OP-ED: Learn to Identify Red Flags and Green Lights
So you survived the downturn, construction has taken off, and you are up to your proverbial earlobes in activity. There are more projects than you can execute, and not enough qualified individuals. How do you confront this boom, and ensure that your projects are profitable and successful? Here are some key issues to weigh and balance as you consider whether to choose the next big job.
Know thy owner
We all know the old phrase – 80 percent of your work is repeat work. But many old clients are no longer in the field, and new owners have arrived. Can you tell if this owner is a good fit? Conduct a detailed interview with the owner's team, and take time to understand its program and longterm objectives. Do the homework – perform your own Internet searches, evaluate credit history, perform background checks. Check out reviews with previous partnering relationships. I know this is not always practical, but there are ways to do it. And ensure that the money is available to complete all the work. You have the right to be paid for your work.
Build your best team
This is easier said than done, I know. But don't tackle new challenges with an untested team. It's better to pass on new assignments than risk a distressed project. You need to not only develop the resources internally, but also develop the relationships externally. Meet subcontractors and discuss goals and expectations before the next project. Ensure that the subcontractor is giving you a qualified team, and ensure that your team collaborates well with the subcontractor teams.
Evaluate project delivery methods
Don't be afraid to be creative. Hard bids will continue to be a delivery method for some time. But consider other options for winwin ideas between owner and contractor, including savings and incentive clauses where owner and constructor share benefits of value. This creates excitement, and incentives can be a relationship builder for the next project. These new delivery methods require some planning, but often create value for both owner and contractor beyond the bottom line.
Dust off that old contract
The world has changed, and so too should your contracts. The Legislature meets no less than every two years, and new case law rolls out each day. It does not take long – review your forms with your management and legal teams,and ensure you are doing everything you can up front to manage risk and ensure payment.
Column first appeared in the Daily Journal of Commerce on October 28, 2015.