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Christopher Ward, a construction risk management expert, is an associate managing director at New York City-based advisory services firm K2 Integrity. The opinions are the author’s own.
As we look toward a new Trump administration, the construction and real estate sectors must prepare for significant policy changes that could reshape industry practices. One of the highlights of the previous Trump administration was its aggressive push for deregulation, aimed at spurring economic growth.
Christopher Ward
Permission granted by K2 Integrity
This approach meant the repeal of numerous environmental rules and regulations. While deregulation can reduce operational costs, streamline processes and accelerate project timelines, it also brings a number of challenges.
The appeal of deregulation lies in its promise of reduced red tape and faster project approvals. However, this comes at the likely cost of diminishing oversight mechanisms.
With fewer regulations in place, the risk of non-compliance and unethical practices increases. For example, the previous administration’s efforts to move federal agencies out of Washington, DC, to reduce the federal workforce—for example, its decision to move the Bureau of Land Management to Colorado—led to a decreased scrutiny of construction projects, mainly due to the declared 87% of the workforce who left the agency or retired.
This environment can encourage mismanagement and abuse because it removes certain checks and balances that would normally prevent these problems.
Potential for increased fraud
Reduced regulatory oversight creates fertile ground for fraudulent activities and wasteful practices. The construction and real estate sectors, already prone to these risks, could see an uptick in these problems under the Trump administration.
Relocation of federal agencies and workforce reductions not only diminish scrutiny, but also dilute the expertise available to oversee complex projects. This scenario increases the risk of mismanagement and abuse, which can lead to significant financial losses and reputational damage to the companies involved.
In addition, the previous Trump administration’s acceleration of environmental degradation raised serious concerns about non-compliance with environmental and cultural protection laws. Accelerated project timelines, driven by deregulation, often neglect critical environmental considerations, leading to increased non-compliance and potential legal challenges.
Furthermore, while deregulation may provide cost savings to construction companies that could be passed on to property owners, short-term economic gains could lead to increased occupational hazards. For example, the “heat stress rule” recently introduced by the Department of Labor it would probably be reversedwhen heat is considered the leading cause of weather-related deaths in the US
Risk management considerations
Regulations come and go as new administrations take effect, that’s to be expected, but for homeowners who want to protect themselves (and the businesses that service them), there are concrete actions that can be taken to term:
- Implement strong internal security protocols that exceed minimum security requirements.
- Provide ongoing training to employees on best practices and ethical standards.
- Hire third-party auditors to ensure compliance with industry best practices.
With the incoming changes brought about by artificial intelligence in the industry, a common data environment (CDE) should also be strongly considered, if it is not already in place. This will not only provide centralized documentation, but also help with version control, audit trails and risk management.
While deregulation under a new Trump administration may offer some economic benefits, it also requires greater vigilance.
By strengthening internal controls and fostering a culture of compliance, industry players can navigate these challenges and take advantage of the opportunities offered by a deregulated landscape. More importantly, stronger internal controls can be seen as a competitive advantage, demonstrating a commitment to quality and accountability.
