It is estimated that fewer than 25 percent of businesses in the United States have a disaster recovery plan.  Like most business owners, contractors view a disaster as something terrible that happens to someone else.  Contractors are not immune from unplanned events that can disrupt business operations, IT services, or use of its facility. On a larger scale, a catastrophe event could destroy the entire facility. Quite frankly, the chances of being affected by a disaster are small. But the consequences are real and the stakes are enormous. It is estimated that more than 40 percent of businesses that experience a disaster end up out of business within five years. Contractors are Unique! Contractors are uniquely exposed to potential disasters.  Unlike most businesses, contractors must consider not only their own facilities (trailers, shops, offices and IT systems) but also their worksites. This exposure requires contractors to be proactive with recovery plans.  A well formulated recovery plan has several components that apply for both the primary business site as well as worksites. First, the plan should specifically identify individuals to respond in an emergency and bring key systems back online. The plan needs to restore business continuity, maintain critical operational functions and return the business or the job site to an effective operational level. Why Worry? The primary reasons for the development and implementation of a recovery plan are to minimize financial loss, meet contractual requirements, assure continuity of operation, and complete construction projects on time and on budget.  Furthermore, there are instances where a disaster recovery plan is required by a statute or contract. Absent a formal obligation, it's just good business to have a well formulated and tested disaster recovery plan. A Systematic Approach The initial step in developing a recovery plan is the completion of a business impact analysis for the business and its worksites.  The analysis should first identify potential risks including, but not limited to, environmental accidents, work stoppages, power outages, and equipment or system failures. Next, the analysis should identify critical business operations and systems, quantify the potential impact of disruptions and identify personnel to address and restore the operating systems.   Lastly, the analysis should include an evaluation of existing emergency plans. An outline of a recovery plan emerges from this analysis. The next step is to designate a team to plan and manage recovery efforts.  This should include both emergency measures designed to protect life and property as well as the restoration of key systems and business operations. Team responsibilities should be detailed. The plan should address such questions as:  Who will notify employees not to report for work - or to report to another site?  Who will be responsible to retrieve critical data from an off-site storage location? Who will communicate to clients during the crisis and its aftermath? What actions need to be taken at the worksite? The Time is Now! The appropriate time for a contractor to plan for a catastrophic event is long before it happens. An effective, well planned, and tested disaster recovery plan is worth the effort! Have Questions? For more information about this and other construction related issues contact Bruce E. Seagrist by phone at 717.761.7910 or by email at BSeagrist@macpas.com.  Mr. Seagrist is a Principal in the Accounting and Auditing Group of McKonly & Asbury, LLP.

Save article

Email Firm

Email to a Friend