Continuing with our Secrets from Successful Subcontractors webinar series, the Secrets to Getting Paid Part 2 introduces new tips to ensuring profitability. Dave Hurley and Justin Wetherby have many years of experience in the construction industry. Dave has over 30 years of experience and severed in executive rolls for several leading contracting firms as well as worked on some high profile projects. Justin Wetherby is a carpenter by trade with over 10 years experience, he’s worked as an estimator, foreman, and superintendent.
In Part two of the Secrets to Getting Paid, Justin and Dave go over the various ways risk can impact profit and how to protect your profit. Here are the secrets to getting paid.
Reading the Contract
There is nothing more important than spending the time to read through the entirety of a contract. And taking the time to completely understand what you are signing. Without this knowledge, your company is put into an incredible amount of risk.
“Before it even begins. If you sign something saying you’re not going to get paid for a certain activity, then you’re not going to get paid. And it might be in there somewhere.” Dave Hurley said.
While contracts can be hundreds of pages long, someone needs to thoroughly review everything in the contract. Certain states have rules that prevent general contractors from using certain language or putting certain responsibilities or stipulations on subcontractors. However, they often can get away with this because someone didn’t read the full contract, and they didn’t report it to the Associated Subcontractors Association or other for help.
Subcontractors should also get a copy of the owner’s contract to better understand the flow of responsibility. So much can be prevented by reading the contract. Dave has more tips and tricks for contract negotiation in the webinar.
Keeping Track of Project Milestones
In order to increase your profits and decrease your risk, a project management best practice is to keep track of project milestones. Many contracts will list out the schedule or expected completion dates. By using a project management system to monitor them, it’s easy for a superintendent to know at a glance where the project is. And great software will keep track of estimated vs actual dates. What this does is ensure that if there is a difference in the estimated vs actual date that it’s noted. And some make notes a required field when the actual date is greater than the estimated date. This way there are notes and documents to explain the delay. This can help subcontractors when it comes to payment, because they can dispute any issues with all of their documentation.
Poor Site Conditions
Site conditions can be a big issue within construction. Much of construction is completed out in the elements, and depending on the region there can be weather hazards that go along with the season. Dave recommends requiring better site conditions for your project. When working on a project where there was recently a lot of rain, continuing to work can churn up the sub-base.
“That sub-base should be firm enough and compacted enough where these conditions shouldn’t arise. Best practices for a GC is to put a stone sub-base, not the finished one, but a stone sub-base so this doesn’t happen and have proper drainage.” Dave continued. “You should never accept these conditions. It delays your progress with your labor, you’ll have material that’s misplaced and lost, even the workers don’t produce as much because they’re slugging around in boots.”
Addressing Scope Creep
Drawings change during the course of a project, the owner might want to change the configuration of a building. In construction, when things change then you have to change with it. However, to make the changes, you need to be informed of them. The field, project manager, and back office all must be informed of any and all changes. Without it sometimes changes fall through the cracks.
And the contract needs to reflect this. This is the only thing that will prevent issues further down the line. Contracts must be updated to reflect any and all changes in scope. Without it, the subcontractors can be held liable for changes in schedule and other repercussions.
Dave and Justin offered sage wisdom from their many years of experience for any and all subcontractors that are looking to protect their profits. They offered information and secrets and even more ways to protect your profits. For more information, visit the On-Demand Webinar Page. Not only does it have the Secrets to Getting Paid Part 2, but it also has the first part of our Secrets from Successful Subcontractors, and Navigating Construction Technology for Subcontractors.