We hear all of the time how to “get to ‘yes'” and how doing so can lead to more business and of course more business leads to more profits. Purely logical, right? Without construction owners with work for general contractors to perform and general contractors hiring subcontractors to perform that work, construction grinds to a halt and clients and friends of mine in the construction industry don’t make money. For this to happen, “yes” has to happen more often than not. So, why the title of this post?
Chalk it up to spending much if not all of my time as a construction attorney either anticipating or dealing with the Murphy’s Law ruled nature of the construction world or to the “Monday morning quarterback” nature of my profession, but I see numerous instances where not taking the job or signing the bad contract would have led to a better outcome than performing the work. What do I mean by this? I mean that as a construction company (particularly one that is lower down the “payment chain” and therefore less in control of the flow of money), you need to carefully evaluate not only the contract presented, but whether you get a good feeling about the party with whom you are contracting.
Everything from whether you’ve worked with this general contractor or owner before and had a series of good experiences to the level of experience of the project manager that you met at the bid day meetings needs to be evaluated. You should also look at the nature of the terms of the contract presented. Is it very one sided and if so does the other party take a “my way or the highway” approach to your attempts to level things out? Are you taking the work because of desperation and can you do it at a price point that will allow you to build in the cushion necessary to make money on the job.
All of things need to be taken into account, along with some good advice on the front end, when determining if a job will be worth taking or will become a black hole of hassle into which profits sink. Frankly, the best contract can be worth about the same amount as its paper if the parties decide to ignore it. Remember, a project that takes too long and ends with either no payment or litigation cannot be profitable and will suck up more time than you anticipate. Better to say “No” to those jobs that you can see being such a job than to take it and end up calling me to sue to get your money.
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