Top Commercial Construction Risks and Challenges for 2024
The commercial construction industry is facing key risks and emerging challenges that impact project timelines, budgets and safety, according to QBE North America’s 2024 Commercial Construction Risk Report.
The report, based on a survey of 500 commercial general contractors and construction managers, highlights cybersecurity threats, financial challenges, and labor shortages as significant concerns for the commercial construction industry.
“Our goal was to identify and evaluate the primary risks threatening the success of commercial construction projects,” said Ryan Powers, senior vice president and head of construction at QBE North America. “Through this report, we aim to highlight these critical concerns and examine the industry’s level of preparedness in mitigating these key risks.”
Top Risks to Watch
The report revealed cybersecurity as the construction industry’s top risk, cited by 42% of respondents. Other significant concerns included cost overruns (35%), high interest rates (33%), labor shortage/lack of skilled labor (28%), and the potential for an economic downturn (28%).
Notably, the industry reported feeling least prepared and most vulnerable to the same risks they identified as the top threats, signaling a pressing need for enhanced risk mitigation strategies across the sector, QBE reported.
Challenges and Opportunities
Managing rising costs amidst inflation is a major challenge facing the construction industry. Survey respondents identified high interest rates (40%) and owner contract disputes (40%) as the primary factors leading to cost overruns. These rising costs threaten project timelines and profitability if not properly managed.
The adoption of new technology in the industry presents both opportunities and risks. New tech is being used to improve safety (46%), quality of work (46%), and collaboration and efficiency (44%). However, the increased use of technology also opens the door to a growing number of cyber vulnerabilities, exposures, and threats that construction firms must proactively address to protect their projects and data.
The shortage of skilled labor continues to be a pressing issue impacting many trades, including electrical, HVAC, and heavy construction, according to the report.
An aging workforce is contributing to the widening gap between job openings and the availability of skilled workers to fill those roles. This labor shortage, coupled with an influx of inexperienced workers, may intensify issues related to work quality and safety on jobsites. Attracting and training the next generation of skilled construction professionals is critical to overcoming this challenge, QBE stated.
Solutions and Recommendations
Nearly half (49%) of commercial construction companies surveyed plan to improve their safety plan over the next 12 months, underscoring the industry’s recognition of a need to bolster risk management practices. A key area primed for enhancement is risk management training for employees. While such training is currently provided, 55% of survey respondents acknowledge it needs to be of a higher caliber, and 51% state it should be conducted on a more frequent basis.
“There are a multitude of risks confronting the commercial construction industry, with new challenges emerging. Mitigating the potential impact of these risks requires an ongoing commitment and proactive measures to ensure a more efficient, safer, and resilient future,” Powers said.
Access the full report here.
Have a question on how to mitigate risk? Contact CMR Risk & Insurance Services for risk management guidance and resources.
Article Published By: riskandinsurance.com
Article Written By: R&I Editorial Team
