Blogs

by Laura Penhale and Tom Postol of IAT Insurance Group

Labor shortages and rising material costs pose a significant challenge to construction contractors, well beyond squeezed profit margins. Here are 3 construction risks to keep in mind and some guidance that can help companies manage through the current environment.

Notwithstanding Covid’s onset in 2020, construction activity has been, and continues to be, robust. New home construction has risen 22% compared to a year ago, and multifamily residential has risen 37% over the same timeframe. With few exceptions, commercial building shows no signs of slowing down either. The public and federal construction market is also picking up steam, with the federal government making a multi-year $550 billion infrastructure investment through the Infrastructure Investment and Jobs Act.

Still, there is reason to be cautious. Because some construction projects can take months or even years to complete, the construction industry has likely not yet felt the full impact of the pandemic and its attendant economic challenges. Contractors are having to adjust to the scarcity of key construction inputs like labor and material. Companies that are effectively managing this disruption still may be experiencing impacts to their profit margins as costs increase. Aside from project margins, lack of material and/or labor also has the potential of impacting project schedules and creating additional overhead expense. Despite today’s difficulties, the good news is that contractors have some level of control in how they manage these variables. IAT shares thoughts on these areas attempting to answer the question: How can contractors adjust to the new reality and still maintain profitability?

Construction Risk has never been greater: What you need to know can be found in IAT’s eBook here:  https://www.iatinsurancegroup.com/docs/default-source/default-document-library/e-book---contractor-risks.pdf

Laura Penhale is an Assistant Vice President of Underwriting for IAT Insurance Group, Surety. She has been with the company for more than 15 years and has more than 25 years of experience in the industry. Prior to joining the IAT home office tram in January 2022, she was a Field Contract Underwriter in the Philadelphia region and was an active member of the Philadelphia SAA. In addition, Penhale served as an Adjunct Professor of Accounting for five years. She holds a master’s degree in Finance from Villanova University. She can be reached at laura.penhale@iatinsurance.com or 610.205.5208.

Tom Postol is the Senior Vice President of Underwriting at IAT Insurance Group for Inland Marine and Property. He has been with the company since 2018 and has more than 30 years of experience in the industry. Postol obtained his bachelor’s in Business Management from the University of Missouri-Saint Louis. He can be reached at thomas.postol@iatinsurance.com or 678.381.8556.