The Biggest Risks Facing Large Construction Companies in 2025

2025 looks promising for large construction companies, with projections indicating an 8.5% growth in total U.S. construction starts, fueled by a positive economic outlook, robust government investment, and declining interest rates. As engineering and construction firms like yours prepare for the year ahead, focusing on key risk areas can help you take proactive measures to navigate a complex landscape and take advantage of the projected industry growth.

When you choose to partner with an experienced insurance carrier like Central, which specializes in the construction sector, you not only receive tailored solutions and risk management support but also peace of mind, knowing that a dedicated construction team is keeping a pulse on the industry’s constantly evolving changes and issues.

This article, based on insights from Scott Zemberi, director of construction underwriting at Central Insurance, explores the most pressing risks that should be top of mind for large construction companies in 2025 and strategies to help address them.

Skilled Labor Shortage Is a Major Concern for Large Construction Companies

The construction industry is facing a significant workforce challenge: one in four contractors is over the age of 55, and an anticipated 25% of the skilled workforce will retire in the next decade. This generational shift underscores the urgent need to recruit and train younger talent. Companies that invest in apprenticeship programs and enhanced job site safety will address the skilled labor shortage (link to Amber’s blog if possible) and position themselves as leaders in a competitive labor market.

Rising Material Costs and Supply Chain Disruptions Continue to Pose Challenges

Inflation and rising interest rates have made building materials more expensive, placing immense pressure on large construction contractors like you, who operate on thin profit margins. While rising interest rates can help manage inflation to some degree, they may also worsen supply chain challenges, leading to higher costs for building materials.

Material scarcity ranks among the top challenges for contractors today. When building materials aren’t available on time or within budget, it can threaten profitability and project schedules. Additionally, substituting materials introduces the risk of construction defects if the replacement materials fail to meet the performance standards of the original specifications. “To mitigate these risks, negotiate contracts that lock in material costs, modify the language, or build in some additional cost in the bid to address potential fluctuations and increases,” Zemberi recommends.

Large Construction Companies Must Continuously Adapt to Regulatory and Legislative Changes

As a large contractor, you must constantly stay updated on the latest requirements in the areas where you operate, a task that becomes increasingly complex as your geographic footprint grows. For instance, building codes in Florida differ significantly from those in Tennessee. Expanding into new markets requires a thorough understanding of these varying codes to avoid improper construction, costly rework, or unexpected expenses that could negatively impact profitability.

Additionally, alternative building materials are an emerging risk in the industry. “Materials such as mass timber and concrete alternatives are being used to achieve some sustainability goals,” Zemberi offers. “However, the long-term durability of these materials is still a question as we don’t have the appropriate passage of time to review how they ultimately will hold up.”

Operational Complexities in Large-Scale Projects Are a Significant Risk

The contractual review process is one of engineering and construction firms’ biggest risks on large-scale projects. These projects often involve numerous contractors and subcontractors, making it essential to thoroughly review agreements to ensure the fair distribution of liability among all participants.

“A well-structured contract includes proper contractual risk transfer, clarifies responsibilities, defines the scope of work, and addresses critical areas such as delays, disruptions, payment disputes, design challenges, and safety concerns,” Zemberi states.

“Given the complexity and many moving parts of large-scale projects, having your contracts reviewed by experienced construction attorneys familiar with the local jurisdiction can significantly reduce risks and streamline project execution.”

Large Construction Companies Must Remain Vigilant About Safety Risks and Workplace Injuries

Approximately 169,600 non-fatal injuries and illnesses are reported in the construction industry each year, so it’s no surprise safety remains a critical concern for large construction companies. Companies like yours risk increased workplace injuries and long-term liability without proper job site oversight and training. 

Zemberi highlights that prioritizing jobsite safety ensures every contractor returns home safely each day—a value that transcends any monetary measure. Additionally, it’s important to look for an insurance carrier offering dedicated loss control services to support your large construction company with safety issues and questions.

Learn more: Meet Jim Johnson, Loss Control Construction Specialist

Cybersecurity Threats and Data Breaches Are Emerging Risks

According to a recent Forrester survey, more than 75% of construction, engineering, and infrastructure respondents had experienced a cyber-incident within the last 12 months. Such incidents can jeopardize a project’s profitability and damage your reputation, potentially hindering future business opportunities. To safeguard against these risks, you should explore cybersecurity insurance options, as many carriers now offer coverage specifically designed to address cyber threats. This protection is worth serious consideration if not already included in a contractor’s insurance portfolio.

Work With a Trusted Partner for Construction Insurance

Zemberi emphasizes, “Choosing the right insurance carrier is critical for contractors, and Central stands out by offering more than just coverage—we provide a true partnership. Unlike carriers where construction is only a small focus, we prioritize understanding the construction industry and each client’s unique needs. At Central, we go beyond reviewing insurance applications or browsing company websites. We actively engage with our clients to learn about their operations, goals, and opportunities to expand their footprint.”

This commitment allows Central to make informed underwriting decisions, tailor policies to fit your needs and deliver exceptional service. Contractors partnering with Central can feel confident knowing Central genuinely cares about your business’s success and will work alongside you to support your growth and navigate new possibilities in the industry.

Contact a local independent Central agent to learn more about comprehensive insurance coverage for large construction companies.