Stop Work: Wield This Powerful Right Properly and You’ll Be Glad

Everyone’s heard the safety message, “Stop, drop and roll.” It’s one of those simple sayings that you’re supposed to be able to remember — even if you’re on fire! This well known safety message conveys a simple solution to a pretty dramatic problem. Wouldn’t it be nice in the construction industry if we could, when we were not paid on time, just stop work, drop everything and roll away from the project until the progress payment (plus additional costs for stopping work) arrived? Dealing with slow payment is not as simple as “stop, drop and roll,” but stopping work can be a critical, effective tool when properly wielded. Read more>

Pay-if-Paid, a.k.a., The Dark Side of the Industry

Pay-if-paid clauses seem like they’re everywhere these days. Even if you’re performing work on a project subject to the laws of states such as California, New York or North Carolina, where pay-if-paid provisions are not enforceable, you’re bound to run into them if you expand your market out-of-state. These clauses are not something to take lightly. Read more>

Protect Your Company’s Investment With Payment Assurances

A construction subcontractor can do everything right in terms of negotiating a good contract and running a project smoothly, but still lose out if project funds run out without warning. The situation is not unlike a bank that issues a credit card and manages a cardholder account well, only to find out that it won’t receive payments because the cardholder unexpectedly goes into bankruptcy. The financial risks of under-funded projects cannot be eliminated on private construction, but there are steps subcontractors can take to limit their losses in case they find themselves working for clients that cannot pay. Read more>

Review Payment Terms With an Eagle Eye

Have you ever noticed the similarities between the language of subcontract agreements and credit card terms and conditions? Look at the section titles, and you’ll find headings like “Payment Terms,” “Termination,” and “Dispute Resolution” in both. The reason for the similarities is simple: Subcontractors are creditors, and face many of the same issues as credit card-issuing banks. Failure to properly handle credit terms and conditions can be as fatal a mistake for a subcontracting firm as for a bank. Read more>

Beware of Weak Links in the Project Financing Chain

Being familiar with the owner’s financing of a construction project is a good idea on any project, but especially when the proposed contract includes a contingent payment clause. When the contract has a “pay-if-paid” clause, or even a “pay-when-paid” clause, the risk of nonpayment, or delayed or partial payment, is high. If there is a contingent payment clause and the owner’s financing is questionable, trouble down the road is not hard to predict. Read more>