The construction industry is blessed with solid growth but challenged by a labor shortage. Those who remember these simple principles will do well.
1. Now is the time to demand Fair Contract language and secure it.
If not now, when? It is much easier in good times to insist upon equitable contract terms.
2. Condition your bid.
Subcontractors are wise to condition their bids upon fair subcontract language by stating: “This bid conditioned upon use of the AIA A401 or ConsensusDocs 750 subcontract.”
3. Price risk appropriately.
For example, “Pay when paid” vs. “Pay if paid” are much different risks. Greater risk suggests that higher pricing is appropriate.
4. Retain your key people.
The best time to keep an employee happy is before they think about leaving.
5. Beware of “Too Much Too Fast.”
Growth that is too rapid can cause contractors to grow out of cash and experience severe cash flow problems.
6. Beware of unrealistic schedules.
If you do not agree to a schedule, be sure to state your objection in writing, and reserve your rights to additional time or money.
7. Watch your receivables.
Prudent contractors properly manage preliminary notices of furnishings and lien rights.
8. Give proper notice of additional costs.
Your contract requires it, so provide the notice required. Timely notice avoids surprises and increases your leverage for an earlier resolution of claims and change orders.
9. Document … Document … Document.
This is easier to do as technology advances. Daily reports with details, RFIs, photos with notations, and drones all facilitate effective documentation.
10. Only “1 new thing” per job.
Successful contractors minimize risk by only taking on one new thing per project, such as one new customer, new region, or new project manager.
Contractors who keep these suggestions in mind will minimize risk, maximize profitability and succeed in a time of growth in the construction industry.