Top Risks Facing General Contractors in 2016 & Strategies to Mitigate Risk

General contractors already face difficulty when it comes to getting paid - not to mention getting paid on time. Scope of work issues, inspection problems, change order disputes, contract disputes and a number of other factors can greatly impact the profit margin for a construction project. Each year contractual requirements and litigation are becoming more complicated in the construction landscape, making risk assessment and mitigation a necessity. It’s imperative that contractors are aware of potential risks that can impact a project. Accepting these realities can help mitigate risk and identify problems before they spiral out of control.

Labor Shortage

The 2008 recession caused the construction labor force to decrease drastically. Construction companies are struggling to find qualified laborers as well as salaried positions such as project managers and engineers. The result is that the workload has increased for workers on a typical job, thus increasing workers’ compensation claims and premiums. Additionally, newer workers need more resources put into them for on-the-job training. It’s more important than ever to make sure to hire the right people for the job. Not putting time into this on the front end can result in costly expenses down the road.

Scope Creep

A common risk to project success is scope creep and design/project changes. Owners and investors are ultimately bound to a specific budget for most projects and major changes can kill a project or create expensive delays. The best way to mitigate and prevent scope creep is to create an open communication stream between stakeholders and general contractors. The ultimate goal is to ensure that everyone is on the same page for a project and has the same vision and priorities.

Compromised Technology

Construction specific technology solutions are the new norm for contractors. It allows them to improve job timelines, streamline workflows and meet bid and contract requirements while lowering the amount of time and resources put into planning and organizing.

This shift increases liability in compromised technology. A lost computer on a job site or even a cyber breach can cost thousands if the right management strategy isn’t in place. Partnering with an insurance broker to make sure privacy management and security are covered will give construction teams the ability to protect themselves and focus on what they do best.

Project Approval Process

Pre-planning and early design can also put a contractor at risk of committing resources to a project that never makes it through the approval process. Likewise, delays in milestone approvals throughout a job can stifle project momentum and waste time and money. This is an unavoidable reality, but it can be counteracted by setting clear, specific goals and deadlines with each party in the project so that everyone is on the same page.


Safety is still at the forefront of risks in the construction world. Oversights in safety can lead to litigation for owners and contractors alike. High profile accidents can be damaging to reputation and risk a decline in future project opportunities. Safety training should be the top priority for general contractors and subs to reduce risk.

How Strategies Group Can Help

Want to look at other ways to manage risk in your business? Strategies Group helps clients review and refine existing business processes to streamline workflow and improve profitability. We also help clients evaluate, select and implement the most appropriate technology solutions based on their specific needs.

Our Business Process and Software Utilization Reviews will help:

  • Clarify your current business processes and compare them to industry best practices.
  • Provide you with a detailed roadmap for automating your processes that yield results.
  • Ensure you are utilizing your technology to its greatest potential
  • Maximize your return on your investment.

Our Technology Search and Evaluation will help:

If you’re looking for ways to improve your business processes and want to make sure you are leveraging the best technology tools, please contact Strategies Group today.

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1 Comment

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