How Leading Construction Firms Turn Risk into a Competitive Edge

In the construction industry especially, risk management is more than a necessity — 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. It’s time to 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 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.

Protect Your Data

A common barrier to technology innovation within construction is data security. It’s a double-edged sword — companies must become more digital to stay ahead of the competition, but more data and online information increase risk. Balancing innovation with safety can be challenging.

The best solution to combat risk is not avoidance but rather to prepare for and defend against threats. Most cybercriminals select targets based on accessibility, so investing in cybersecurity infrastructure and educating staff members can significantly help construction companies ward off these bad actors.

Whether you are transitioning from an on-premises system to the cloud, adapting to modern work, or concerned about the security of sensitive data, there are simple and effective strategies to safeguard your cloud environment.

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

Protect your construction business from costly cyberattacks.
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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.

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 with 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.

Stay Ahead of Regulations

Regulations are expanding. 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.

Monitor Financial Disputes with Forensic Accounting

When risk becomes reality, construction leaders need defensible numbers. That’s where forensic accounting comes in.

• Evaluate financial impacts.

  Accurately quantify the financial impact of cost overruns and delays by assessing the extent of the damage caused by disruptions and providing a clear picture of the financial consequences.

• Tracing funds.

  Misappropriation of funds and fraudulent billing practices are common issues in construction. Forensic accountants trace the flow of funds by examining bank statements, invoices, and payment records.

• Verifying costs.

  Inflated labor, material, equipment, and overhead expenses can significantly impact a project's budget. Forensic accountants verify these costs to ensure they are accurate and justified.

Risk as a Growth Strategy

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

Construction firms that turn visibility, governance, and compliance into strengths outperform peers on margin, project execution, and bid competitiveness. With the right systems and controls in place, risk becomes a strategic advantage.

At Eide Bailly, we help construction firms transform disconnected efforts into integrated, scalable performance. Let’s build smarter together.