Pursuing Business With ‘Risky’ Accounts

Prevailing business wisdom holds that the way to reduce credit risk is to limit credit lines, be stingy in allowing credit and freeze orders on past due accounts. This line of thought posits that it is generally impossible to lower “bad debt” losses without adverse consequences to sales and business expansion. Read The Full Story »

Expanding Your BusinessMore Like This

“If ‘x’ is the number of contractor failures that happen when the market is on the way down, then it is ‘3x’ when the market starts to go back up,” says construction industry expert and author Dr. Thomas Schleifer, who admits feeling like the industry is still in limbo. “Dollars put in place I’d hoped to see by August 2012 are not there; now I’m looking to the first quarter of 2013.” Continue »

Subcontractor RiskMore Like This

The public and private capital that funds construction either isn’t there or is sitting on the proverbial sidelines, with nonresidential construction put-in-place declining 21.8 percent from October 2008 to May 2012, according to the U.S. Census Bureau. Future indicators of construction activity like the Architectural Billing Index are trending downward in 2012 after a brief rise in the latter part of 2011. While there are indications that certain sectors are expanding (e.g., power, manufacturing and health care), the overall outlook for construction is negative in the near term. Continue »

Asset ProtectionMore Like This

At a construction site in suburban Houston, after all the workers have gone home, a pickup truck pulls up to the poorly lit back entrance. Someone enters the site through an unlocked gate, returns to the truck with a small load of wallboard and drives off. The next day, he’ll be back—to go to work. Continue »

SafetyMore Like This

Successful companies strive to use every tool possible to ensure their projects are safe, on schedule and within budget. New methods are developed and piloted each year in an effort to improve project execution and satisfy customer expectations. However, all too often safety programs are not updated regularly, and safety performance can result from luck rather than reproducible results. Continue »

Risk ManagementMore Like This

Although the general economy shows signs of a slow recovery, construction spending remains below November 2006 levels. When the construction playing field changed drastically as a result of the 2008 financial crisis, contractors found themselves spending more money chasing projects with significantly more competition and lower profit margins. Many were not financially or operationally prepared for this shift. Some did not survive, but many did through careful planning, confident leadership and solid decision-making. A key to survival was a close partnership between contractors and their critical advisors, including accountants, banks, insurance agents and sureties. Continue »

Surety BondingMore Like This

The nation’s slowly dropping unemployment rate may be a sign that the economy is on the road to recovery. But surety executives still expect the next year to be tough for the construction industry as the impact of the recession and depleted backlogs continue to take a toll on contractors’ balance sheets. “Contractors at all levels face significant challenges in acquiring work and getting adequate margins, while dealing with owners who are having budget and staffing issues themselves,” says Rod Williams, chief underwriting officer for Liberty Mutual Surety. Continue »

Risk ManagementMore Like This

As 2012 comes to a close, it is important for construction companies to step back and analyze where they stand and determine where they need to be in the immediate future. Introspection is often easier than looking forward, but the latter is more important to implement a strategic market position and take advantage of the slowly improving economy. Continue »

Risk ManagementMore Like This

The construction industry tends to be dominated by privately held entities, so specific financial information such as leverage ratios or overhead often is not readily available. In the past, a lack of consistent automation to produce financials and other information made it more challenging for contractors to take a broader industry view of profit and loss in a meaningful way, or apply any reporting content to the unique structure of the organization. Additionally, only a few inconsistent industry-wide reporting mechanisms were in place to benchmark information.  Continue »

GC Liability InsuranceMore Like This

Construction contract documents are more frequently stipulating $2 million single occurrence, $4 million aggregate general liability policy limits verses the more common $1 million single, $2 million aggregate limits held by the vast majority of contractors. While the higher limits provide more coverage than a traditional policy, it’s important to also consider an umbrella or excess liability policy. The general consensus in the insurance industry is a $1 million/$2 million policy with the appropriate endorsements and a supporting excess liability policy can provide equivalent coverage to a $2 million/$4 million policy. Continue »