For contractors, the term "cost control
has become something of an oxymoron, like "married bachelor
or "standard option.
With major events like Hurricane Katrina, cement shortages and code changes increasing construction expenses, it's easy to overlook more covert costs. Example: Construction site theft, which is estimated to add 1 to 2 percent to the cost of building a new home. Construction theft is literally and figuratively big business, with industry experts estimating annual losses at roughly $1 billion. There are 50 countries in the world with lower gross national products. THE PROBLEM

Karen Blythe, executive director of the Northwest's non-profit Construction Industry Crime Prevention Program (CICPP), pegs the loss from tools, material and equipment theft at about $26 million a year, and that's just the beginning.

Nationwide, the Insurance Services Office reports a 20 percent annual increase in the value of equipment being stolen. The National Equipment Register, a database of stolen construction and farm equipment, received 4,000 theft reports in 2003. A year later that figure was up 25 percent. Blythe says the CICPP typically receives one or two reports of stolen large-scale equipment (generators, forklifts, etc.) a year. In the first six months of 2005, however, her organization received four. "The number of thefts and the dollar amounts being reported are increasing,
she says. "These people are not getting caught, so they are just getting bolder and bolder.

Construction site crooks will steal just about anything. Blythe recently had a case where vandals tried to steal the aluminum steps off a job trailer during work hours. In another CICPP case, a police officer stopped a truck where the suspects had loaded up everything from ladders and windows to aluminum planking. In a third, refrigerators, lumber and cabinets were stolen off a job trailer as the general contractor worked nearby. Unfortunately, these in-your-face type thefts are becoming more commonplace. "The question is, what does a thief look like?
asks Blythe. "We have had contractors tell us that their thieves just looked the part, they looked like they belonged.

Some experts believe that these thieves do "belong,
that is, many thieves have an intimate knowledge of the construction industry. They know what to steal, when to steal it, where to steal it and where to sell it. For example, copper wire-stolen by the wheel, in links or directly from the walls of unfinished homes-is often broken into small pieces. Once the sheathing is removed it appears to be clean copper and is unidentifiable even to its rightful owner. Said copper is often sold to legitimate contractors who have no idea that they're dealing with hot wiring.

"We are seeing everything down here in California being stolen,
says Earl Gunnerson, executive director of the Crime Prevention Program (CPP) of Southern California. According to the National Equipment Register (NER), California ranks third in the U.S. (after New York and Texas) for equipment thefts. "We are also seeing an increase in equipment that is going across the border. All the stuff coming into the U.S. is being checked, but not the stuff going out.
Gunnerson estimates the average loss per construction site theft is between $65,000 and $75,000.

The old "time equals money
equation is another financial formula involved in construction theft. Many victims say the most devastating price they pay is that of unanticipated downtime. "The cost of getting electricians in to replace copper wire that's been ripped out is somewhat minor compared to the cost of construction delays,
says Randy Agron, vice president of A.F. Sterling, an Arizona builder. Blythe estimates that the downtime related to construction theft costs contractors roughly three times more than their stolen items.

Of course, construction theft cost control-or the lack of it-hits a builder's bottom line. "Companies are now building in x' amount of money for their bids, just in equipment that they know will be lost,
says Gunnerson. "It is all passed on to the consumer in the end.

IN SEARCH OF A SOLUTION

What works and doesn't work when it comes to cutting construction theft costs?

ï Remember that an ounce of prevention is worth a pound of cure. Don't count on recovering what you've lost. The NER reports that only 10 percent of stolen equipment is ever recovered. Minimizing the problem is the only real solution.

ï Report any theft immediately. Most stolen items are recovered within 100 miles of the crime scene. The longer you wait to report a theft the longer the thief has to travel and the longer the odds of recovery. NOTE: checking your inventory regularly is crucial to early theft detection.

ï Keep careful ownership records of large-ticket items. This isn't always as easy as it sounds. For example, unlike traditional motor vehicles, heavy equipment is not required to have a VIN number. Instead, the equipment comes with a variety of number and letter codes in various locations on the machine, such as a six-digit SN plate, engine number, confidential SN, and a dealer or company ID. You need to address this complication systematically. Step 1: Find the numbers on each machine. Step 2: Write them down and where they are located. Step 3: Take pictures of your large ticket items. Step 4: Put this documentation where you can get to it easily. The more quickly you can communicate these numbers to your anti-crime strategic partners (police officers, crime prevention or professional associations, used equipment dealers, other builders, etc.) the more likely you are to recover your wayward wheels. NOTE: the CICPP, CPP and NER offer databases with descriptions and, in some cases, photos, for contractors to help identify their lost equipment.

ï Make sure your identification system is meaningful. "The recovery rate for our members that mark their equipment properly is much greater, almost double,
Gunnerson says. Some contractors paint their tools bright colors to try to deter theft and make them easier to distinguish on job sites. "I have been to several (stolen) property rooms in police stations, and I can't tell you how many tools are painted blue or purple but have no other identifying marks. How do we know what contractor that is?

ï Don't solve one problem by causing another. Etching your social security number on items is a no-no. Why give construction site thieves the information they need to become identify thieves? Blythe recommends that owners inscribe their driver's license number on tools (first two initials of the state followed by the number and the letters "DL
) because it is the only traceable number in all 50 states.

ï Disable your heavy equipment before leaving the job site. Universal keys (which can be obtained via online auctions for a few dollars) are making it easy for burglars to get their hands on expensive machinery. By taking out a vehicle's battery or removing its steering wheel, you might save yourself tens of thousands of dollars.

ï Keep expensive items off the job site for as long as possible. For example, a study completed by the Community Oriented Policing Services, a branch of the Department of Justice, found that builders who delayed installation of appliances until homeowners took occupancy of a home removed most of the opportunities for theft.

ï Don't give yourself a false sense of security (Part I). Make that a false fence of security. Fences are not always a meaningful deterrent to theft. After doing site surveys, Blythe says she has found several situations where fences were only partially completed and were easily jumped, squeezed through or passed under. To be effective, fences should limit all accessible entry points. The NER recommends adding a fence around construction sites and augmenting it with motion sensor lighting and an alarm system. Some builders also add fence detection systems that sound an alarm if an intruder attempts to cut or climb the fence.

ï Don't give yourself a false sense of security (Part II). Using solar powered GPS units to track computers, bobcats and other key equipment also has its drawbacks. Thieves who think a high-ticket item might be protected by a GPS system will often take that item to an isolated area. If nobody comes to pick it up in a few weeks, they retrieve it.

ï Avoid purchasing stolen items by checking product identification numbers, connecting with law enforcement officials before purchasing iffy items, dealing with reputable suppliers, making a formal pre-check of all major equipment, etc. Like all industries, the construction industry is full of doers and stewers. Many contractors fret about construction theft but do nothing to stop it. A recent study by DeWalt revealed that 97 percent of construction industry professionals interviewed were concerned with their job site security, yet less than 15 percent were protected with an alarm system or security plan.

On the flip side, there are companies like Legend Homes (Portland, Ore.) that are proactive about pilfering. Legend Homes places program managers on each work site to monitor incoming and outgoing foot traffic (with more than 200 sites under construction at any given time, raising a fence around each home is not a feasible defense). For some of its communities located in isolated areas, Legend uses cameras and hires security guards to patrol at night. When crimes have occurred during daylight hours, the company has locked down entire subdivisions and searched vehicles. "Our employees know we are paying attention,
says Vern Malen, Legend's production manager.

Malen says the company's best line of defense is an extra set of eyes. "We rely heavily on nearby homeowners to notify us of any suspicious vehicles,
he says. Recently a newspaper carrier called in suspicious activity, resulting in an arrest. Malen notes that posting notification/reward signs around the properties also encourages neighbors and community members to report potential problems.

Construction theft may be a cost of doing business, but you can take steps to keep the costs down. Be aware. Be proactive. Be defensive. Or be resigned to losing money to those who are more interested in construction theft than you are. You can't have it both ways.