Source: AGC Constructor Magazine
In today’s economic environment, here’s what contractors should do
- Make sure your contract allows you to request that the owner provide reasonable evidence of adequate financial resources before starting work and during the project, without condition. Exercise that contractual right.
- Make sure your contract allows you to stop work and/or terminate the contract if you are not provided with reasonable evidence of financial resources and/or are not paid for work properly performed.
- Obtain as much information as you can about the owner’s previous construction projects, including claims, disputes and payment history with other contractors.
- Make sure you understand where the owner is getting the money to pay for your project. Ask for a copy of the owner’s loan documents or commitment. Obtain a credit report, a financial statement or a Dun & Bradstreet report on the owner.
- Learn who owns the project real estate. Is that the same entity with whom you have a contract? If not, inquire about the relationship between the fee owner and the contracting party and determine how that may affect your right to payment.
- Understand the mechanic’s lien laws in the project’s jurisdiction and strictly comply with all notice requirements.
- Understand the role of the architect/engineer on the project as it relates to the payment process. Ask for a copy of the agreement between the owner and the A/E.
- If you are not providing the builder’s risk insurance, ask for a copy of the policy that covers the project.