Explore Munich Re Group

Get to know our Group companies, branches and subsidiaries worldwide.

Keeping up with the evolving construction industry
The construction industry is a dynamic segment of the economy.
Keeping up with the evolving construction industry
© Paul Bradbury / Getty Images
    alt txt

    properties.trackTitle

    properties.trackSubtitle

    By Matt Klemmensen, Casualty Loss Control Expert, Munich Re Specialty – North America

    Contracting firms must constantly adapt to changing market conditions. Shocks like the “remote work revolution” brought on by the pandemic have caused cancellations and delays to commercial office projects. The high interest rate environment has caused slowing of multi-family starts in some areas. 

    In response to market and financial pressures, many contractors are looking for work outside of their proverbial "sandbox," by either diversifying project types or seeking work in new geographic areas. While revenue growth is certainly attractive, operational expansion comes wrought with perils of risk and uncertainty. Every type of project has specific nuances, making experience paramount in successful project completion. Every region, state, and even county has differing adoption cycles for uniform building codes, their own set of subcontractors serving the area, and different labor regulations.

    When thinking about expanding operations into new markets or geographic areas, consider using one or more of these proven approaches to help mitigate the risk.

    Expand with your clients

    The simplest way to begin to secure contracts in new areas is to leverage your existing reputation and relationships that has been built with your clients. Many contractors have success expanding into new areas by following their clients. This provides opportunity to deepen the client relationship and more easily gain a foothold in a new geography.

    Bring your own subcontractors 

    Considering today's construction labor demands are still outpacing supply, access to qualified craft is one of the major challenges with expanding into new regions. The best subcontractors are the ones you already know and have built solid working relationships with. Reduce uncertainty in your expansion, and see if your best subcontractors are willing to expand in to new areas with you.

    Joint ventures

    Teaming up with other contractors allows you to leverage the individual experiences of each firm. This is a great way to gain valuable project experience in new markets, and new geographies, with less risk. As a fringe benefit, the combined financial strength of the firm is generally considered by owners and financiers in capacity calculations, allowing you to potentially go after larger projects.

    Super subcontractors

    An alternative to joint ventures, super subcontractors are a contractual arrangement whereby the prime or lead general contractor hires a local or specialized firm for their access to craft or experience in a specific project type. The super subcontractor contract can be set up for complete project delivery or just specific scopes. This arrangement allows firms to maintain their client relationships, but successfully stretch experience into new project types or geographies.

    Munich Re Specialty offers a wide range of insurance solutions and services for your construction business during challenging market conditions.

    Contact us to discuss your unique needs  
    Contact us
    Matt Klemmensen
    Matt Klemmensen
    Casualty Loss Control Expert Munich Re Specialty – North America
    About Munich Re Specialty Munich Re Specialty – North America products and services are offered by and provided through insurance companies and producers/surplus lines brokers that are eligible or licensed in accordance with the laws and regulations of individual jurisdictions. Products and services are not available in every, and may vary by, jurisdiction. The information provided on this site is intended as general information only and does not constitute an offer to sell or a solicitation to purchase insurance or non-insurance products and services. Please be aware that the insurance policy and not any information provided on this site will form the contract between the parties thereto, and will govern in all cases. Munich Re Specialty – North America’s insurance products and services in the United States, Canada, and the United Kingdom are underwritten and provided by or through one or more of the insurers, producers/surplus lines brokers that are members of the Munich Re Group identified below. Each company is financially responsible only for insurance policies it has issued. For more information on Munich Re Specialty, including licensing, regulatory-required, and other information on the operating companies, please click here.

    Newsletter

    Stay ahead of the curve with exclusive insights and industry updates! Subscribe to our Munich Re Insights Newsletter for a front-row seat to the latest trends in risk management, expert analyses and assessments, market insights, and innovations in the insurance industry. Join our community of forward-thinkers at Munich Re and empower your journey towards a more resilient future.