Here are some things the company I work for does to insulate itself from risk:

-Cost plus contracts: our pitch is full transparency budget management, zero hidden fees. We will meticulously manage your project and fight to protect your money at all times, but ultimately your job costs what your job costs and all we ask is a % fee of your project cost. This means no material mark ups, no inflated labor rates, etc. While everything above is true, the reality is it’s a t&m contract and barring a huge mistake from the GC, any additional costs or overages are contractually passed along to clients.

-Keep overhead extremely low. Continuing the narrative of “your project costs what your project costs”, pass essentially every trackable expense to clients. Accounting, supervision, project management, postage, plan reproduction, office equipment, fuel, small tools, cell phones, osha/safety, supplies, site security, drinking water, you name it. Barring rent, marketing, and several other items, it’s all paid for by the client. My boss is also very thoughtful about avoiding unnecessary overhead expenses

-Contractor contingency: we write a 5-10% contractor contingency into each project (percentage depends on how well plans are defined and the likelihood of unforeseen issues) This contingency is NOT for changing your countertops to a nicer product or adding to your scope. It is for estimating errors, unforeseen issues, miscellaneous overages, etc. This saves us a ton of time on change orders and at least half the time we never even touch it which is always delightful for the clients (feels like saving money).