The construction industry remains one of the world’s largest industries contributing $13 trillion worth of gross annual output in 2023 which represents 7% of global gross output. According to McKinsey & Company, by 2040 the industry could grow by around 70%, but engineers and constructors in many parts of the world are struggling to deliver even today’s project pipeline. 

When it comes to creating a more sustainable future, we have already explored how the construction industry has a significant role to play in the race to achieve net-zero targets by 2050 by developing and executing new projects and a drive in the use of new sustainable materials including renewables, low-carbon activities, infrastructure, building insulation, and a great deal more.

While prospects for growth within the European (and global) construction and infrastructure sector remains positive, there are and will continue to be a significant number of existing and new challenges faced by firms in this sector.

Inflation remains high in many economies and the threat of recessions continue, as does the potential for contractor insolvencies. Uncertainty continues to mount over tariffs with a new president in the White House, which combined with ongoing conflicts with Russia’s war on Ukraine and high volatility in the Middle East, are likely to fuel the continued strain in supply chains. Access to and the use of new materials in the pursuit of meeting net-zero goals present some unknown risks and a chronic labour shortage threatens to destabilise the ability of the industry to achieve its growth potential.

To meet these challenges and risks, construction contractors and project owners are placing an ever greater emphasis on the governance of risk management across their businesses. Budgets continue to shift, risk management functions continue to gain more prominence and influence within their organisations and risk financing and risk transfer strategies are changing.