Contract documents

June 17, 2024

Being successful in the construction industry is no easy task. It takes hard work to build the proper channels, patience to cultivate relationships, and discipline to stay the course during those lean times every contractor experience at some point. These things may sound inconsequential or abstract on the surface, but adherence leads to growth—something that every contractor strives for.

Growth is the goal of every contractor, but there are missteps, silent killers, and pitfalls that even the most ardent construction leader must be aware of or run the risk of inevitably falling prey to.

Things That Slow Contractor Growth

1. Managing resources poorly: Managing resources poorly has led to the demise of many construction contractors. Without resources, they can’t operate effectively, but unfortunately, it takes being in a depleted position for some to recognize this truth. To be clear, resource management isn’t just about money; it’s about every resource that goes into a successful project, including the machines that require maintenance and the people charged with performing.
2. Bidding desperately: Every construction contractor wants a substantial backlog. The condition of a backlog tells the true story of a contractor and where their business stands. Every contractor wants to build a healthy backlog but building it the right way is where success and failure are determined. Underbidding or bidding out of desperation to secure a project lessens the profit margin while depleting valuable capital resources and slowing growth.
3. Working without a contract: A good contract is the basis of any construction project and the first place any contractor should begin. Comprehensive, balanced contracts set the tone for success, but in too many cases, contractors choose to navigate the challenging construction landscape without one. Contracts are the best friend a contractor can have as they speak volumes about how a firm conducts its affairs, provide sound legal protections, and lay the foundation for success.
4. Processing and planning inefficiencies: There’s a direct correlation between processing and planning and when a contractor is inefficient in either of these areas, it’s a recipe for disaster. Things, unforeseen things, happen in construction and adjusting on the fly and having access to tools like AIA Document G701-2017 Change Order Form, help contractors adjust, stay on course, and finish projects successfully.
5. Avoiding technology: Many contractors continue to shun technology and the myriad of benefits embracing it provides, but it’s here, and from the looks of things, here to stay. Technology improves efficiency, builds a strong financial model, and positions contractors for lucrative opportunities. With that, any contractor still on the fence about using technology or avoiding it altogether is seriously jeopardizing their long-term viability.

Conclusion

A successful, thriving construction firm is what every contractor wants to be a part of, but understanding what to avoid and how to reach that space is a critical step on the path toward success. Managing resources, regardless of their type, is a must. When it comes to bidding on projects, this arm of the business must be sound. Bidding too low and out of desperation sets the stage for ruin, which is why this approach must be avoided at all costs.

A solid contract is the one thing all contractors need before moving forward and choosing not to use one is a risky proposition. With that it’s in the best interest of any contractor, regardless of the stage of their business, to find a legal solution that aligns with their business.

Planning and efficiency go hand in hand, and without planning, contractors can expect to become inefficient, which will cost them opportunities now and well into the future. On that note, before any activity begins, contractors should make sure there’s a plan in place to support every phase of the project.

Lastly, the world is changing, and technology is driving those changes, and nowhere is it more apparent than in construction. Drones, online document creation, and the assortment of other leading-edge solutions dotting the landscape aren’t going backward; they’re going forward, and contractors who use them and follow these tips can expect to do the same.

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AIA Contract Documents has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.