A major shift in the construction industry as it has recovered from the Great Recession is increasingly complex building projects with shorter deadlines. The dynamic has created increased and novel risks.

Since bonding is a crucial risk-management tool in construction, surety-bonds experts need to constantly keep their finger on the pulse of the industry. Based on sureties’ understanding of how construction risk is changing, here are the top perspectives surety specialists share about the future of the U.S. construction industry. They are extracted from the reports Managing Risk in the Construction Industry and the 2016 AGC/FMI Survey on Managing and Mitigating Risk in Today’s Construction Environment.

Subcontractor Default is a Major Risk . . .
Surety experts see the inability of subcontractors to complete contractual obligations as a top risk for general contractors today. According to the reports, subcontractors have not yet managed to adapt to new factors in the industry, such as increased project complexity, new margins that require business model adjustments, and shortage of skilled labor.

These shortcomings make it difficult for subcontractors to deliver on deadlines and handle their existing workloads. Many end up struggling with cash problems, which creates obstacles for their operation and prevents them from getting bonded.