With economic recovery in several construction segments slow to take hold, more small and midsize contractors are pursuing work that may be well beyond their field of expertise, if not their physical or financial capacity, construction risk management experts said.

In order to maintain sufficient levels of operating capital — or worse, simply avoid having to scale back the workforce — small and midsize contractors are expanding the types of projects for which they're willing to bid, the kinds of contracts they'll sign to secure those projects and the specific tasks they agree to perform once on site, experts said, and all at profit margins far below normal market levels.

While that broader field of vision regarding viable contracting opportunities may very well mean the difference between solvency and bankruptcy for many mid-market contractors, experts said taking on construction work in unfamiliar disciplines without thoroughly understanding the contract standards, assumed liabilities and logistical constraints of a particular project can have serious legal and financial consequences.

“The most obvious place we've seen this dynamic manifest itself as a problem has been in surety failures and subcontractor default claims,” said Scott Rasor, the Chicago-based president of Zurich North America's construction practice. “The margins for a lot of smaller contractors, particularly the smaller trade contractors, have been falling off steadily since 2008 and continue to erode, to the point where there just isn't any room for mistakes in any of these bids, and that's really problematic.”

Many general contractors in the middle market, hoping to preserve whatever nominal profit margin they can on new contracts, have begun performing their own site preparation, steel erection, concrete pouring and other tasks typically delegated to subcontractors, said Paul Becker, the Nashville-based chairman of Willis North America's construction practice.

However, he noted, contractors must understand the breadth of worker safety and product defect liability exposures attendant to such operations.

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“We do see these kinds of things happening fairly frequently, and we've had to have a number of conversations with clients about how certain risks may or may not line up with their traditional strengths,” Mr. Becker said. “If you're doing something like the concrete pour yourself, now you're responsible not only for the subcontractors working around you, you're also responsible for the quality of the concrete you're putting in,”

Additionally, Mr. Becker said, most general contractors' safety managers on-site are tasked primarily with coordinating safety protocols and procedures among the separate subcontractors. But if contractors are performing the work themselves, he said, “they're the ones that actually have to drive safety protocols among their own labor force, as well as maintain and watch all of the other subcontractors' protocols.”

As certain markets within the construction industry have shown significant signs of life since the end of the recession, mid-market contractors are also expanding the range of projects for which they'll pursue contracts. Civil infrastructure, health care facilities, higher education and rental apartment buildings all have seen moderate recovery in terms of new contract opportunities. And they have begun to attract construction companies from other fields of construction — such as commercial office space, large-scale retail and smaller, specialty trades — that are nonetheless eager to take on the work.

“Contractors know what parts of the economy are thriving, and will migrate towards those segments if they can,” said Steve Healy, senior underwriting manager at Boston-based Liberty International Underwriters, a unit of Liberty Mutual Insurance Co. “Large infrastructure jobs are certainly in vogue right now. Large, federally funded streets and roads, bridges, toll plazas, those projects are what's picking up speed out there, predominantly.”

For example, the migrations are not always as dramatic as a contractor leaving the retail space to erect steel for an interstate bridge, Mr. Healy said. Even contractors working in seemingly similar disciplines often are taken by surprise by the amount of additional risk that must be accounted for when leaving their “comfort zone,” he said.

“A company that normally paves driveways and parking lots suddenly wants to bid for work on a road or a bridge or an interstate is going to encounter a number of risks that they wouldn't ordinarily worry about,” Mr. Healy said. “If you're used to paving driveways and you sign up to pave a four-lane interstate, there are a whole lot more things you have to factor in regarding controlling the flow of traffic, night work, workforce size, even the sheer proximity to moving traffic can be a significant exposure if overlooked.”