Construction payment is complex and full of challenges. Because payment in many aspects of construction projects depends on credit, the potential lack of visibility throughout a project can make payment issues hard to avoid. Continue »
Historically, construction industry participants are three times more likely to fail during an economic recovery than they are during an economic downturn. Continue »
Financial risk on construction projects is a hot potato. Nobody wants to get burned by it, and everybody is always trying to toss it to somebody else.
Why? Because construction projects are inherently complicated and difficult to complete without hiccups. Weather intervenes, or a single workmanship dispute erupts, and a domino effect sends delays and payment dilemmas rippling through the entire job. Continue »
Subcontractor default is neither understated nor under-reported. Everyone in the industry is familiar with it and the consequences of the likely, yet always surprising, situation when a subcontractor defaults on a project. Continue »
It’s hard to understate how prevalently misunderstood the concepts of mechanics liens, bond claims and financial risk are in the construction industry. Yet, these issues permeate every industry relationship. Those who try to evade dealing with these issues tend to get scorned, while companies that confront these issues head-on tend to succeed. Continue »
If a contractor begins to show signs of financial distress while a project is mid-construction, the one thing an owner should not do is rush to terminate the contractor unless it is clear that the contractor is in such a state of financial distress that it is incapable of completing the project.
Subcontractor default is a problem that is neither understated nor under-reported. Everyone in the industry is familiar with it and the consequences of the likely, yet always surprising, situation when a subcontractor goes into default on a project. Continue »
Financial risk and construction goes hand-in-hand, and the further away a company is from the project developer, the more risk it shoulders. The scope of financial risk on a construction project is a huge topic contemplating under-funded or underbid projects, contractor default problems, misappropriation of project funds and more. Following are five ways companies can reduce or manage these financial risks. Continue »
The construction industry has one of the highest failure rates of any business sector. It’s important to be prepared for this reality when doing business in the construction market. Even the improving economy can’t help with this challenge. In fact, it may hurt, as research suggests that contractors are three times more likely to fail in an economic recovery than a downturn. Continue »
In most cases, deciding whether to file a payment bond claim or a mechanic’s lien claim is simple because only one option is available. On unbonded private projects, the general rule is unpaid subcontractors or suppliers can file a mechanic’s lien against the project jobsite. A mechanic’s lien claim asserts a security interest in the title of the property itself. These claims typically must be filed with the recorder’s office in the county where the property is located, and the claims usually are asserted against the owner’s interest in the property. Continue »
The mechanic’s lien is a unique legal remedy available to the construction industry to secure and collect on debt that arises from services furnished to a construction project. Each state has specific rules about when the lien must be filed (see Lien Deadlines) and who has the right to file. This general rule stands across the country: Entities that furnish labor, materials, equipment or services to a project where real property was being improved in any way are entitled to secure that claim by filing a lien against the property, if the document is filed relatively soon after furnishing. And what is the exact value of a mechanics lien? Why should one be filed? How exactly does it work to get the claimant paid? Continue »