The construction industry is full of risks. Let’s look at some of the top challenges for construction contractors, and things they can do to help mitigate their risk.

  1. Government Shutdowns: The most recent federal government shutdown was the longest in its history at 35 days. This shutdown posed a difficulty to small contractors relying on the SBA Surety Bond Guarantee program. This tool, often utilized by underwriters to help support bonding for contractors that are less experienced or are facing financial difficulties, was unavailable during the shutdown. As a result, many smaller contractors were unable to obtain public work without the proper bonding in place. The shutdown also had other unfavorable effects on contractors including stalled projects, lack of new federal work to bid on and lapses in government backed loan payments. 

  2. Labor Shortages: The construction industry continues to grapple with a labor shortage. During the “Great Recession,” over a million workers left the industry, many never to return. In the years since, retiring older workers have not been replaced by new, younger workers at a sufficient pace to keep up with demand. Companies are continuing to strengthen their training programs to attract new talent and are working with industry associations and state and local governments to promote careers in construction. These efforts must continue amid the rising cost of labor and the uncertainties in the labor market.

  3. Overextension: While labor shortages have increasingly become an issue for contractors, the jobs available for them to pursue have become larger and more plentiful. While this can present an exciting opportunity to achieve growth, contractors must be careful not to take on more work than they have the capacity to handle. Overextension is one of the most common causes of contractor failure.

  4. New Technology: Over the past decade, digital technologies such as Building Information Modeling (BIM), 3D Printing, prefabrication, and wearable sensors for tracking jobsite safety and productivity have become more widespread in the construction industry. While the technology provides opportunity for innovation, it is also brings cybersecurity risk. In order to implement these new technologies successfully, the construction industry’s workforce must accept the changes and respond quickly to keep productivity at the highest level.

The above listed areas of risk can be shared with your clients to help them navigate the challenges they face in  2019. For more information or questions about construction surety, please contact Allstar Financial Group at 800-424-0132 or visit our website at