Five Major Risks in Construction Businesses

Construction businesses can be hugely profitable, successful, and useful. But they also come with plenty of risks too. Fortunately, there are steps you can take to minimise the dangers that accompany a construction business. Below, we explore five major risks and how to lower them.

Environmental risks

As the UK pushes towards net zero targets, more and more environmental risks have emerged in construction. Indeed, the Climate Change Act has stipulated a target of a 50 per cent reduction in GHG emissions in the built environment, by 2025, from a 1990 baseline. As such, construction businesses now have a duty to minimise their environmental impact and could face a financial punishment if they don’t.

Construction risks

There are risks involved with construction too. The profitability of a project can be limited if construction runs over time, or if technology changes mean you have to use new equipment.

Design risks

Design errors and omissions can all leave a construction project in jeopardy. If you fail to carry out work in accordance with a contract, then it could leave the business liable when it comes to payment.

External risks

External factors can harm a construction business too. For instance, public objections to planned construction can hold a project back, as can law changes.

Project management

Each project needs to be managed carefully too. Without this you can fall behind schedule or find yourself with contractor delays that leave you liable.

How to avoid these risks?

Risk identification

One way to lower or avoid these risks is to identify them in advance. Ensure that you work together with all the stakeholders to establish where the risks lie and how to miss them.

Risk assessment

Once you’ve identified what the risks are, you should critically assess them. What are the biggest and most urgent risks? These are the ones that you should prioritise and deal with first.

Risk mitigation

You should also develop plans that actively make these risks less likely to materialise. One potential option is investing in builders’ insurance to give you peace of mind that you’ll be covered against many of the risks facing your company.

Risk monitoring

Lowering risks is a constant process though. You should repeat the process above routinely – especially when you start new projects. This can be achieved by consistently monitoring risks and working to eliminate them as they arise.

There are plenty of risks facing a construction business. But by identifying, assessing, mitigating and monitoring them, you should have peace of mind that your company is ready to face these challenges head on.