In last month's article, I dealt with the white-collar segment of construction industry theft represented by embezzlement. Now, let's turn our attention to the more common problems associated with the theft of tools, equipment and materials, which can be thought of as construction's "blue collar" crime wave.
So common has it become that most estimates peg construction theft to surpass $1 billion in value each year. I suspect several of you reading this have been victimized by "shrinkage" at one time or another. There are two aspects to the problem. One is thievery from the outside world, which can be minimized with a variety of security precautions. The other is internal theft by your own employees. This is trickier to deal with because not only is this a security issue, it also involves sensitive issues of employee relations, employee rights and our legal system.
Quite a few contractors are all too willing to turn a blind eye to petty theft in their organizations. Some rationalize tools or inventory shrinkage as just another cost of doing business-and cheaper than replacing any good worker they might suspect of being a thief. Insurance may cover the cost of replacement and it can be hard to find out who exactly is the thief or thieves. (Years ago, I published a report from CNA Insurance saying that around 40 percent of all construction claim dollars are due to theft.) Rare is the contractor who treats internal theft as a bona fide crime and pursues the arrest and prosecution of perpetrators.
This attitude is understandable from a business perspective but contractors who are too cavalier about theft should not be surprised when it proliferates in their company. Internal theft feeds upon itself. When they see one thief beating the system, more timid employees gain courage to supplement their incomes.
Here are some tips from security experts and contractors with tool security systems to prevent losses: