The minimization of risk by roofing manufacturers by moving to performance information and requirements

One of the major causes of concern for facility managers is leaking roofs. Many facility owners have become very knowledgeable about roofing systems due to the industry's inability to provide performing systems. Not often discussed is the manufacturer's risk in the roofing industry. Roofing manufacturers have used the limited warranty concept to protect themselves from the risk of nonperformance. Facility owners have not realized that the warranties protect the manufacturer more than the owner. This paper discusses an innovative approach by two roofing manufacturers to minimize their risk of nonperformance by using an information structure to force contractors to continually improve. The information structure was used to restructure their delivery of materials, their warranty program, and the contractor requirements. The research program known as the "Alpha Program" addresses all aspects of risk for the manufacturer (namely the contractor performance, identification of owner perception of value, maintenance of the roofing system, and the roofing warranty). This program has resulted in the first roofing warranty in the roofing industry that covers every aspect of nonperformance except those covered by a traditional building insurance. This paper also includes the performance results of over 650 roofs across the United States, which used an information-based approach.