Construction companies are three times more likely to fail in an economic recovery than in a downturn, according to Ryan Howsam, a principal at FMI Corp., so managing risk is one of the most important aspects of running an AEC business.
“Contractors die of gluttony, not starvation,” he said during a September webinar.
With the U.S. experiencing one of the longest recoveries in history, contractors must be especially vigilant not to run out of cash. “This is a time managing risk is more important than ever,” said the certified risk and insurance specialist.
For contractors, risk falls into several buckets, each with its own set of considerations for how to manage it. Most organizations, said Holsam, view risk in various silos, including finance, operations, business development, estimating, self-perform and project management.
PCL Construction’s vice president of risk management, Hugh McLellan, told Construction Dive the company puts risk into three buckets:
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Enterprise — things that impact any company, including the economy, interest rates, a change in political parties, local governments, regulatory changes and even…
