Rapid industrialization has brought in its wake several jobs. One of them is industrial hazard, which is taking newer and newer signifiers of all time. With mechanical, electrical, chemical and radiation jeopardies harassing the industrial universe, the ‘Risks to Life, Limb, Health and Wealth ‘ are common in this domain of economic activity. Hazards are present in every corner and under every rock. Industrial hazards may originate while managing, storage or because of operational mistakes and misdemeanor of recognized safety processs. The industry, hence, has to be ever prepared for such contingencies. An industrial hazard is the 1 that may impact several countries within the mill or may do serious hurts, loss of life, and extended harm to belongings and break to fabrication activities. Such hazards may happen in any industry in malice of best attempts to forestall them. The agony and harm as a consequence of the accident is determined by the possible for loss environing the event. However, the hazard can be mostly avoided if effectual action is taken as per pre-planned and practiced processs, using the combined resources of the mill and outside exigency services.
The building industry has changed quickly over the past 10 old ages and some companies are faced with more hazard and uncertainness than earlier. Clients are more likely to prosecute in judicial proceeding when things go incorrect. Hazard in building has been the object of attending because of clip and cost overproductions associated with building undertakings. Hazard can be defined as an unsure event or status that, if it occurs, has a positive or negative consequence on a undertaking aim.
As the decision, most building company have to analyze their undertaking to extinguishing a specific menace, normally by extinguishing the cause. The undertaking direction squad can ne’er extinguish all hazards, but specific hazard events can frequently be eliminated. Other than that, from the analysing, it can cut down the expected pecuniary value at hazard events by cut downing the chance of happening ( e.g. , utilizing new engineering ) , cut downing the hazard event value ( e.g. , purchasing insurance ) , or both.
Risk Management on Construction Company
Most of advisers help concern proprietors and enterprisers develop the concern aims necessary to accomplish the organisation ‘s service, societal, net income and growing ends by questioning the chief leaders. Talking through the vision for an organisation helps the leaders vocalize where they want the organisation to travel. A concern aim provides a particular, mensurable, realistic, action-oriented and clip sensitive statement that, one time achieved, propels the organisation closer toward run intoing one of its ends. The concern ‘ ends and aims form the foundation of its concern program. Business proprietors can follow the same procedure on their ain to develop feasible ends, aims and actions to assist their concern win.
There are 2 nonsubjective classs in Construction Company which are short term nonsubjective and long term aim. Short-run refers to annual ends and aims. For case, if the end is to open a existent estate concern, some short-run aims include obtaining a Realtor ‘s licence, leasing office infinite and buying a computing machine and MLS subscription. Long-run refers to three to five twelvemonth ends and aims. Following the existent estate start-up illustration, these may include gross revenues ends and aims in footings of figure of belongingss sold or dollars, and opening a 2nd office location. One aim for run intoing a gross revenues end of 24 places in the 2nd twelvemonth of concern would be publicizing to make a larger patronage.
As the decision, the chief aim of hazard direction is to protect the belongings, net incomes and forces of the administration against losingss and legal liabilities that may be incurred due to assorted hazards. It minimises cost of the hazard and maximises the proi¬?tability. The inadvertent hazards may non merely consequence in unexpected costs to a company but endanger its endurance wholly. Therefore, it is indispensable for the direction to make some exercising to cognize about the possibility of a ‘risk event ‘ , beginnings of such event and impact of such event beforehand and see ways and agencies of forestalling, cut downing or understating the loss.
Footings of Mention
This study is about the research on issue that relates to Risk Management in Construction Company. The research is concentrating on Industrial Construction Company.
The study about the research was requested by Miss Kwan Jing Hui. This study is prepared by five pupils undergoing the capable Corporate Risk Management in Multimedia University Cyberjaya who is Erda Nurakma Binti Zharani, Muhammad Adi Arzri Arshad, Thania Nasiha Md Shariam, Nurul Farahin Husin, Tiara Citra and Nur Atiqah binti Adam. We will wish acknowledge Ziestech Company because the cooperation that they have been given to us in the procedure of finishing this assignment. This study is submitted on 16 January 2013.
In this study about Risk Management in Construction Company, we are utilizing two methods utilizing the primary informations and secondary informations. The primary information is based on the interview that we have done based on an industrial building company that we have chosen for more understanding in the research. The company that we have chosen is the Ziestech Company where we seeking to acquire more information to back up our research. We create a short questionnaire to understand more about the hazard direction of the company. On the other manus, we are making our research besides utilizing the secondary informations where we found some diaries and other beginnings that can be helpful to back up our intent in finishing this study.
Based on Research: Risk Management on Construction Company
Risk Management in Construction Industry
Hazard in building undertaking is extremely related to type of hazards that may detain the public presentation of the undertaking itself. In order to extinguish hazards, in building undertaking should hold effectual hazard direction as mentioned by Lee Chun Siang and Azlan Shah Ali ( 2012 ) . Effectiveness of hazard direction fundamentally depends on how the undertaking leader identifies and concept expectancy actions to put on the line that may happen during the life rhythm of building undertaking. In add-on, hazard have to be analysed and listed out throughout project life rhythm, otherwise hapless hazard direction would impact in low public presentation of undertaking. Mention to effectual hazard direction, it enables to find appraisal of undertaking hazard, every bit good as control possible barrier to the success of the undertaking completion. Construction undertaking ‘s value sometimes reflects to its hazard direction. Variable hazards that related to building undertaking make it different from other industry. It ‘s due to assorted variables such as technology, procurance, proficient ( The Association of Project Management, 2000 ) .
In Malaysia, building hazard direction has non been a precedence and shows bad repute based on Hamimah Adnan et Al ( 2008 ) . An attitude from contractor that attend to do simple undertaking, fast procedure and less expensive methods while they identify hazards. Even though in building industry, its undertakings might be different from undertaking to project, that ‘s why hazard designation besides might be different. For the undertaking leader, personal experiences, developing forte on hazard direction would be needed. However, Norazian Mohd Yusuwan ( 2008 ) found that Malayan Construction Company is non paying much attending on coverage, reexamining and supervising its hazard direction activity and still see unfamiliar method among Malayan Construction Company. Limited cognition for hazard direction in building undertaking once more related to limited budget and they found it will merely add for operational cost of undertaking. There is different intervention related to put on the line direction that based on size of Construction Company. Most of companies that is stable in fiscal position, good known in public, and keep a large building undertaking that will hold formal hazard direction.
Relationship Between Risk Management And Project Performance
Maintain good public presentation during the undertaking activity in building will ensue in less hazardous for the undertaking and closer to its successful. However, if happen to hold failure in hazard direction it will do addition in operational & A ; fiscal cost, capital construction amendment, detaining for edifice activity, overrun budget / higher hazard in insolvency, lost in hard currency influx, bad quality for concluding merchandise possible to remake work after completion and many more ( Sundararajan 2004 ) . Assorted possible factors in building undertaking activity harmonizing to Flanagan and Norman, 1993 ; Akintoye and MacLeod, 1997 ; Smith, 2003, there are long period, complicated procedures, detestable environment, fiscal strength and dynamic organisation constructions. These variables of hazard direction clasp of import regulation and reflects how the undertaking ‘s public presentation will be. Researchers found building undertaking public presentation findings can be concluded to be, clip and safety ( Chen et al. , 2000 ; Shen, 1997 ; Tam et al. , 2004 ) .
Peoples Involve in Construction Project
Harmonizing to one of building insurance for the Construction Design & A ; Management ( CDM ) 2007, participants who involved in building undertakings are clients, CDM co-ordinator, interior decorators, chief contractors, contractors and workers. Property developer, and company who has building undertaking consider as clients. CDM co-ordinator will be chosen to take the undertaking and as adviser on wellness and safety issues during undertaking clip. Following is interior decorators such as applied scientists and designers who prepared for edifice drawings in and out. Person in charge to be after, pull off and organize wellness & A ; safety while undertaking is go oning will be the chief contractors. Contractors are people who involved in concern building i.e. civil technology, mechanical, electrical, demotion & A ; care companies. Last, workers are anyone who straight carries out the work during project building, i.e. pipe fitter, electrician and scaffolder.
Hazard Faced By Construction Industry
There is no line point on a building company ‘s income statement titled “ Cost of Hazard, ” but this is really one of the industry ‘s largest and most volatile disbursal points. Some building companies pay 5 per cent or more of their gross income for hazard related costs. In an industry with tight net income borders, efficaciously pull offing hazard can sometimes do the difference between doing a net income or non, and in some instances, the endurance of the concern. There are many sorts of hazards faced by a building company. One of the illustrations is economic system lag. Recessions normally happen where there is a widespread bead in disbursement. Recession can give a really large impact to building companies. This may be triggered by assorted events, such as a fiscal crisis, and external trade daze, and inauspicious supply daze or the bursting of an economic bubble.
The other hazard face by Construction Company is increasing competition, where, economic growing is the addition in the sum of the goods and services produced by an economic system over clip. Economic growing is by and large distinguished from development economic sciences. The other factor is that increasing in population can acquire same thoughts or merchandise from different people. The same building will increase in competition such as quality, monetary value, measure and etc. The other hazard the building company faced is regulative or legislative alterations. Regulatory alterations are controls imposed on a company by an authorization ( normally the authorities ) that by and large restricts the “ natural ” way in which the company is traveling.
Legislative Authority or the power to do Torahs at the Federal degree is vested in the Parliament, which comprises the Yang di-Pertuan Agong, the Senate and the House of Representatives. Other than that, Construction Company besides confronting the hazard of hurts to the workers. Occupational hurt rates among building workers are the highest among the major industries. While several hurts control schemes have been proposed by assorted administrations, their effectivity for cut downing the rate of hurts in the building industry remains unsure. Cash flow hazards besides one of hazard that Construction Company faced. Some company ‘s available hard currency will non be sufficient to run into its fiscal duties. That is because of the any mismatch plus or quality in the buildings.
In building site, pull offing the work in clip is necessary to avoid any holds and for the company ‘s and investors good. However, employees sometimes bury to set safety foremost, by making “ short cut ” and due to this consequence in accidents. Examples of common fatal accidents are falling from delicate roofs, ladders & A ; scaffolds, being stuck by excavators, lift trucks, fall ining constructions.
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Based on reported informations below from Malaysia Ministry of Human Resource period 1994-2008, major accidents caused in building held the 5th place on last 2008. Numbers of accidents eventually had decreased in 2008 as its lowest figure within 12 old ages.
Scope of Policy and Coverage in Construction Industry
For intent of this assignment, we will touched on the two types of hazards faced by building companies, that is, 3rd party liability claims and hurts to workers and on how the insurance policy works to minimise possible pecuniary loss to the company.
Third party liability claims can be in two signifiers, amongst others: –
Claims made by the party whom have awarded the contract to the building company. It can be a authorities or private company contract. One of the conditions in the contract understanding will be that the contractor must publish a public presentation bond to the awarder. Performance bond, usually in the signifier of an insurance policy gives an project to the awarder of the contract that they will pay the sum stated in the policy in the instance that the contractor fails to finish the contract or breached the specifications of the contract. In Malaysia, public presentation bond is usually within the scope of 2.5 % to 5 % of the contract value.
The other type of a 3rd party claims is where claims made by a 3rd party be it an single or a company to the contractor due the agony incurred by them which arise from the contract execution, for illustration, amendss to their belongings, sound pollution and besides loss of net incomes. There is usually no specific per centum on the coverage. However, it will be decided by the contractor base on his premise on possibility and chance of its occurrence by looking at the nature of the occupation.
Mentioning to Department of Occupational Safety & A ; Healthy Malaysian, below are Occupational Acts drumhead:
Factories and Machinery Act 1967.
2. Employees Social Security Act 1969.
3. Occupational Safety and Health Act 1994.
4. Occupational Safety and Health ( employer ‘s safety and wellness general policy statements ) ( Exception ) Regulations 1995.
5. A Occupational Safety and Health ( control A of A industrial major accident jeopardies ) Regulations 1996.
6. A Occupational Safety and Health ( safety A and A wellness commission ) Regulations 1996.
7. A Occupational Safety and Health ( Classification, Packaging and Labeling of Hazardous A Chemicals ) Regulations 1997.
8. Occupational Safety and Health ( Use and Standards of Exposure of Chemicals Hazardous to Health ) Regulations 2000.
9. A Occupational Safety and Health ( Notification of Accident, Dangerous Occurrence, Occupational Poisoning and Occupational Disease ) Regulations 2004-NADOOPOD.
Relation to current pattern in Construction Industry in Malaysia
Construction industry so one of the highest accident occur non merely Malaysia but all over the universe. Construction is one of the valuable plus to our state since it brings Malaysia through the universe by the recognisance of our edifice such as Petronas Twin Towers which is one of the highest edifice in the universe, Kuala Lumpur International Airport, and Formula One Sepang circuit. This building is an of import portion of our economic system ; it helps our economic system by pulling the investors to put in our state. News reported that incidence of hurts and human deaths rates are high in Malaysia. The company may lose their valuable employees if this often occurs.
Employer ‘s duty to guarantee the wellness, safety and public assistance of their employee
The quotation mark of “ safety first ” is a common quotation mark that used to guarantee that every employee aware of their safety while working. There are several or consciousness that have been given to guarantee the wellness, safety and public assistance of their employee. This is to guarantee the company will be able to finish their undertaking on clip. When one of their employees injured while executing their work, it is considered as a liability for their company doing their work in advancement decelerating down. The sum disbursement for the intent of safety is good as the effects are the company would bask an effectual safety than enduring with the cost. There are several current patterns to cut down the hazard of accident.
There are several effects that the company can acquire when they guarantee the wellness, safety and public assistance of their employee. This can be seen by the company can cut down the accidental cost, when they does n’t hold to pay immense sum of money to pay for their employee if accident occur at their on the job topographic point. The company will heighten the image of company by demoing that their company is cognizant of their employee ‘s and following the regulations of ( Occupational Health and Safety Assessment Series ) OHSAS 18001. The company besides can increase their concern chance which can be seen when their workers are efficient to complete their undertaking on clip. Increase overall net income of undertaking were besides the benefit of guarantee the safety and wellness of workers this can be seen when there ‘s no accident occur on their employee, the workers operation run swimmingly and employer does n’t hold to pay more on accident and acquire more net income alternatively.
Companies can mention to the authorization such as Department of Safety and Health ( DOSH ) , National Council of Occupational Safety and Health ( NCOSH ) , National Institute of Occupational Safety and Health ( NIOSH ) , Construction Industry Development Board Malaysia ( CIDB ) and Local authorization about the safeness.
Construction Industry Development Board Malaysia ( CIDB )
For illustration like Construction Industry Development Board Malaysia ( CIDB ) under the authorities was established by Act 520 of Lembaga Pembangunan Industri Pembinaan Malaysia Act 1994 in July 1994 as a statutory organic structure under the legal power of the Ministry of Works Malaysia, with CIDB they offered a provide preparation for the building companies. The board ensures the company with the duty of organizing the demands and wants of the building industry, be aftering the way of the Malaysia ‘s building industry, turn toing the pertinent issue and jobs faced by the building industry, doing recommendation in the preparation of policies for the building industry
Department of Safety and Health ( DOSH )
The board will guarantee that their client would be provided sufficient information on safety and wellness. Their duty are duty of administering and implementing related to occupational safety and wellness to guarantee that safety, wellness and public assistance of people at work every bit good as others are protected from jeopardies ensuing from occupational activities in the assorted sectors which include fabrication ; excavation and quarrying ; building ; agribusiness, forestry and fishing ; public-service corporations ( gas, electricity, H2O and healthful services ) ; conveyance, storage and communicating ; sweeping and retail trades ; hotels and eating houses ; finance, insurance, existent estate and concern services ; public services and statutory governments.
National Council of Occupational Safety and Health ( NCOSH )
The board was established under Section 8 of Occupational Safety and Health which is their duty is to
Investigate and do study and besides to urge to the Minister any affairs whatsoever related to the aims of OSHA.
To amend or do any alteration deem necessary for statute laws of OSHA.
To better disposal and enforcement of OSH statute law.
To further concerted audience relationship between direction and workers with respects to OSH and wellbeing of workers.
To decide any peculiar jobs related with OSH and wellbeing of workers consist of adult females, handicapped and other group of people in the society.
To explicate equal methods and processs of controls at workplace for chemical industry.
To analyse statistics related to occupational human death and hurt which happen at workplace
To supply installations for wellness attention a workplace.
To further development programs and public credence of good industrial codifications of patterns related to OSH.
National Institute of Occupational Safety and Health ( NIOSH )
The board chief vision is to be the ‘Leading Centre of Excellence ‘ in Occupational Safety and Health. NIOSH ‘s duty is supplying developing ; audience services inseminate information and behavior research and development to employees, employers and those responsible, either straight or indirectly in the field of occupational safety and wellness.
Example of companies following the wellness and safety direction guidelines
Occupational Safety and Health Management System ( OSH-MS ) guidelines promotes a safe and healthy working environment by supplying a model that helps organisations to consistently place and command wellness and safety hazards, cut down the potency for accidents, assistance legislative conformity, and better overall public presentation.
Sime Darby Engineering Sdn Bhd, oil and gas building industry which practiced the OSH guidelines they are to the full concern on the safety wellness and environment. This company is certified by ISO 9001 OHSAS 18001 and others. Their chief aim is to set up a safety and wellness commission to upgrade the degree of occupational safety and wellness in their company. They are committed to follow with all relevant environmental, safety and wellness statute law, prevent pollution and accidents, minimize use of risky stuffs, chemicals and gases, and minimise release of pollutants to air, H2O and land. , cut down ingestion of natural resources. , cut down, reuse and recycle of waste, promote environmental, safety and wellness consciousness to all employees, clients, sub-contractors, providers and visitants
Sustainable Construction patterns in Malaya
Several attempts has been given to the building industry which it lead several alterations. Construction waste causes environmental job towards Malaysia such as H2O pollution, environmental pollution and others. The concern toward environment has been given merely less attending before this nevertheless with the increasing consciousness of planetary environment has lead the building to increase the protection and sustainable towards our environment. This pattern may take to the construction which will heighten our life ‘s quality, protect the environment and at the same clip keeping a balance between growing in economic system and continuing the natural resources and ecosystem.
Problems in current pattern of Malayan Construction Industry
Malayan building industry depends to a great extent on unskilled foreign labour worker as they considered as inexpensive, widely available and flexible. Majority of building industry taking this manner as this might take to a job such as deficient, slow and labour intensifier.
Growth of policy in Insurance Market of Construction Company
Based on day-to-day modus operandi of a house activity, they might encounter legion sort of hazard on during executing their occupation. The hazard can be predicted before it might really go on but the house ca n’t presume that all hazard can be eliminated. Thus it comes to consideration of house to hold a proper manner to pull off their hazard. There are three chief insurances coverage in today ‘s building industry, which are:
Contractor ‘s All Risk Insurance.
Contractor ‘s All Risk insurance is exactly designed for the intent of pull offing hazard against any loss and harm during the building work takes topographic point. This sort of insurance covers any loss related to plants, building works and any harm originating from the building procedure. It a simpler word, this type of insurance policy helps to pull off against unanticipated and inadvertent physical loss or any harm happens to the belongings during the period of insurance. Contractor ‘s all hazard Insurance is best to cover all plants executed by the contractor whether it is impermanent type of work or building type of work that takes a longer period to carry through.
The basic Contractor ‘s All Risk insurance gives protection coverage whether under building period or care period against:
Material harm during the work under building
Loss and harm towards contractor ‘s machinery, works and equipment.
Loss and harm on principal ‘s bing belongings.
Third party belongings harm or any bodily hurt happens during the contract of work.
The insured parties include the principal, chief contractor and the sub-contractor. Examples of types of building undertaking that can be insured under Contractor ‘s All Hazard Policy are:
Civil works such as dikes, power workss.
General edifice building such as industrial, halls, bowls and residential.
Railway line, roads, tunnels, Bridgess.
Electrical equipment installing.
Other assorted work.
Chemical bonds / Insurance Guarantee.
Chemical bonds are widely being used and about every interaction between inter-personal and inter-corporation usage it to vouch the undertaking achievement. The insurance company really works as a in-between individual between the two parties because the fact that insurance companies are fiscal establishments. Thus intervention of insurance companies in adhering concerns can bring forth other type of concern such as Contractor ‘s All Risk, Public Liability and Workmen ‘s Compensation policies. There are few characteristics of bonds, which are ;
Once bonds are given, it ca n’t be cancelled until its termination day of the month.
Most of authorities undertaking demand bonds and are worded, therefore bond demand to be issued by the contractors to fulfill the demand of stamp. Furthermore the demand of bond in such manner enables the ability to raise the bond by the holder without any ground and account. Any demand however any difference or protest by the insurance company, contractor or any 3rd party demands to be settled by the insurance company.
Workmen ‘s Compensation Insurance
This policy is being design to give protection for any employee insured against hurt, accident or any disease caused from the employment. The employer is the 1 who need to pay such compensation based on the jurisprudence set up in the agenda of the policy and common jurisprudence.
Demand for workingmans ‘s compensation insurance normally comes from: –
Contractors who are required to hold insurance under the demand of contract with the Principal.
Employers that are holding foreign workers which are non eligible to lend to SOCSO but because of ( a ) above, they normally include these workers in their insurance based on the pay axial rotation of 15 % of entire contract value. The employer or their sub-contractor should besides take note that they are besides required to be under the proviso of the Workmen ‘s Compensation.
Based on Interview: Risk Management on Construction Company
In this portion of findings, we refer to an industrial building company that has been involved in this industry for a long clip. Ziestech Enterprise has been kindly to supply the information needed about their hazard direction. The company located in Kulim Kedah. Basically, they are an electrical industrial building company that offer client electronic and air conditioner service. The director, Mr Arshad Bin Tasselim has been exposed to us the hazard direction that company has applied for the workers and concern.
Ziestech Enterprise is a company that can be categorized as industrial building. The company has been in the industry about 10 old ages. Ziestech Enterprise has been low in the industry where they have started little so finally they had grown to go a really successful electrical industrial building company. Based on our interview session with Mr Arshad, he explains that the company is really high skilled in electrical and wiring for the industrial building where they have the ability to affect their concern in managing heavy electrical occupation. Furthermore, to execute this sort of undertaking, the company necessitate a really particular certification such as Wireman from Suruhanjaya Tenaga Malaysia.
As an electrical building company, Mr Arshad is cognizant that their company is confronting a really high hazard particularly the workers safety. The operational undertaking is related with electrical use and contraptions, where they might confront the hazard of holding accident, loss, harm or hurt during the building works takes topographic point. The industrial undertaking is far more unsafe because the workers are exposed to a really high electromotive force. Mr Arshad explains more about the use of electrical equipment that has been used in industrial plants where it involves with 240V to 450V. Workers that involved in this sort of occupation, they will be supervised by the expertness that has been hired by the company.
Mr Arshad is really cognizant with the hazard that their facing every on the job twenty-four hours. Ziestech Enterprise is good prepared in pull offing the hazard and decided to purchase some of the insurance policies that can cut down the degree of peril in executing the undertaking. Mr Arshad explains more about the loss and harm during the building work for illustration harm to machinery, works or 3rd party harm that has been insured by Contractor ‘s All Risk. The company besides concern about the workers that may wound and accident during executing undertakings where they pay for Workmen ‘s Compensation to see the employee. Risk direction is really good for the company and the current insurance coverage satisfy the demands for the Ziestech Enterprise.
Risk Management in Construction Industry can be really good to the companies that are using this because the internal organisations such as staff, supervisors, center and senior direction have a heightened consciousness of hazards within their work environment. In add-on, hazard can be identified, assessed and controlled in conformity with the legislative demands of OHS Act. Besides that, hazard direction becomes a portion of the organisational corporate civilization. It reduces the badness of an accident consequences in an associated decrease in hurting and agony. Furthermore, hazard direction besides cut down in the badness and incidence of workers ‘ compensation claims, taking to a decrease in associated and hidden costs ( such as loss of staff morale, loss productiveness, etc. ) .
To reason, it is a known fact that hazard direction is a really of import tool to be applied by companies in order to guarantee their endurance. Both the contractor and the insurance company seek their degree best to cut down their ain hazards. Incorrect judgement may be a fatal blow on the endurance of the company.
The building industry is a vehicle through which a state ‘s physical developments are activated by originating undertakings from the bluish print phase to the execution. Execution can convey approximately benefits to the people and the state, therefore fulfilling the aspiration of national advancement and growing economically. There are some recommendations that can be improved in building hazard direction undertaking such as:
Clear processs for contract direction
Safe work processs communicated and implemented
Work-site review and proper on-site supervising
Regular hazard appraisals and workplace safety audits and topographic point cheques
Effective communicating of several duties and contract bounds
Thorough initiation and preparation of both edifice director and contractor
Records direction and on-site record maintaining ( manual, scheduled services )
No short cuts in covering with the safeness of workers and internal organisations.
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