A Christmas List to Improve Construction Projects

How to Improve Construction Contracts

By Mark A. Cobb

As construction attorneys working throughout Georgia, the Cobb Law Group stays busy. Because we represent project owners, general contractors, subcontractors, and suppliers, we come across the same issues repeatedly–contract issues and subcontractor defaults, payment issues, slow-payments, payment bond claims, lien claims, and similar construction matters. In the spirit of the holiday, the Cobb Law Group decided that it needed to write it’s own Christmas Wish List which we hope will come true for all of us!

1. Peace on Earth (at least on Construction Projects): As construction attorneys, we are often confounded by way some contractors treat their subcontractors (and vice-versa). Think about it–owners, architects, prime contractors, specialty subcontractors, and suppliers share the same goal of a successful construction project; all too often, however, a small problem occurs and instead of resorting to reason and fairness, one or more of the parties become stubborn and demanding. That is not the path to successful project completion! Instead, collectively solve the small problems to prevent them from becoming large problems. To encourage collaborative problem-solving, we even suggest that you build into your construction contracts fairness, reasonableness, and include a mechanism for problem solving!

2. Goodwill Towards Men (including the Plumbing Subcontractors): It is not uncommon for everyone involved in a construction project to be a small-business. On this positive side, this can mean that you have direct access to the decision makers and, more likely, their reputation in on the line. On the other hand, a problem project can cripple a small business. Thus, it is vital to understand and articulate the expectations of each participant. It is vital that the project schedule be maintained–when the owner or the general contractor “force” those below them to wait long periods of time or insist that they man more hours due to another’s delay, then small contractors are hurt. Businesses rely upon specific start dates and they schedule their employees accordingly–delays and demobilizations impact these businesses ability to perform on your construction project as well as on other projects.

3. Gifts of Gold, Frankincense, and Myrrh: If you are a project developer or a general contractor, please give your subcontractors and suppliers the ability to perform. This may seem obvious, but some many contractors fail to do this. Provide your subcontractors with timely and reliable plans, drawings and specifications, communicate with them throughout the course of the construction, and work cooperatively and–most importantly–pay your subs and suppliers on time! Nothing diminishes project enthusiasm like slow-paying. Every business relies upon cash-flow, but in the construction industry, it is particularly true. In fact, most Subcontract Agreements require that the subcontractor keep the job free from all materialmen’s liens; yet, is can be difficult for a subcontractor to pay their sub-subcontractors and suppliers if they are not being paid.

4. A Fair Deal: When our lawyers sit down with a client to draft or negotiate a construction contract, we discuss the tone of the construction contract which they wish to use. Some project owners and contractors insist upon a severe, one-sided contract for their subcontractors and lower-tiers; however, we advocate that a more reasonable approach is more likely to be successful and can help you attract a better subcontractor. For example, when a subcontractor believes that it has no ability to negotiate its contract, then that same subcontractor is less likely to be fully invested in the project. A fairer subcontract agreement, however, allows the subcontractor to be given the assurance of fairness to all the parties.

5. A Readable Contract: Construction lawyers are notorious for their complex sentences and verbose phrases; there is no need for this! A good lawyer can draft a construction contract that is readable and easy to understand. When this is accomplished, the parties better understand their roles in the building process and the understand their expectations; more importantly, a readable contract is clear, unambiguous, and more likely to be enforced by a court if needed. We often direct clients away form using AIA Construction Contracts for many reasons, but often it is simply because they can be difficult to read.

6. Christmas Trees on the Job Site: Okay, this one may not be as “legal” as the other items on this list, but what child doesn’t relish seeing a Christmas tree–decked out with lights–positioned on a high-beam on a construction project or suspended from a crane. It’s good marketing for the project’s success, it promotes a festive atmosphere on the jobsite, and it’s just plan awesome to see!

7. Family Time: Construction projects are under tight schedules which can be worsened by the weather; regardless, it’s important to remember that every laborer and every business owner is a person with a family that is important to him or her. Please make sure that they have time to spend with their loved-ones. Sure, the mortar can wait one more day.

8. Relationships: It doesn’t matter whether you are painter or a plumber, a project owner or a construction manager, an architect or a construction lawyer, the construction industry is founded on building and maintaining strong relationships. Treat the others with respect and fairness and they will treat you similarly. Build strong relationships and you’re more likely to build successful construction projects.

9. “Lien” on Us: Contractors, subcontractors and suppliers have a gift when it comes to construction collections. By using Georgia’s Statutory Construction Notice Scheme, Lien Waivers, Affidavits of Non-Payment, Payment Bond Claims, and Mechanics and Materialmen’s liens, you can almost eliminate bad-debt. We hope that everyone involved understands their rights and obligations under Georgia’s statutes as they can benefit owners and general contractors as much as they benefit subcontractors and suppliers.

10. Improve Georgia’s Lien Statutes: Although Georgia’s lien laws and statutes regarding Georgia’s Little Miller Act are great ways to make sure that payment is received, there are some loop-holes and improvements which could be made. For example, many potential lien understand that their claims of lien must be filed within 90 days of the last day in which they actually worked on the project; however, this time-period can be shortened to 60 days if there are any unpaid, signed, valid lien waivers. This confusion has caused many lien claimants to rely upon the 90 days when, in fact, their failure to act within 60 days of the date of the unpaid lien waiver precludes their lien claim.

11. More Referrals: As construction attorneys we are very fortunate to have a steady-stream of new clients. More often than not, our new clients have been referred to us from existing clients. We appreciate this very much as our clients are our most important relationship. We have filed 1000s of materialmen’s liens in the state of Georgia, Miller Act Claims, Georgia’s Little Miller Act claims, and payment bond claims; moreover, we have drafted and negotiated more construction contracts and handled default and termination claims than we can count. We are thankful that most of our clients actively say good things about us and our legal services.

12. Be Willing to Negotiate Your Subcontract Agreements: It doesn’t matter how one-sided a construction contract is, you should always review and understand the agreement with your attorney. An experienced construction attorney can help you negotiate and soften the harsher provisions such as pay-if-paid clauses, pay-when-paid provisions, default and cure provisions. We wish that more clients utilise our negotiation abilities prior to entering into a contract in order to prevent problems which might occur later on.

Leave a Reply

Your email address will not be published. Required fields are marked *