The world of construction is, unfortunately, replete with projects that go south.
And it’s true – sometimes this is because of a dramatic event – a single point of failure, catastrophic and terminal for the responsible players.
More often, though, the project dies a death of a thousand cuts. Small, seemingly insignificant burdens layer themselves up until things hit boiling point. And then, left with no other option, a colossal fight ensues about issues that could otherwise probably be resolved – if not for all the things that took place before.
The truth is that maintaining a profitable project is an exercise in relatively uninteresting disciplines. They are predictable, somewhat dull, and utterly imperative for any construction business to survive.
Here are our top 5.
Do the Work Up Front With a Proper Contract Review
The reason most disputes flare up and go beyond an initial foray is that things are unclear.
And the only reason things are usually unclear is that somebody didn’t:
- Check the contract properly; or
- Follow the contract properly.
Ambiguous clauses, unclear notice requirements, and timeframes are the regular killers.
But with a useful contract review, your entire contractual procedure should be explained, understood and in place with your project team before you start.
Train Your Team
Having a contract review from your lawyers is a great start, but too often the advice either just gets put in a draw, or the critical information doesn’t find its way into the hands of your team.
Don’t make that mistake.
The best way to make effective use of your contract review is to get together with your lawyers and your project team and ensure that all your key personnel have:
- Read the review;
- Understood it; and
- Had an opportunity to ask questions and have them answered.
Anyone in the project team who might later be responsible for a problem should ultimately be involved in these discussions.
Allocate Responsibility… and Authority
Often problems occur because a task simply isn’t anyone’s responsibility.
The inevitable response? “Oh, I thought Billy Bob was handling that!”.
As part of your review, your training and pre-project preparations, ensure that it’s clear who is responsible for what.
A notice comes in? Who receives it? What do they do with it? Where should it be sent? What type of notice is it? When is a response required?
Importantly, empower your team to do these things without needing to seek input. Just make it clear who can, and should, do what along the way. Because without the understanding that they can and should do something, most people wait to see if someone else is going to deal with it.
Don’t Let it Slide
We understand the commercial reality – if you’re a contractor, you don’t want to upset your principal.
Unfortunately, these desire for relationship often results in this chain of events:
- Issue occurs that might entitle contractor to make a claim;
- Contractor ignores claim in the interest of relationship;
- Issue occurs that might entitle principal to claim;
- Principal does not ignore and complies with contract;
- Come final claim time – principal asserts a massive offsetting claim, and refuses to pay.
This can kill a project dead.
And it’s not because of the final dispute – it’s because of the many decisions along the away.
Conserve your rights while conserving your relationship. Make phone calls, comply with the contract, and work both angles to ensure that any final issues can be determined equitably – not with you on the back foot because you didn’t issue a single notice during the contract term.
Love your Lawyers
This sounds self-interested, of course, but it’s true.
Sadly, many potential issues get far too long in the tooth before the lawyers are called.
Calling your lawyer doesn’t mean that things need to turn into a full-on brawl – it might be as simple as a brief conversation, some help with a contractual term, or checking that a notice complies with the contract.
These small costs along the way are far better spent than the massive legal bill you might get if things degenerate into a huge dispute that you can’t afford to lose.
After all, a stitch in time saves nine.
Keeping each and every project profitable is going to be a critical skill for many contractors in the coming months and years. Most can’t afford to let something go south.
If you need help, just give us a call and let us be part of your team, building your business and your projects one step at a time.