The construction industry faces numerous challenges and risks due to its complex, high-stakes nature. Understanding these risks and developing strategies to mitigate them is essential for the long-term success and sustainability of the business. We’ll explore some of the current top risks in the construction industry and discuss strategies for mitigating them effectively.
1. Financial Risk
Construction projects involve large sums of money and significant upfront costs. In a survey from Construction Dive, 84% of contractors reported higher-than-anticipated costs. Delays in payment and unexpected expenses can lead to cash flow issues and have you scrambling to start your next project.
According to a 2024 report by Billd, subcontractors wait an average of 57 days to get paid, all while fronting materials and labor from the day the project begins. Traditional bank loans for fronting funds can leave contractors in the lurch with long repayment cycles. Without cash reserves to fund bigger projects, you’re unable to scale your business.
2. Project Management Risk
Poor project management can lead to delays, cost overruns, and disputes with clients or GCs. At its core, project management