Top Risks that Construction Contractors Face

Summary: Contractors must take the necessary steps to minimize risks so as to not create financial havoc.

Construction projects are filled with a variety of risks. As a matter of fact, all projects have some type of risk for contractors. But, by understanding the types of risks and how to manage each of them can help you avoid, or mitigate the overall level of risk. This guide will discuss some of the most common types of risks and how contractors can minimize or avoid them.

Clients Refuse to Pay

It happens more often than you might think. There are times where contractors are not paid for the work they have completed. This often causes bankruptcy and leaves shareholders, suppliers, and subcontractors in a precarious financial position. There are several reasons why clients withhold payment that include: dishonesty, a lack of money, the project value exceeded the budget, and invoice disputes.

Poor Project Management

A lack of project management in any company will ultimately lead to a waste of money. The same goes for the construction business. If employees aren’t supervised or the overall budget isn’t adhered to, oftentimes the project will go over the allotted financial amount of completely collapse due to poor decision-making.


Projects that are not completed on time can tie up the contractor’s resources and negatively impact various other tasks and projects as well. Moreover, it can create a negative reputation and can even lead to the imposition of penalties by the client. Delays aren’t just limited to negligence but are also caused by adverse weather – which technically can’t be controlled. Poor weather conditions can damage completed work and force the team to redo everything at additional cost and time.


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