List of construction industry challenges
Some of the key construction industry challenges are:
- Rising material costs
There are many factors behind the rising prices of construction materials like cement, steel, and lumber. However, the challenge can be dealt with in the following ways:
- If you anticipate an increase in the prices of construction materials, you can stock up the materials before the new rates come into effect. You can also purchase in bulk when they are on sale.
- Look at multiple suppliers for purchasing the materials. This will help mitigate the challenge if one supplier hikes the prices or runs out of materials.
- Shortage of skilled labour
Shortage of skilled labour coupled with an ageing workforce is another serious challenge affecting the construction industry in many ways, such as:
- Lack of skilled workforce leads to project delays. As a result, penalties are imposed resulting in loss of revenue.
- Quality of work can get impacted when workers are less experienced. If there is a need for rework, it can impact costs.
- Project Delays and Cost Overrun
Project delays happen due to improper planning, mismanagement, scheduling issues, and unpredictable events such as weather, machinery failure and labour shortage.
Cost overrun is another challenge which occurs when a project exceeds its pre-planned budget. This can be due to poor estimates during the planning phase, payment delays, supply chain issues and design changes.
- Environmental and sustainability issues
Due to the growing pressure to adopt sustainable practices, construction industries face the challenge of meeting strict sustainability standards and certifications. Efficient waste disposal and recycling of construction waste is also an environmental challenge.
- Health and safety risks
Ensuring the safety of workers in high-risk environments is a challenge. Thousands of workers die every year due to accidents at construction sites. The reasons can be the unpredictable nature of construction sites, non-compliance with safety regulations, etc.
How insurance can help
Engineering insurance provides financial protection against potential risks at the workplace. The coverage includes:
- Damage to equipment and machinery due to accidents, fire, theft, natural disasters, vandalism and mechanical breakdowns.
- Project delays owing to events which are beyond one’s control, such as natural disasters, civil unrest, strikes, etc.
- Third-party legal liabilities, which means any injury or property damage caused to third parties during work, will be covered by insurance.
Conclusion
The challenges in construction industry can significantly impact budget, project timelines, and overall quality of work. Addressing construction industry challenges is crucial for the success of the business. Additionally, having engineering insurance is a must for financial protection against a wide range of risks and ensuring the stability of the industry.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It is advised to verify the currency and relevance of the data and information before taking any major steps. Please read the sales brochure / policy wordings carefully for detailed information about on risk factors, terms, conditions and exclusions. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.