Why Do Construction Companies Fail?

Failure in ripped paper

Overextension is one of the primary reasons why contractors fail.

February 14, 2023
The Hartford Staff - The Hartford Insights

If a construction company takes on a lot of work, it’s a good thing, right? Not exactly. In fact, overextension is one of the primary reasons why contractors fail. And it’s something that contractors should consider as a priority for their risk management plan.

Of the 43,277 construction businesses that started in March 2011, only 37.6% of companies survived 10 years later.1

“The construction industry has a high rate of failure,” explains Tim Holicky, senior executive underwriter in The Hartford’s construction central bond team. “And more often than not, it’s because of too much work, rather than too little of it. The key to a contractor’s long-term survival is knowing when to say no.”


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