Five Strategies to Help Contractors be Proactive, Prevent Legal Problems and Minimize Risks
Posted On: Thursday, January 23, 2014
According to Albert Einstein, “[i]ntellectuals solve problems, geniuses prevent them.” Sure, we all know it’s better not to have a problem in the first place, but the question is, how do we prevent it? Of course it’s impossible to ensure that disputes will not arise; it’s a given that those in the construction business will encounter some bumps in the road. There are, however, some simple strategies contractors can employ to minimize their risks.
Hindsight is 20/20
Why is it so easy to be a Monday Morning Quarterback? Because we know how everything played out and therefore can see with great clarity what should have been done differently and how. It would be nice to get a do-over sometimes, but that’s generally not an option in the construction business — or in any business for that matter. The next best thing is to take affirmative steps to help prevent problems from arising, and to protect your interests in the event of a dispute. The good news is that it’s mostly just a matter of common sense.
In the Construction Law section of our website, we describe a number of simple strategies designed to help contractors be more proactive. Here are the Top 5:
Tips for Contractors
- Paper-trail everything; email is a great tool for this. If you have an important conversation with someone, send that person an email summarizing the discussion and confirming anything that was decided.
- Cross your “T”s and dot your “I”s. Make sure that all documents requiring signatures are signed by all parties, and that you have a signed copy. Make it your regular business practice to obtain signatures on all change orders before you do the work. It’s too easy for an owner or General Contractor to refuse to pay for a change order on the basis that it wasn’t signed; and most likely, your contract requires a signed authorization for payment.
- Keep good records; they should be thorough, accurate and organized. Keep copies of all documents pertaining to each job. Seek help from a financial professional in order to maintain complete, accurate financial records.
- Make sure that you and your subcontractors have all required certifications and registrations. Pay attention to any special requirements under your contract for any subcontractors you hire, and verify that your subcontractors have met all requirement. Failure to do so can cause major problems, such as losing a bid on a job.
- Contact a construction lawyer as soon as you realize there is a potential for a dispute to arise. We can inform you of your rights and obligations, and advise you how to proceed. At your request, we can become involved in discussions and negotiations at this early stage to try to prevent problems from arising, or from escalating into something more complicated and costly. In cases where a mechanic’s lien may be useful, it’s important to talk to a lawyer early on to ensure you don’t miss the strict filing deadlines.
While these suggestions may sound obvious – and many of them are – the key to successfully implementing them is consistency. One small, seemingly insignificant error or omission can blossom into something ugly and unwieldy. And worst of all, costly.
Visit the Construction Law section of our website at ferraroboule.com or contact us for additional strategies, information and helpful tips. We regularly help our construction law clients with contract negotiations and drafting, and resolution of construction disputes.
-Rhonda S. Boulé