Workshops covering all the important construction contract topics specifically for subcontractors. From understanding critical terms, to negotiations and getting paid.

Dateline SAN DIEGO, California, November 28 – As the family and friends waddled out to the back porch after the traditional American Thanksgiving gorge-fest, they huddled around the outdoor fire-pit to sip Irish coffee and imbibe in other after-dinner treats.  Feeling particularly full, the lethargic group’s consensus was that they had just engaged in one of the 7 Deadly Sins – that being “gluttony”, which was certain to be followed by another Deadly Sin, that being “sloth,” because the thought of getting up to clean the kitchen was a bit overwhelming.  But the family could not remember all the other Deadly Sins, which was probably due to the sedative effect the turkey’s tryptophan was having on their brains. The next day, one of the group members (that being me) wondered what the other Deadly Sins were.  After Googling it I realized that, for the most part, the Construction Industry would do right by avoiding these Sins. So, with a touch of creative license, here are the 7 Deadly Sins as applied to the Construction Industry.  Engaging in these Sins as a contractor will likely lead to problematic projects, or even worse, financial ruin. Pride traditionally means the excessive belief in one's own abilities that interferes with the individual's recognition of the grace of God.  As applied to the construction industry, having too much Pride makes someone believe they are always right, or their methods are always the better way to do things.  A person with this mentality often dismisses others’ ideas for job-site problem solving, which undermines the creative team approach to problem-solving.  It also can lead to not asking for help when one should, for example, getting someone else’s opinion on how to handle confusing plans. Envy  is the desire for others' traits, status, abilities, or situation.  If a contractor is always envying others, it leads to a shattering of the contractor’s confidence, having the opposite effect as Pride.  With this mentality, a contractor may let the perceived intellect, education or company size of someone else on the project team intimidate him or her.  This leads to the contractors letting themselves be walked all over, such as not fighting for valid change orders, or not demanding that they be paid on time.  And, at the end of the day, the contractor who is caught up in the sin of Envy is left wondering why they can’t seem to get ahead despite how hard they work.   Anger  traditionally is described as being manifested in the individual who spurns love and opts instead for fury.   Someone who embraces Anger lets their emotions spin out of control when minor disagreements come up on a project.  They always think that when someone makes a mistake, that person is out to get them, and they will never forgive that person for the mistake. Anger is so prevalent in that person, that it is almost impossible to have a reasonable discussion with them, or reach a compromise, when something goes wrong on a project.  If someone simultaneously lets the sin of Anger and the sin of Pride take over, watch out!  When a project dispute comes up, this combination is almost always rewarded with a one-way ticket to litigation. Gluttony  is an inordinate desire to consume more than that which one requires, while Greed is the unchecked desire for material wealth or gain.  As related to construction, these two sins can lead to the same fallout.  First, these Sins lead to a contractor wanting to secure more and more projects.  This is often too easy to do in a good economy, so contractors forge ahead bidding and accepting project after project without the ability to staff them properly with the required skilled workforce.  This leads to project delays and the erosion of the contractor-customer relationship.   Plus, this also can lead to payrolls that seem to grow exponentially over a short period of time and a significant increase in material purchases.  These financial obligations usually must be paid before the payment trickles down from the owner to the prime contractor and then to the subcontractors.  When this happens, contractors can find themselves taking money from one project to pay for another, or even worse, opting for ways to finance their immediate payroll and material purchases with expensive debt options such as factoring their accounts receivable or drawing down unsecured lines of credit.  In the end, contactors who make decisions based on Gluttony or Greed often find themselves in such a financial bind that bankruptcy is their only salvation. Sloth  is the avoidance of work.  In today’s world, we think of it as laziness.  This Deadly Sin wreaks havoc for many when engaged in by a prime contractor’s project manager.  First, the Sloth PM procrastinates on getting subcontracts out to the subcontractors, which causes a frenzy of activity as everyone tries to negotiate and get the subcontracts signed before the project starts, or at least by the time the first payment is due.  Second, the Sloth PM can’t be bothered to submit change orders in a timely fashion, which results in delayed payments for work performed.  This can eventually lead to stop payment notices, claims, and liens being filed by subcontractors, which creates a significant amount of bad blood between the owner and the prime contractor and between the prime contractor and its subs.  Finally, the Sloth PM keeps horrible records and does not bother to organize and keep current the logs for submittals, RFI’s and change orders. Lack of project document organization usually spells disaster if a dispute ever arises on a project – especially with disputes related to project delays. Lust  is an inordinate craving for the pleasures of the body.  This leads quickly and directly to an employment law nightmare – enough said. As you fly into the New Year, think seriously about whether or not you are letting any of these Sins creep into your decision making or conduct.  And, if they have crept in, think seriously about taking the opposite action in order to run your business, as well as your life, in a financially healthier, and more productive and enjoyable way.

For most contractors, every construction project begins with signing the contract and ends with getting final payment. A lot will happen between these two events, and to make the project as successful as possible, the savvy contractor will need to be very proactive, even getting involved well before signing the contract. The "contract" most often includes  a number of different documents and are usually collectively referred to as the "contract documents".  They are not just the plans and specifications along with the agreement you sign, they can include anything else that may be designated as part of the "contract documents" in your agreement is signed, and almost always includes the prime contract for a subcontractor.  Also, it is very important to know that your proposal or bid, and any exclusions or clarifications you included with it, will not become part of any contract unless they are specifically included and identified as part of the contract documents. Think of the contract documents as the roadmap for the project, where every aspect of the work is addressed, including how to resolve problems. The contract spells out your rights and responsibilities, as well as your risk and your rewards. 1. Do Your Homework Keep in mind that if the Owner or Prime Contractor really wants you to do the work, and they know and trust you, they may be more willing to negotiate with you on some of the terms. This is where getting involved early will really help you.  Even if they don't know you, and you are a subcontractor, know what the prime contract and other contract documents require, and be sure that you aren't asked to take on any more risk than the Prime Contractor.  Getting some of the more oppressive terms revised is usually reserved for risk managers, senior executives, or the company attorney. The goal is to make sure the contract is a "fair" contract. If you can avoid falling into the "take-it-or-leave-it" trap, it will be to your advantage. But in reality, there really isn't a truly "fair" contract for both sides, because invariably one side has an advantage over the other. And if negotiations are out of the question, you need to be able to identify your risks, and then manage those risks. Once the contract is signed, the easy part of is over and the real work begins because you’re legally committed to performing exactly what the contract documents require.  At that point, are you leaving the project's success in the hands of the project managers and superintendents? If so, that’s perfectly okay …… if they understand the contract documents thoroughly. If they don’t, then it could be a disaster waiting to happen. Many people claiming to be conversant in construction contracts may think they know the terms and conditions but often they really don't understand them. In addition, many project managers don't even look at the contract until something is going wrong on a project.  The heat of the moment is not the time to try to figure out what the contract requires you to do, nor is it the time to let a new project manager take a crash course in construction contracts.  So, then what do you do? 2. Really Know the Contract This is easier said than done.  After winning the job, and before the project even gets started, make sure that all project management personnel thoroughly understand the contract documents. If they are not up to speed, get them training!  Expecting your project managers to get on-the-job training for contracts management is not a smart move.  When you consider that, for many projects, they’re going to be responsible for managing millions of dollars, you can start to see the value in the well-used cliché "knowledge is power". The contract spells out exactly what you are expected to do to protect your rights. If your PM doesn't know, or forgets a key requirement, it could cost you. 3.  Manage the Contract You should be able to pick out all the important clauses that need your special attention within a contract. These aren't "killer clauses" unless you drop the ball, and many of these clauses are used on a daily basis.  But some contract provisions are invoked only when an event happens. Do you know what that event may be, or do you even know how to identify that event in order to comply with the contract?   Bottom line is – don’t manage your contract on autopilot. You must understand the terms, or otherwise risk missing critical deadlines and the opportunity to maintain your anticipated profit margins!

In my line of work, I run into a significant number of contracts.  Some terms are especially bad for the side that did not draft the contract. Despite signing on to bad terms, there are steps any contractor or subcontractor can take to enhance their chances of success when faced with a claim or dispute.  Those steps include proper notice, proper notice and proper notice as well as documentation, documentation and documentation.  Proper notice and good documentation are so important that they each deserved being repeated three times! Let’s get down to the basics: 1.      Proper Notice As a prime contractor, you need to fully understand how quickly you must provide the owner notice that the project is being delayed, or that you are running into problems that are costing you more money.  Likewise, as subcontractor you need to know the time limits for providing notice under your subcontract as well as the prime contract.  More and more contracts are stating that if you do not provide timely notice then regardless of what or who caused the problem (even if it is the owner), you have waived your right to pursue a claim for more time or money. Typical Events Requiring Written Notice (Even if you talk about it at a meeting!) a.     Delays to the approval of submittals; b.    Disagreement with a written interpretation of the contract documents from the Architect, Engineer or Owner; c.     Information received through an RFI that changes or adds to scope or time; d.    Contractor’s receipt of a directive that impacts contract price or contract time; e.     Order for “minor” changes in the work that are not minor to the contractor; f.      Conditions encountered, observed, or believed to be present by Contractor at the site which differ from those indicated in the contract documents or are not ordinarily found in similar projects or sites.  Most contracts state that the contractor has examined the site and is willing to take all responsibility for conditions that differ. g.    Interference with, damage to, or delay in, the Work regardless of the cause; h.    Suspension of the work; i.       An order by Owner to stop the Work; j.       Emergencies; k.    Force Majeure; l.       Government agencies making changes under their own authority; m. Contractor’s desire to make a change in the work or deviate from the plans whether or not if affects price or time; n.    Contractor’s belief that overtime or acceleration must be implemented to keep to the project schedule; o.    Subcontractor or supplier request for increase in price or time; p.    Contractor’s use of Owner Allowance items; Contractor’s use of contingency 2.      Get it in Writing Remember – there are no exceptions.  Create a paper trail for everything.  Whether or not to proceed with extra or changed work without a formal written change order or directive has to be decided on a case-by-case basis and most contracts require that you get a directive for extra work in writing – otherwise you waive your right to get paid.  But when a decision is made at a weekly meeting, or you get a verbal directive, confirming in an email that you’ll proceed unless you are told otherwise is sometimes your only choice to avoid delaying the entire project.  Sometimes you’ll not know if the other person gets the email even if you request a “read” receipt from the email server.  So, to verify your “confirming” email was received, “cc” at least one other person and include a question to the person you send it to that will likely prompt them to reply to that specific email. 3.      Keep it Clear Strive to include only one issue per email and list the specific reason in the subject line.  Do this even if you have more than one item to discuss.  For example, if you are following up on one change order request and two RFI’s, send three different emails to keep the communication string clear for each item.  Keep mindful of the proper chain of command, but “cc” others if an issue is becoming critical and you are not getting the information or direction you need. 4.      Meeting Minutes Keep notes from meetings yourself.  Promptly review minutes if they are prepared by others and distribute changes to all attendees for items that are wrong or missing from the minutes. 5.      Daily Reports Set aside time daily to document the day’s events (daily reports or journal) and make this a habit regardless of whether or not you are required by your contract (or boss) to do so.  Use your tablet, laptop, or good old-fashioned paper and ink! Document everything, all communications, even verbal discussions held on site. Document visitors, owners and inspectors who visit the jobsite, weather conditions, rental equipment, crew sizes, any unusual occurrences, etc. Finally, the importance of documenting in “real time” cannot be emphasized enough - key details may be forgotten if prepared later - plus, documenting from memory lacks credibility.   Realize that complicated and costly issues can end up going to litigation 2 or 3 years after the work is done and, by then, the individuals on the job will have forgotten most of the details.  You (and your company) will thank you when you have ample and accurate documentation to refer to when testifying later.  Always remember the old legal saying: The one with the best documentation wins!

San Diego Subcontractor Summit September 12, 2024 The San Diego Subcontractor Summit will provide an action packed day of workshops designed to tackle the unique issues subcontractors face related to negotiating subcontracts, subcontract compliance, and performing their work. Space is limited to 50 attendees to ensure maximum learning and retention of information. Who Should Attend? • Company Owners and Management • Project Managers and Project Engineers • Superintendents Where is it located? Sunset View Room, Marina Village 1935 Quivira Way, San Diego, 92109 What's the Cost? Full Day: $390.00* per person *a portion of all registrations are donated to charity. For more details, please contact us. San Diego Subcontractor Summit Ended 390 US dollars $390 View Course

The San Diego Subcontractor Summit was a rousing success! Pam Scholefield - "Negotiation Workshop" Brittany Russell -"Mindful Negotiation" Oliver Craig -"Evaluating Bonded Work" Pam Scholefield’s high energy style kept everyone engaged and focused on the important stuff for negotiating subcontract terms, contract management, and claims drafting. Brittany Russell with Mindful Synergy Solutions provided an insightful session on mindfulness during negotiations, which was very well received. Oliver Craig with Cavignac offered useful information on bonds and fielded questions as they relate to subcontractors. We are excited that the Subcontractor Summit was met with such positive feedback. Check back for our upcoming Winter- Spring schedule Please Send Me More Information on upcoming Summits First Name Last Name Email Message Send Now Thanks for submitting!

San Diego Subcontractor Summit Ended 390 US dollars $390 View Course