---
title: 5 Biggest Construction Risks & How a Preferred Developer Can Help
description: There may be no phase riskier than construction. Let's take a look at five of the biggest construction risks and how a preferred developer can help.
image: https://blog.simoncre.com/hubfs/Blog%20Files/Blog%20-%20Stock%20Photos/Construction-Risk.jpg
---
- [Properties](https://simoncre.com/properties/#!/main)
- About Us
- [Our Company](https://simoncre.com/about-us/)
- [Our Team](https://simoncre.com/our-team/)
- [Our Culture](https://simoncre.com/our-culture/)
- [Careers](https://simoncre.com/careers/)
- Approach
- [Development](https://simoncre.com/development/)
- [Acquisitions](https://simoncre.com/acquisitions/)
- [Dispositions](https://simoncre.com/dispositions/)
- Resources
- [Insights](https://blog.simoncre.com/insights)
- [News](https://blog.simoncre.com/news)
- [Case Studies](https://blog.simoncre.com/case-studies)
- [Contact](https://simoncre.com/contact-us/)
- [Properties](https://simoncre.com/properties/#!/main)
- About Us
- [Our Company](https://simoncre.com/about-us/)
- [Our Team](https://simoncre.com/our-team/)
- [Our Culture](https://simoncre.com/our-culture/)
- [Careers](https://simoncre.com/careers/)
- Approach
- [Development](https://simoncre.com/development/)
- [Acquisitions](https://simoncre.com/acquisitions/)
- [Dispositions](https://simoncre.com/dispositions/)
- Resources
- [Insights](https://blog.simoncre.com/insights)
- [News](https://blog.simoncre.com/news)
- [Case Studies](https://blog.simoncre.com/case-studies)
- [Contact](https://simoncre.com/contact-us/)
SUBSCRIBE
- [](https://www.facebook.com/SimonCommercialRealEstate)
- [](https://twitter.com/simon_cre)
- [](https://www.linkedin.com/company/simoncre)
- [](https://instagram.com/simon.cre)
# Insights
 News & views of the industry we love
[](https://blog.simoncre.com/insights/the-5-biggest-construction-risks-and-how-a-preferred-developer-can-help#down)
[ back to resources](https://blog.simoncre.com/insights)
This is a search field with an auto-suggest feature attached.
- There are no suggestions because the search field is empty.
CATEGORIES
- [- Buyers](https://blog.simoncre.com/insights/topic/buyer)
- [- Tenants](https://blog.simoncre.com/insights/topic/tenants)
- [- Brokers](https://blog.simoncre.com/insights/topic/broker)
- [- Sellers](https://blog.simoncre.com/insights/topic/seller)
# 5 Biggest Construction Risks & How a Preferred Developer Can Help
January 29, 2019 [](http://www.facebook.com/share.php?u=https%3A%2F%2Fblog.simoncre.com%2Finsights%2Fthe-5-biggest-construction-risks-and-how-a-preferred-developer-can-help%3Futm_medium%3Dsocial%26utm_source%3Dfacebook) [](http://www.linkedin.com/shareArticle?mini=true&url=https%3A%2F%2Fblog.simoncre.com%2Finsights%2Fthe-5-biggest-construction-risks-and-how-a-preferred-developer-can-help%3Futm_medium%3Dsocial%26utm_source%3Dlinkedin) [](https://twitter.com/intent/tweet?original_referer=https%3A%2F%2Fblog.simoncre.com%2Finsights%2Fthe-5-biggest-construction-risks-and-how-a-preferred-developer-can-help%3Futm_medium%3Dsocial%26utm_source%3Dtwitter&url=https%3A%2F%2Fblog.simoncre.com%2Finsights%2Fthe-5-biggest-construction-risks-and-how-a-preferred-developer-can-help%3Futm_medium%3Dsocial%26utm_source%3Dtwitter&source=tweetbutton&text=5%20Biggest%20Construction%20Risks%20%26%20How%20a%20Preferred%20Developer%20Can%20Help)
Some risks come with great reward. Others come with great challenges. Commercial real estate development is filled with both.
Starting from the deal-making stage all the way down, [the commercial development process](https://info.simoncre.com/the-commercial-real-estate-development-process) is filled with a [variety of risks](https://info.simoncre.com/most-common-setbacks-in-commercial-real-estate-development). But there may be no phase riskier than construction. Each construction project is unique and comes with its challenges and opportunities.
Unfortunately, there’s no way to predict or avoid ALL of the risks that are associated with commercial construction. But we can break down the list into five of the biggest, most common risk areas in construction and how you can minimize that risk.
[](https://hubspot-cta-redirect-na2-prod.s3.amazonaws.com/cta/redirect/2422299/00d339f3-95f3-45ab-8993-d2229525b669)
### 1) Project Approvals & Permits
In the development process, you run the risk that no usable planning permit is received or that this process takes much, much longer than expected. This risk also applies to other municipal approvals/permits, such as commercial licenses. Whether or not grants are obtained is also included in this risk.
- **With a Preferred Developer:** A preferred developer handles the necessary work with municipalities saving you time, resources, and avoiding the headaches of complicated approval and permit issues.
### 2) Design/Technical Issues
Developments are often exposed to the risk of design defect losses, or deficiencies. This can result from the uncertainty of resources and availability of materials, inadequate site investigation, or incomplete design. These risks can commonly occur when there are changes in project scope/requirements, and if there are design errors or omissions.
- **With a Preferred Developer:** An experienced developer works with its network of architects, consultants, and planners to ensure design issues are not overlooked and/or handles the workload of correcting any issues.
### 3) Budget/Cost Overruns
From conditions unknown to the contractor to meeting client requests that are beyond the original scope of work, commercial developments face a variety of factors that can impact your budget. Change orders, delays, fluctuating material and labor costs, and design issues can all result in cost overruns.
- **With a Preferred Developer:** Using a preferred developer means as the tenant, you agree to a certain rent and you know your expenses. The developer takes all the risk of cost overruns.
### 4) Safety Concerns
Construction sites are filled with many different types of physical hazards which need to be identified, assessed and planned for. While work safety responsibilities fall on contractors, the responsibility still remains with the developer (who hires the contractors) to ensure all legislative responsibilities are correctly delegated.
Site management is a requirement before starting any development project and this includes managing the proper implementation of accident prevention measures.
- **With a Preferred Developer:** As the party responsible for hiring the contractors, a preferred developer will manage and handle any safety issues which can ultimately be challenging and even costly.
### 5) Site Conditions
Differing site conditions can increase construction costs, and can also delay the project's schedule. Conditions that often cause issues include:
- Weather
- Buried debris
- Unexpected utilities
- Soils with inadequate bearing capacity
- Large amounts of unanticipated rock
- Groundwater at levels higher than anticipated
These conditions may also trigger clauses in contracts which then shift risk from the contractor to the property owner/developer.
- **With a Preferred Developer:** These are issues that the property owner/developer will be responsible for. They’ll have to take measures and incur costs to mitigate those site conditions.
---
Construction will undoubtedly always be filled with its share of risks. It’s how you reduce those risks that lead to great rewards. And effective risk reduction starts with collaboration. In a [preferred developer](https://info.simoncre.com/why-use-a-preferred-developer), you get a partner that’s willing to take on the risks that come with the real estate development process. So, as a tenant, you spend less time worrying about the intricacies and risks and more time worrying about running your business.
| ####  | #### JARED ATKISSON [\>](https://simoncre.com/team/jared-atkisson/) ##### Vice President of Construction Jared Atkisson joined SimonCRE in 2015 as Vice President of Construction, where he oversees all of SimonCRE’s new construction projects, expansions, and remodels. Jared has especially abundant past experience in restaurant ground-up construction. #### Other Posts by JARED: [](https://hubspot-cta-redirect-na2-prod.s3.amazonaws.com/cta/redirect/2422299/0ff498e0-c41d-4176-8642-131ec36b90c1) [](https://hubspot-cta-redirect-na2-prod.s3.amazonaws.com/cta/redirect/2422299/92704d0d-c2e6-4528-b8db-ba83ae7b6cfa) [](https://hubspot-cta-redirect-na2-prod.s3.amazonaws.com/cta/redirect/2422299/84258ac0-3487-456f-8a23-ed8e82eb48c7) |
| --- | --- |
[Preferred Developer](https://blog.simoncre.com/insights/topic/preferred-developer) [Construction](https://blog.simoncre.com/insights/topic/construction) [Risks](https://blog.simoncre.com/insights/topic/risks) [Tenant](https://blog.simoncre.com/insights/topic/tenant)
### Related Posts
Check out our latest news & views to help keep you informed
April 16, 2024
[The Factors that Determine the Rent Rate of a..](https://blog.simoncre.com/insights/the-factors-that-determine-the-rent-rate-of-a-property) [read more](https://blog.simoncre.com/insights/the-factors-that-determine-the-rent-rate-of-a-property)
March 19, 2024
[Working With Your Landlord to Achieve Expanded..](https://blog.simoncre.com/insights/working-with-your-landlord-to-achieve-expanded-tenant-improvement-allowances) [read more](https://blog.simoncre.com/insights/working-with-your-landlord-to-achieve-expanded-tenant-improvement-allowances)
March 5, 2024
[6 Common Allowances for Tenant Improvements](https://blog.simoncre.com/insights/6-common-allowances-for-tenant-improvements) [read more](https://blog.simoncre.com/insights/6-common-allowances-for-tenant-improvements)
August 29, 2023
[What We Look for in General Contractors: Part..](https://blog.simoncre.com/insights/what-we-look-for-in-general-contractors-part-ii) [read more](https://blog.simoncre.com/insights/what-we-look-for-in-general-contractors-part-ii)
May 2, 2023
[Why Fixed CAM Costs are the New Fix to an Old..](https://blog.simoncre.com/insights/why-fixed-cam-costs-are-the-new-fix-to-an-old-problem) [read more](https://blog.simoncre.com/insights/why-fixed-cam-costs-are-the-new-fix-to-an-old-problem)
KEYWORD
- There are no suggestions because the search field is empty.
TENANCY
- [- Buyers](https://blog.simoncre.com/insights/topic/buyer)
- [- Tenants](https://blog.simoncre.com/insights/topic/tenant)
- [- Brokers](https://blog.simoncre.com/insights/topic/broker)
- [- Sellers](https://blog.simoncre.com/insights/topic/seller)
- [- Fans](https://blog.simoncre.com/insights/topic/fan)
TYPE
- [- Article](https://blog.simoncre.com/insights/topic/article)
- [- Download](https://blog.simoncre.com/insights/topic/download)
- [- Video](https://blog.simoncre.com/insights/topic/video)
### BLOG & PROPERTY SIGNUP
Get exclusive content and property updates sent straight to your inbox
Stay up to date with exclusive content, the latest news, and our property updates delivered to your inbox
- ADDRESS 6900 E. 2nd Street
Scottsdale, AZ 85251
- phone
[480-745-1965](tel:4807451965)
[](https://www.facebook.com/SimonCommercialRealEstate) [](https://twitter.com/simon_cre) [](https://www.linkedin.com/company/simoncre) [](https://www.youtube.com/channel/UCBONc-W0e61QtbfGsW_duPw)
© 2020 SimonCRE. All Right Reserved | [Privacy Policy](https://simoncre.com/privacy-policy/)
- [properties](https://simoncre.com/properties/#!/main)
- [About Us](https://simoncre.com/about-us/)
- [development](https://simoncre.com/development/)
- [acquisitions](https://simoncre.com/acquisitions/)
- [Tenants](https://simoncre.com/tenants/)
- [Brokers](https://simoncre.com/brokers/)
- [Buyers](https://simoncre.com/buyers/)
- [Sellers](https://simoncre.com/sellers/)
- [Fans](https://simoncre.com/fans/)
- guide
- [Understanding Build To Suit Development](https://info.simoncre.com/understanding-build-to-suit-development)
- [The Commercial Real Estate Development Process](https://info.simoncre.com/the-commercial-real-estate-development-process)
- [Build to Suit FAQ](https://info.simoncre.com/build-to-suit-development-faq)
- [Why Use a Preferred Developer?](https://info.simoncre.com/why-use-a-preferred-developer)
- [What to Know About Commercial Redevelopment](https://info.simoncre.com/what-to-know-about-commercial-redevelopment)