Construction estimates may be padded or tools are not adequately tracked or responsibilities monitored for contractors to understand their true situation.  On one large hotel project protected by fencing and 24-hour guard gates, the general contractor still lost $100,000 in tools over the course of the project (Legarza, 2003).

Physical Security

A fundamental means to promote improved site security is by making the site less accessible to thieves and others intent on creating problems.  A key step in promoting physical security is to minimize or control access to the construction site.  This is done through controlling site access at gates and constructing exterior barriers such as fences or natural obstacles.  If these exterior means are compromised then interior site barriers can be implemented to provide additional protection.  Physical security is not usually a complex undertaking for most construction projects but it does require close attention to security basics. 

Another key concept in the security scheme is the concept of defense in depth or security layers.  Thus a construction site security theme may consist of site fencing and warning signs, security lighting, locks, inaccessible storage, guard patrol, alarm system, and further measures.  This way more than one barrier has to be surmounted by the successful criminal.  These multiple barriers slow down criminal elements increasing risk of exposure.  It is worth noting that any security system devised by humans can also be defeated by humans.  But if the construction site security system is made more difficult for the criminal, they may decide to leave and select an easier target.

The ability to provide physical security can depend in large measure on the configuration of the construction site.  A linear construction project such as a highway or pipeline project is difficult to protect.  A vertical construction project such as a high rise building is much easier to protect since, despite its height, it has a limited site perimeter.  No one security solution is best for every construction site.

Site Fencing

One of the most common methods to provide exterior security is by means of fencing the perimeter of the site.  The most common fencing material is chain link.  This material can be installed in rolls or in sectional units.  The advantage of sectional units is that they can readily be reused on other projects by semi-skilled workers.  In addition sectional units at a jobsite can be readily modified by on-site crews to meet changing construction project requirements.  However, sectional units while providing flexibility must be anchored and not provide gaps in their coverage along a perimeter.

The fencing should be at least seven feet in height.  Supplementing the fencing should be triple strands of barb wire on top where allowed by governmental agencies.  The fencing should be rigidly anchored by posts and set no more than a couple of inches off the ground surface.  In soft ground surfaces direct burial may be required for the bottom fence portion with poured concrete anchors.  The fencing should also prominently feature warning signs against trespassing.  One builder went so far as to install security fence around an entire 750-acre housing development situated on two golf courses (Taylor, 2003).

Site fencing can also be important in protecting against after-hours accidents by kids attracted to playing at the construction site.  Children deserve special protection under the law and construction sites may be considered as an “attractive nuisance” for children (Sweet, 2004).

Fenced Compounds

Where the entire project can not be fenced for disparate reasons such as with linear projects that are cost-prohibitive, fenced compounds can provide a solution (Paulk, 2004).  Fenced compounds may also provide a solution for subcontractors if the owner, construction manager or general contractor refuses to fence the entire site.

These fenced compounds can be strategically located for tools, equipment, and material shipments.  After shift operations, valuable items can be grouped at these compounds.  To prevent excessive travel time, correct spacing of these compounds is essential.  With the compounds, it is easier to maximize effectiveness guard security patrols.  Security patrols have a more limited area upon which to concentrate their efforts.  If possible, the compounds should be situated on higher ground for improved security patrol visibility.  With remote projects in locating these compounds it is recommended that the compound should be visible from nearby roads for improved security. 

Clear Zones

Unless periodic observation of fenced barriers takes place, these lose their effectiveness.  Whether site fencing or fenced compounds, clear zones should be present both outside and inside the fencing.  This clear zone should be a minimum width of five feet on both the inside and the outside of the fence (Arata, 2005).  If room permits it should be larger.  These clear zones are simple in concept but may be difficult to create at a construction site.  A construction site fence is usually placed at the outer property edge meaning that areas beyond this are not within the constructor’s control.  In selected instances it may be wise for the contractor to offer free of charge to create a clear zone on adjacent property.  In other cases, the cost expedient move may be to rent the necessary clear zone space at the site perimeter.  Or judicious fence location may mean that this barrier is set back from the property edge.  This set back will be dictated in large part by the site size in relation to construction requirements.  Unfortunately in many situations material lay down space is at a premium and thus the fence must be at the property boundary.  In urban areas, in particular, many projects are built “sidewalk to sidewalk” and the luxury of extra space is not available.  Prime elements for elimination in these clear zones are weeds, underbrush, and trash that may conceal people or materials from guard patrols. 

Walls and Other Barriers

The requirement for fencing can be in part sometimes mitigated by the presence of walls and other barriers.  A project site bordered on one side by a steep ravine may not require a fence due to the impassability of the ravine walls.  However, fencing on this ravine or other means of protection may still be important due to safety considerations for project workers.  An existing block wall or other fencing of an adjacent property may be adequate to eliminate portions of project-required fencing.

Gates and Related Issues

Insofar as possible, gate access to the project should be at restricted levels.  Every gate to a project is a potential breach in the physical security system.  Ideally a construction site would be able to operate with one or two gates.  Other gates may be necessary such as on jobs with mixed contractor union and non-union contractor labor forces that require a “two-gate” system are required by federal labor law.  Gates besides main entrances should be locked when not in service or if not posted with permanent guards.

Locking of gates at end of shift while relatively simple requires some careful practices.  Gate locks should not be left in open position during construction operations.  Open locks can be replaced with similar-look locks by thieves passing by the project and left on the gates.  After hours these same thieves can then gain access to the project utilizing their keys in their own locks (Brown, 2004).  Locks can be procured that prevent key removal unless the lock is returned to the locked position.  High security gate locks instead of garden variety locks can prevent compromise and can also help guard patrols detect cut off and replaced locks.

Parking for contractor personnel is a problem at many construction sites.  Employee vehicle parking within the secured perimeter should be strictly limited to management personnel.  Those vehicles so designated should be given distinctive parking stickers.  The parking stickers should be of a type and size that are not easily duplicated by unauthorized users.  For longer term projects, sticker designs and colors can be changed periodically.  Other employees should be required to park outside the secured perimeter. 

Locks and Key Control

Locks for gates, tool boxes, and storage containers should be high quality with pick-resistant features.  Quality of locks selected should be from a maintenance standpoint as well as security standpoint.  Construction locks need to be both abuse resistant and weather resistant due to the rugged construction environment.  An inoperative lock is as bad as a thief-defeated lock.  Locks should also be selected from the standpoint of a total security system.  A heavy lock on a poor quality chain with the chain easily defeated by bolt cutters is a poor selection.  Combined with the heavy lock should be a high quality chain protected by nylon or plastic sheathing preventing defeat by bolt cutters.  Any security measures must be viewed in the context of a total system.  In turn, that system is only as strong as its weakest link.

For the facility itself, as soon as practicable, doors and locksets should be installed by the contractor.  If poor quality lock hardware has been selected by the designers, it may be cost effective for the contractor to make upgrades at installation.  The contractor could do this on their own or via a value engineering change order.  Permanent lock systems are available that allow contractors’ access during construction.  When the client uses their keys, the contractor’s keys are disabled for the same lock.  This provides an added measure of security for the client and reduces contractor key control/retrieval problems.  Many large tract home and custom home builders have adopted this lock disable technique as standard practice.

Ideally the locks selected for construction and permanent use will have keys with anti-duplication features.  These keys are typically stamped with the inscription, “do not duplicate.”  Moreover the key blanks are nonstandard (not readily available) and kept under careful control by the manufacturer.  More advanced permanent electronic lock systems utilize pass cards or proximity readers/cards to provide additional benefits (Horan, 1997).  A lost pass card or proximity card can be deleted from the system prohibiting any unauthorized use.  This saves substantial costs since locks do not have to be periodically re-keyed.  Given the high turnover in construction in conjunction with the variety of contractors on the typical site, this is a substantial benefit.  Electronic access systems provide record tracking for management review.  A user with a pass card once activated in the lock can provide a permanent record of time, date, and user identification.

Whether the system is conventional locks and padlocks or electronic access systems, a sound key control policy is a prerequisite.  A superintendent or project manager can be assigned master keys or master key cards that allow total project access.  On the other hand, a craft supervisor may be given key access with a sub-master or a few keys covering their limited responsibilities.  The tendency for some construction firms is to give everybody a master key or key card to everything.  The problem here is that total access then approaches a total loss of security.

The key policy with either conventional or card keys should rely on a system comprised of change keys, sub-master keys, and master keys (Green, 1995).  A change key or card opens only one lock.  A sub-master can open a group of locks.  Finally the master, as its name implies, can open all locks.

Site Lighting

Illumination of the construction site can be an important deterrent to theft.  From a psychological perspective, adequate site lighting deters criminal attempts.  From a guard security perspective, a well-lighted site makes detection easier.  Lighting levels to accomplish this task do not need to be excessive.  Lighting requirements are typically based on factors of size, time, and contrast.  Detecting people at night involves relatively large objects (size) at relatively slow speeds (time) and simple form recognition (contrast).  Therefore average lighting levels of 1-2 foot-candles or even less can be adequate for this intended purpose.  If practicable, lamp lighting patterns should overlap and avoid dark and light pool contrasting areas.

The preferred lighting types for this exterior lighting are typically metal halide or high and low pressure sodium lamps.  These types of lamps are effective over wide areas.  In addition, these lamp types have long bulb lives and low power consumption per lumen produced as compared to traditional fluorescent and other lamp types.

The selected lighting system should be well maintained and protected against attack.  Light standards should be placed inside the secured construction area with buried utility lines to guard against unintentional damage or vandalism.  Traditionally the parking area for a facility and its lighting are the last targeted items for project completion.  For secured storage, some situations may lend themselves to early installation of parking lot pavement and lot lighting.  This early parking area and lighting completion provides an excellent secured storage area for the project.

Tool Containers

Secure storage of tools and equipment besides gang boxes is often accomplished through containers or trailer vans parked on the site.  At the end of the shift, these are then securely locked.  These door padlocks can be further protected by welded steel plate covers.  To provide additional protection against lock removal, a backhoe or forklift is placed against these doors to prevent opening.  Wheeled equipment such as welding machines, air compressors, and cement mixers can be placed atop these rugged containers to prevent drive-away theft.  A key consideration in this instance is ensuring that adequate structural roof capacity is available to support these loads.

If tool containers are not available or items of a bulk size prevent convenient storage, the constructor must try other approaches.  Air compressors, welding machines, large ladders and similar items can be suspended in mid air from crane boom hooks.  Forklifts can locate their fork tines in between a cement mixer’s frame and a wall.  Forklifts can set their forklifts on top of lumber piles to prevent removal.  Front-end loader buckets can be curled, lowered, and placed over walk-behind compactors and spare backhoe buckets.  With the caveat that the equipment should not be able to be started, these techniques can provide excellent security.

Alarm Systems and Security Cameras

Continual evolution of microelectronics combined with more economical pricing has meant that alarm systems can be feasible in some construction situations.  It is common practice, of course, for those builders in the residential segment to protect model homes during off hours with alarm systems.  In addition, some builders equip model homes with security monitoring cameras.  Thus sales personnel in one office on a system of monitors can scan several model homes to protect against theft and vandalism.

Projects under construction are more difficult to protect with alarm systems and security cameras.  Until facilities are complete with doors and windows a some standard alarm systems are of little value.  The problem that applies to security cameras involves monitoring personnel.  A security camera system unmonitored is of slight value except for recoding theft events after the fact.

However there are alarm systems based on motion detection that can be used at construction perimeters.  The motion detection system can be tied into a cellular telephone system to automatically dial a guard service to dispatch a patrol.  While these motion detection systems are not inexpensive, compared to full-time guard service for a year, it is a cost-effective investment.  These motion systems can be keypad activated by project personnel.  A superintendent leaving the project for the evening codes the keypad to activate the system.  Inside or outside a facility, motion detection systems can be tied into security cameras.  The security camera does not activate and alarm remote monitoring personnel until activated by motion sensors.

Some typical alarm system types for area and space protection include the following (Hayes, 1991):

Another type of system for individual equipment protection is a proximity sensor.  These proximity sensors can be utilized underneath a piece of equipment.  If the equipment is moved by unauthorized users, this triggers the proximity sensor.

Firm Policies and Procedures

Contractor’s need to set in place policies and procedures that will help to avoid internal security problems.  Contractors must recognize that internal employee security threats can be just as serious an issue as external threats.  Moreover, these security problems are exacerbated when a contractor’s employees team up with those outside the firm.  Contractors need to avoid hiring problems in the door if at all possible.

Credit Checks

Some firms implement credit checks on all employees.  The theory here is that an employee with poor credit and problems paying bills is more likely to be a theft risk.  This follows from the practices of many insurance companies that increase premiums for poor credit risk clients.  Experience has shown that these poor credit risks file an inordinate amount of claims.  Contractors on internal theft cases have found the same experience with theft and thus implement credit checks.

Mandatory Drug Testing

Another common tactic is to implement drug testing policies for all employees.  An employee with a drug habit needs to support this habit.  An expensive drug habit can overwhelm the employees’ ability to pay for it out of standard wage and salary means.  A construction project with expensive tools, equipment, and material provides many opportunities for employee theft.  Many contractors have implemented mandatory drug testing for in an attempt to improve the safety climate.  Control of internal theft is another justification for drug testing policy implementation.

Employee Badges

Due to the large number of employees from various subcontractors on a project, it can be difficult to detect unauthorized personnel.  To combat this and improve site security, some contractors have implemented employee badge systems.  Each employee must wear the badge continually in an open and readily-visible manner during the shift.  These badges must be distinctive and copy resistant.  Often these badges contain a photograph of the employee and are laminated for durability.  Periodically the badge colors can be changed on longer term projects when lost or misplaced badges become a problem.  Site checks of employee badges on site can be cross checked with payroll records to prevent problems with ghost employees.

On larger projects with guards stationed at personnel entry/exit gates, the practice must be to frequently inspect the badges to ensure matching identification.  On a regular basis, either guards or supervisors on site can make spot checks to enforce compliance.  Individuals seeming out of place can be checked more easily.  If these types of controls over an in-place badge system are not done the value is minimal.

Internal Project Controls

Construction is not as systematized as many other industries.  Every project typically has unique elements captured in plans and specifications.  These elements in the plans and specifications must be converted into material purchases.  Once purchased the material must be delivered to the project site and kept secure until final installation.  Construction firms are often dealing with at least some new suppliers for every project.

If a construction firm lacks adequate internal controls, invoices and receiving reports can be readily falsified by employees of the contractor.  To prevent these occurrences, contractors need to have a set of checks and balances in place. 

The first control is a sound, detailed estimate for the project.  Not only does the estimate help to buy out the project but, properly monitored, it can help to pinpoint employees over-ordering material for their own use.  Material ordering and receiving responsibility should be split between different individuals for implementation of the checks-balances concept.  Material purchases, if possible, should be centralized by the contractor.  Centralized control not only produces volume purchasing discounts but can help to avoid fraud by dealing with known suppliers.

Internal controls must be in place to check payments on invoiced materials.  If there are holes in a contractor’s purchasing system, errant or unscrupulous suppliers will find them.  One common practice is to double invoice a contractor.  A bill is sent for materials in one month and paid by the contractor.  Then sometime later, an identical bill is sent to the contractor.  Inadequate controls can result in payment for the same bill twice if monitoring is inadequate (Nelson, 2003).  Mistakes can also be made with supplier invoices in error or on purpose such as where a contractor is billed out for 3/4 inch plywood instead of the actually ordered and delivered 5/8 inch plywood.  Matching and systematized checking of purchase orders, receiving reports, and supplier invoices can avoid these fraudulent practices.

Consumables are another area for potential problems.  Certain contractors such as those involved in heavy construction have large equipment fleets.  These fleets must be supported with consumables such as tires, batteries, and fuel.  Internal controls should be in place to monitor such items as tire usage and fuel consumption against known benchmarks.  A set of tires for a large front end loader can exceed the cost of a luxury automobile.  In one case, collusion between a company’s equipment foremen and the local tire dealer resulted in an inordinate amount of expense for new loader tires.  Benchmarking tire usage with other contracting firms eventually led to the discovery of this problem (Kelnhofer, 2004).  Fuel misuse particularly with gas that can be used for employee personal vehicles is another sometimes severe problem.  Fuel consumption vs. hours of operation and type of use should receive further contractor monitoring efforts.

Tool and Equipment Manual/Computer Tracking

Construction firms must have procedures in place to ascertain where tools and equipment are amongst project site and home office locations.  There are commercially-available programs utilizing bar code technology that can assist in this effort.  The problem with many firms particularly with small tools and hand power tools is that there is a lack of knowledge of where these are or how many are missing from theft or loss.  Many contractors have as a matter of policy expensed these tool purchases to individual jobs over the years with no further control efforts. 

Bar coding programs can readily track with minimal labor expense what tools and equipment have been assigned to what project (Toolwatch, 2003).  When bar coding is complete for a project, the bar coding tool can be readily downloading via interface to a personal computer.  The personal computer can then generate internal management reports including location information.

A prime element in this tracking effort is to pinpoint responsibility with tools and equipment to individual supervisors.  Thus at any point in time, a detailed tool and equipment inventory by supervisor is readily available.  Tool responsibility policies must make economic sense, however.  As an example, some firms have a policy that incorporates employee brass tags for tool checkout.  An employee is given a brass tag etched with the employee’s employee number.  When an employee needs a safety harness or power tool, they can turn in this brass tag at the tool crib or tool trailer.  Upon tool or harness return, the brass tag is returned to the employee.  If daily returns are required, the time spent standing in line at shift start and shift end can quickly exceed both the direct and indirect costs of the tool or harness.  A better responsibility on certain items such as safety harnesses is to have enough to check them out for longer durations to employees.

Again, security efforts must be continually analyzed for both effectiveness and economic sense.  If tool and equipment tracking efforts are too strict employees may rebel or become discouraged in these situations.

Global Positioning System/Radio Frequency Remote Equipment Tracking

The advent of low cost global positioning systems (GPS) and radio technology is being successfully applied to equipment tracking for theft recovery.  A GPS locator or radio frequency device can be placed in a secure hidden location on a piece of equipment.  When the equipment is noticed missing, it can then be tracked as to its location.  Besides the cost of the transmitter and installation, the contractor pays a monthly monitoring fee.  Compared to the cost of the lost equipment, the costs to install and monitor equipment are minor.  Due to the effectiveness of these systems, contractors are adopting this technology in increasing numbers.  One vendor recently publicized that during 2004, 78% of equipment stolen with its tracking system was recovered by law enforcement personnel within 24 hours and 19 percent was recovered in less than an hour (LoJack, 2005).  GPS tracking systems on the market offer up to a five-year battery life with separate battery backup.  In addition, system vendor personnel install these unobtrusive systems in protected locations preventing disablement by thieves.  One significant advantage of these systems is that thieves can actually be caught in the act.  Systems also allow a concept referred to as “geo-fencing.”  In geo-fencing, boundaries can be set for the equipment such as the project site whether it be a rectangular/square area of a conventional project site or a linear-type project such as a street utility project.

Tool and Equipment Identification

At a minimum, a contractor’s tools should be easily identifiable on a project.  Selection of distinctive paint colors along with tool engraving can assist in this regard.  On certain large projects, general contractors have assigned unique colors on a mandatory basis to each subcontractor on the project.  Thus every tool and gang box was not allowed on the project until it had been color coded with the mandatory paint color (Roberts, 2003).  This helps to avoid losing tools to other subcontractors.

Visits to local pawn shops alerting them to tool colors and engraving identification can also assist in loss reduction efforts.  Rewards can be given to these individuals and others that assist in the recovery of stolen tools and equipment.  A subsidiary advantage of tool/equipment identification is that stolen property recovered by police can be positively identified by the contractor.

Contractors need to have ready an inventory sheet on large equipment with serial numbers available in case of theft.  The appendix contains a recommended form from the California Highway Patrol (CHP) developed through their Construction Industry Crime Prevention Program (California Highway Patrol, 2005).  The form with product identification numbers and strategically-placed unique owner applied numbers along with color photographs of individual machines can be very helpful in theft recovery efforts.

Material Waste Disposal

Every project generates significant amounts of waste material.  This waste material is typically removed from the project by means of disposal drop boxes.  Control of what is placed in the drop boxes is a problem on many sites.  If tools or material are placed in these drop boxes by dishonest employees, ascertaining the loss source can be difficult.  Collusion between contractor employees and personnel from the trash disposal company upon drop box site removal can take place dividing the spoils.

To prevent these problems drop boxes should be placed in open view and not hidden from sight.  Ideally this open view may include a position where trash disposal activity can be in view of the site office trailers.  Some contractors set up cyclone fence sections on the ground with open sides.  Trash placed in these cyclone-fenced areas can be more readily examined than solid-sided drop boxes.  Periodically the trash is then removed by front end loader and trucks.  A project engineer may be assigned to periodically monitor these trash disposal activities.

Certain waste materials from construction operations should be disposed of as quickly as possible.  Appliances once delivered to a residential or commercial construction site are a key theft target.  Empty appliance boxes placed outside the building can be an advertisement for thieves.  Therefore these appliance boxes should be knocked down and hauled away the same day.

Other Items

Enforcement of allowable work time windows on construction projects is also important.  Workers for some subcontractors may want to start earlier than other firms.  The obvious problem here is that non-uniform work hours can lead to subcontractor to subcontractor theft on sites.  On open sites such as major housing subdivisions, this is even more of a problem.  Uniform work hour windows can help to prevent this problem.  Activity occurring outside these windows can be readily investigated by security patrols.

Another practiced internal policy on the part of some contractors is to lock off areas of a project upon completion.  A mid-rise hotel building, for example, will have raw construction on the top floors with finishing construction nearing completion on the lower floors.  As soon as this lower floor work is done, room doors are locked for room security.  This prevents pilferage from finished rooms during total hotel construction.  It also prevents destructive acts by disgruntled craft personnel upon finished rooms.

Guards and Guard Services

Guards from the contractor or guard services for construction site security are one of the most expensive security elements.  If chosen, the guard service coverage must justify the expense based on the dollar volume of construction work requiring protection.  Guard service can range from periodic drive-by patrols to full-time on-site security staff.  In known high crime areas, full-time security staff may be the only solution.  The quality of guards varies greatly.  The low-cost provider of guard personnel may furnish substandard personnel or those with criminal records to a jobsite.  For some contractors, workers that need light-duty work while recovering from an accident can provide an excellent source for construction site guards.  An injured carpenter might not be able to perform carpentry tasks for the contractor but can provide guard services.  This gives the injured employee a useful light-duty task while helping the contractor reduce their overall workers’ compensation costs.

A guard service for off-shift hours on a typical project with one guard present might be retained from 6:00 PM to 6:00 AM with full coverage (24 hours) on the weekends.  This would be a total of 108 hours per week for a 52 week year plus 6 annual holidays (additional 12 hour coverage each) for a total of nearly 5700 hours.  At a guard service firm charge rate of just $15 per hour, excluding overtime, this is then nearly $85,500 per year.

Some contractors when they think of construction site security automatically think of guard services.  While guard services can be an important and necessary part of site security measures, due to their expense, many other less-costly measures can be undertaken before guard service implementation.  The rising costs of guard services coupled with the lowered costs of microelectronics security equipment and remote monitoring dictates a careful analysis.

Site Security Costs and Benefits

There must be a balanced decision made on the level of site security and thus associated costs versus the benefits (Goldman, 1999).  Simply stated, to spend five dollars on an item over the course of the project for a dollars’ worth of benefits does not make economic sense.  Some constructors take the view that theft will happen anyway and only consider the direct costs of material or tool replacement in their calculations.  However, fifty dollars of missing material may mean a two-hour delay to a three member crew while the material is redelivered and re-sequencing takes place for the crew.  Add a half-hour of supervisory time to determine that indeed the material is missing and reordering would be a conservative number.  If the two-hour delay for three people plus the half hour of supervisory time pencils out at fifty dollars per hour per person, fully-burdened, this is an indirect cost of three hundred and twenty five dollars.  Calculation of the true cost of the fifty dollar theft must add this three hundred and twenty five dollar indirect cost.  Some have estimated the indirect costs of a site theft at three times the direct costs (Lohendorf, 2005).

The true cost of construction site theft is often not adequately calculated due to poor internal controls on the part of contractors.  Poor estimating and inventory-tracking practices mean that contractors do not have an accurate view of theft losses on a yearly basis.

Some costs of thefts go far beyond the actual item stolen by thieves.  A prime example of this is intellectual property.  A laptop or desktop computer in a jobsite trailer may have a replacement cost of $1500 excluding software.  However, if project personnel have spent 1,000 work hours inputting data onto this computer, at a $50 per work hour cost, the value here is $50,000.  Prudent policy in this case, in addition to theft prevention, is to backup this valuable data on a continual basis.  This backup data then should be stored away from the computer both at the jobsite and remotely from the jobsite to protect against fire and natural disasters such as was witnessed with widespread hurricane devastation along the Gulf Coast of the U.S. in 2005.

Insurance Protection

The catch-all answer by some constructors to poor site security practices is that they have insurance coverage.  This answer ignores important aspects of site security issues.  The first problem is that insurance only protects against covered losses.  The often more substantial indirect costs are not typically part of insurance coverage.  Secondly, most insurance policies have deductible provisions.  As an example, the first $500 or $1000 of any loss may be covered by the deductible rather than the insurance.  Thus the fifty dollar material loss would be bare of insurance coverage.  The third problem with insurance coverage is that theft losses can lead to increased premium rates.  The fourth issue with insurance coverage is that coverage may be denied by an insurance carrier if a contractor has not taken certain protective measures.  Finally, insurance does not cover the significantly larger indirect costs, as noted above, involved with lost productivity and schedule delays.

Even in the face of adequate insurance coverage, a contractor may want to carefully evaluate the tradeoffs between insurance costs and security costs.  Spending more on improved security may mean that the contractor can save on insurance costs via higher deductibles.  Insurance coverage should be reserved for those catastrophic losses that would seriously affect the contractor’s financial situation. 

Police Assistance

Contractors can encounter problems when relying on police departments for site security duties.  Police departments in many locales are overburdened with more serious crimes such as murders and drug trafficking.  Construction site theft is a low priority issue therefore in many departments as personnel is occupied with more serious crimes.  Moreover, police departments will often not respond to jobsite alarms.  Instead, jobsite alarms will need to be routed to contractor supervisory personnel or their guard service.  Only then will most police departments actually respond to a construction site theft alarm call.  However, as noted below, police departments can provide excellent unbiased advice for contractors.

Site Security Assistance

There is a large array of choices when it comes to construction site security.  Some of the choices are relatively basic such as fencing and site perimeter basics.  Other choices such as alarm systems and system integration are more complex.  Police departments in mid-size and larger cities often possess a high degree of expertise in these security areas.  These police forces have specialists that can provide a great deal of assistance.  Since they do not represent security system vendors, their advice would not contain this bias.  For recommended policies and procedures, contractor trade associations can be excellent information sources and forums for the pooling of ideas.

Vendors selling security products can be another source of sound advice.  The warning here is that they are trying to sell a product and thus their recommendations may be biased towards selling their particular product.  But if this is kept in mind, many of their other recommendations can be useful.  Vendors will see many more projects in a year compared to the typical contractor.

There are a number of security consulting firms available.  Again, the caveat about vendors is important here since some of these consulting firms have commission-sharing arrangements with certain product vendors.  The key problem with many of these security firms is a lack of expertise with construction contractors.  Their experience may be solely with retail establishments controlling shoplifting losses or other business concerns.  If a security consultant is selected, their background should contain similar assignments for contractors.  It is advisable given the importance of this firm selection to check references with other contractors.

Summary

The overarching goal in construction site security must be to prevent losses occurring from criminal activity.  The criminal activity can take place from outside threats or internal company threats.  Effective construction site security stems from the application of a number of security measures from physical security through to policies and practices including internal controls.  There are typically numerous levels and measures taken for construction site security.  This is commonly referred to as defense in depth.  If one element of the security system is breached by criminal elements, other elements are still present to deter the theft.  As in all financial decisions, the cost of added security must be balanced against the cost of the theft loss.  However, just the base cost of a theft loss is an inaccurate measure since it is the proverbial tip of the iceberg.  To base loss cost must be added indirect costs such as loss of crew production and supervisory time to replace the lost items. 

References

Adrian, J.J. & Adrian, D.J. (1999). Construction accounting. Champaign, IL: Stipes Publishing.

Arata, M. (2005). Construction site security. New York: McGraw-Hill.

Bradley, D. Construction sites vulnerable to theft. (2005, March 5). Commerce Journal, p. B1, B4.

Brown, T.A. (2004). Business security: protect your business. London: Crary Publications.

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Appendix

California Highway Patrol – Construction Industry Crime Prevention Program  Don't be a victim. Protect your property.

Remember to attach photos of equipment.