Cyber attacks. Rising construction costs. A shortage of skilled labor. And high interest rates. These are the most serious threats to the commercial construction industry according to a new report released by QBE North America.
On May 14, QBE released its 2024 Commercial Construction Risk Report, highlighting the key risks and emerging challenges facing the commercial construction industry.
The top concerns? QBE’s report focused on cybersecurity threats, financial challenges and labor shortages.
“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, in a written statement. “Through this report, we aim to highlight these critical concerns and examine the industry’s level of preparedness in mitigating these key risks.”
The report surveyed 500 commercial general contractors and construction managers. Key findings include:
Cybersecurity concerns top the list: Survey respondents identified cybersecurity (42%) as the industry’s top risk, closely followed by concerns over cost overruns (35%), high interest rates (33%), labor shortage/lack of skilled labor (28%) and the potential for an economic downturn (28%).
Interestingly, these are the same risks that respondents feel least prepared for and most vulnerable to, signaling a need for enhanced risk mitigation strategies.
Managing rising costs is a challenge: Inflation, including the rise in material and labor costs, can threaten project timelines and profitability. Survey respondents identified high interest rates (40%) and owner contract disputes (40%) as primary factors leading to cost overruns on job sites.
Adopting new technology as cyber threats intensify: The industry is adopting new technology to improve safety (46%), quality of work (46%), and collaboration and efficiency (44%), but it must also address the growing number of cyber vulnerabilities, exposures and threats.
The need for skilled labor outpaces the demand: The ongoing labor shortage is impacting many construction trades, including electrical, HVAC and heavy construction. An aging workforce is contributing to the widening gap of job openings and the availability of skilled labor. Inexperienced workers may intensify issues related to work quality and safety.
Risk management strategies can improve: Nearly half (49%) the survey respondents intend to improve their safety plan over the next 12 months. While risk management training is currently provided to employees, survey respondents recognize that training needs to be of a higher quality (55%) and more frequent (51%).
“There are a multitude of risks confronting the commercial construction industry, with new challenges emerging,” Powers said. “Mitigating the potential impact of these risks requires an ongoing commitment and proactive measures to ensure a more efficient, safer and resilient future.”
The 2024 Commercial Construction Risk Report from QBE North America highlights the need for the industry to strengthen its risk mitigation strategies. As emerging trends, new opportunities and innovation continue to shape the commercial construction landscape, identifying, evaluating and mitigating risks is critical.
