How Leading Construction Firms Turn Risk into a Competitive Edge

In today’s construction industry, risk management isn’t an insurance policy — it’s a business strategy.

Consider this:

• The average ransomware demand has reached $3.5 million.
• 90% of breaches involve phishing or email compromise.
• One misstep in payroll or compliance can disqualify you from public contracts.

Security touches your systems, your subcontractors, your financials, and, ultimately, your ability to scale and win work. Unmanaged risk can stall projects, drain cash flow, and derail growth.

The solution? Embed risk resilience into every layer of your operation.

The Current State of Risk in Construction

With modern connected technologies, construction firms can streamline everything from project management to field operations. But these capabilities come with a heightened exposure to cyber risks.

Key Threats for the Construction Industry

IoT Vulnerabilities

• Jobsite devices with default credentials
• Connected systems that are often overlooked and unsecured
• Attackers using jobsite tools for lateral movement into core systems

Supply Chain Attacks

• Vendor breaches exposing company data
• Maliciously loaded hardware or firmware from third-party tech
• Lack of visibility into tiered subcontractor security posture

Insider Threats

• Subcontractors connecting to internal systems with no controls
• Rogue or disgruntled employees with privileged access
• Costly mistakes from undertrained staff

Business Email Compromise

• Spoofed internal emails requesting urgent wire transfers
• Email account takeovers redirecting vendor payments

The Three Biggest Myths Holding Construction Leaders Back

1. “Security is only an IT issue.”
   Reality: It’s an operations, finance, and strategic growth issue. Cyber risk affects job flow, bonding, vendor trust, and regulatory standing.
2. “Security is just about breach prevention.”
   Reality: Resilience is about detection, response, and continuity. The cost of downtime or data loss can exceed the cost of a breach.
3. “Security will only cost us money.”
   Reality: Strong security builds client trust, improves project delivery, protects margins — and increases enterprise value in an eventual exit or acquisition.

Security and risk resilience are most effective when prioritized as a strategic, cross-functional imperative. Monitor these three areas to ensure your construction company stays proactive and risk-aware. 

Protect Your Projects and Payments

Construction is one of the least-protected industries — and most targeted. From ransomware to payment fraud, cyber threats can halt bidding, delay pay apps, and compromise sensitive data.

What to Watch:

• Business Email Compromise (BEC): Fake vendor requests trick AP teams into wiring funds.
• Ransomware: Shuts down ERPs, job site tech, and even safety systems.
• Unsecured Jobsite Tech: IoT sensors, mobile apps, and drones create entry points.

Immediate Actions:

For Technology Leaders:

• Implement multi-factor authentication (MFA) across all apps.
• Run a cyber risk assessment for third-party and jobsite system vulnerabilities.
• Enable real-time alerts for log anomalies and suspicious file access.

For Finance Leaders:

• Train AP teams to verify all wire transfers — especially vendor changes.
• Ensure backup and recovery plans include financial systems and WIP reports.

For Operations Leaders:

• Include cyber risk training in site safety briefings.
• Establish policies for personal device use and secure jobsite Wi-Fi.

A ransomware attack can cost more than a project delay — it can void bonding capacity. Protect your reputation by building cyber into business continuity plans.

Managing Contract Risk

Weak clauses, outdated templates, or inconsistent language create legal and financial risk — especially when entering new markets or working with new partners.

Common Pitfalls:

• Broad indemnity clauses and unclear scopes
• Manual change order processes that lack documentation
• Payment terms that impact project cash flow

Immediate Actions:

For Finance Leaders:

• Review how contract terms impact cash flow, insurance, and bonding.
• Standardize scopes, pricing assumptions, and change order processes.

For Operations Leaders:

• Empower PMs with a contract risk checklist during preconstruction.
• Track contract compliance KPIs, including change order response times, margin erosion, etc.

For Tech Leaders:

• Digitize contract workflows with integrated tools tied to ERP and PM platforms.
• Build alerts for milestone risks including insurance laps or expired certificates.

Contracts are your first defense. Align legal, finance, and ops teams to surface risk early — before it hits the field.

Stay Ahead of Regulations

Regulations are expanding — and enforcement is tightening. Compliance is no longer check-the-box — it's a business differentiator. Public sector bids, ESG scoring, and insurance underwriting increasingly depend on provable compliance maturity.

Top Areas to Watch:

• Certified payroll requirements
• OSHA recordkeeping and safety audits
• Environmental and DEI compliance for public work

Immediate Actions:

For Operations Leaders:

• Assign field compliance captains for OSHA and jobsite reporting.
• Integrate safety data into your performance dashboards.

For Finance Leaders:

• Use automated payroll tools for certified wage reporting.
• Track regulatory deadlines with a compliance calendar.

For Tech Leaders:

• Ensure systems can support reporting by geography and funding type.
• Establish data retention policies and audit trails across platforms.

Make compliance reviews part of project closeouts — and surface trends by business unit.

Risk as a Growth Strategy

Risk intelligence helps you act faster and safer. And the most risk-ready companies strategically plan for risk cross functionally – across finance, operations, and technology.

Ask Yourself:

• “How well can we prove risk controls to lenders or buyers?”
• “Can we use compliance automation to unlock more public work?”
• “Do our dashboards give execs early warnings or just reports?”

Risk Readiness in Action

As Building Zone Industries (BZI) grew, it needed better visibility across operations and finance. Manual processes and siloed data made it difficult to assess project health, manage risk, and respond quickly. 

Eide Bailly worked with BZI to modernize its systems, implement a cloud-based ERP, and create real-time dashboards that:

• Increased visibility into job costs and timelines
• Streamlined reporting for leadership and compliance
• Led to better decision-making backed by trusted data 

Make Your Organization Risk-Ready

The most resilient construction firms don’t just avoid threats — they use risk intelligence as a competitive advantage.

Here’s how:

• Compliance → Opens access to public funding, improves ESG scoring, supports higher insurance ratings.
• Cyber controls → Help qualify for cyber liability insurance, safeguard bonding capacity, and protect cash flow.
• Contract standardization → Reduces margin erosion, minimizes disputes, and improves bid accuracy.

Let’s align your risk strategy with your business goals.