QBE North America Unveils Insights on Cyber, Labor and Financial Challenges in 2024 Commercial Construction Risk Report

Rhea-AI Summary

QBE North America has released its 2024 Commercial Construction Risk Report, identifying key challenges in the industry, including cybersecurity threats, financial issues, and labor shortages. The report is based on a survey of 500 commercial general contractors and construction managers. Key findings indicate 42% of respondents see cybersecurity as the top risk, followed by cost overruns (35%) and high interest rates (33%). Additionally, 40% highlighted owner contract disputes as primary cost overrun factors. The industry is adopting new technology to improve safety and efficiency, yet cyber threats are increasing. The labor shortage is significantly impacting trades like electrical and HVAC. Nearly half of the respondents plan to enhance their safety plans over the next year, emphasizing the need for better and more frequent risk management training.

Positive

• 42% of respondents identified cybersecurity as the top risk, highlighting industry awareness.
• 35% of participants are concerned about cost overruns, indicating a focus on financial management.
• The industry is adopting new technology to enhance safety (46%), work quality (46%), and efficiency (44%).
• Nearly 50% of respondents plan to improve their safety plans within the next 12 months.
• 55% of survey respondents recognize the need for higher quality risk management training.

Negative

• 28% of respondents feel unprepared for labor shortages, impacting key trades like electrical and HVAC.
• 40% of participants identified high interest rates and owner contract disputes as primary factors for cost overruns.
• Inflation and rising costs are considered significant threats to project timelines and profitability.
• There is a pressing need for enhanced risk mitigation strategies as new challenges emerge in the industry.
• 51% of respondents acknowledge the need for more frequent risk management training.

NEW YORK, May 14, 2024 /PRNewswire/ -- QBE North America today announced the release of its 2024 Commercial Construction Risk Report, uncovering key risks and emerging challenges within the commercial construction industry. Highlighting cybersecurity threats, financial challenges and labor shortage as significant concerns, the report sheds light on the industry's unique risks threatening project timelines, budgets and safety.

"Our goal was to identify and evaluate the primary risks threatening the success of commercial construction projects," said Ryan Powers, SVP, Head of Construction at QBE North America. "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:

• Least prepared for the top risks: 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, signaling a pressing 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.
  
  
• 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 trades, including electrical, HVAC, heavy construction, among others. 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 added. "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. 

Survey Methodology

The QBE Survey was conducted by Wakefield Research among 500 U.S. commercial general contractors and construction managers at companies with a minimum annual revenue of $20M USD, between March 11 and March 24, 2024, using an email invitation and an online survey. Results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interviews and the level of the percentages expressing the results. For the interviews conducted in this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 4.4 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample.   

About QBE

QBE North America is a global insurance leader helping customers solve unique risks, so they can stay focused on their future. Part of QBE Insurance Group Limited, QBE North America reported Gross Written Premiums in 2023 of $7.6 billion. QBE Insurance Group's results can be found at qbe.com. Headquartered in Sydney, Australia, QBE operates out of 27 countries around the globe, with a presence in every key insurance market. The North America division, headquartered in New York, conducts business primarily through its insurance company subsidiaries. The actual terms and conditions of any insurance coverage are subject to the language of the policies as issued. Additional information can be found at qbe.com/us or follow QBE North America on LinkedIn, Facebook and Instagram.

More information about QBE's Construction practice can be found at https://www.qbe.com/us/construction.

QBE makes no warranty, representation, or guarantee regarding the information herein or the suitability of these suggestions or information for any particular purpose. QBE hereby disclaims any and all liability concerning the information contained herein and the suggestions herein made. Moreover, it cannot be assumed that every acceptable risk transfer procedure is contained herein or that unusual or abnormal circumstances may not warrant or require further or additional risk transfer policies and/or procedures. The use of any of the information or suggestions described herein does not amend, modify, or supplement any insurance policy. Consult the actual policy or your agent for details about your coverage. QBE and the links logo are registered service marks of QBE Insurance Group Limited. © 2024 QBE Holdings, Inc.

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SOURCE QBE North America

FAQ

What are the main risks identified in the QBE North America 2024 Commercial Construction Risk Report?

The main risks identified are cybersecurity threats, financial challenges including cost overruns and high interest rates, and labor shortages.

What percentage of respondents see cybersecurity as the top risk in the construction industry for 2024?

42% of survey respondents see cybersecurity as the top risk.

How are rising costs impacting the commercial construction industry according to the report?

Rising costs due to inflation, high interest rates, and owner contract disputes are threatening project timelines and profitability.

What technological adoptions are being made in the construction industry to mitigate risks?

The industry is adopting new technology to improve safety, work quality, and efficiency.

How is the labor shortage affecting the commercial construction industry?

The labor shortage is impacting many trades, including electrical and HVAC, with an aging workforce and inexperienced workers exacerbating issues.

What improvements in risk management do construction companies plan to implement over the next year?

Nearly half of the respondents plan to enhance their safety plans, with a focus on higher quality and more frequent risk management training.