The Seven Deadly Sins of Contractors
Kegler Brown Construction Newsletter December 1, 2016
Most are familiar with the Seven Deadly Sins that have been around since biblical times. But many contractors need to learn – and avoid – the Seven Deadly Sins of the construction industry.
1. Failing to Condition Your Bid
A contractor’s bid is its first – and sometimes only – opportunity to determine how much risk it will assume for its bid price. Savvy contractors will condition their bids based upon acceptable contract language. Those who fail to do so may be stuck with whatever contract language is pushed their way after their bid is accepted.
2. Failing to Document Changes
In a world where technology is omnipresent, there is no excuse for failing to document – with photos, e-mails or daily reports – any change that a contractor expects to receive additional payment for.
3. Failing to Give Timely Notice
Every contract requires prompt written notice of change orders or claims. Yet contractors often wait too long to notify those upstream of potential additional charges and face the risk that their otherwise legitimate claims for entitlement are barred as untimely.
4. Failing to Pay Promptly
Those who bill and receive payment, and fail to pay their subs and suppliers within ten (10) days of receipt of the money for that work, face the sizeable risk of being liable for 18% interest and legal fees under Ohio’s Prompt Payment Act.
5. Signing Overly Broad Lien Waivers
Modern lien waivers often waive much more than lien rights. And overly broad lien waivers can inadvertently waive pending change orders and claims. Lien waivers should be closely reviewed and modified as appropriate.
6. Writing Something in an E-mail that You Would Not Want Your Adversary to Read
It is easy to write something in an e-mail with no thought given to who else might read it later. With litigation discovery, e-mails will be read by your adversaries. So do not put anything in an e-mail that you would not want your mother – or a judge – to read.
7. Failing to Reasonably Compromise if Given the Opportunity
Disputes are not resolved without considerable cost and hassle. Seldom does either party feel good about the litigation journey and the end result. If a contractor can fairly compromise sooner rather than later, much downside can be avoided.