My one piece
of advice to
construction
executives to
ensure their
business thrives is
that the company
needs to be
sufficiently capitalized to weather
downturns and take advantage of
upswings in the economic cycle.
Forecasting, budgeting, estimating
and constant monitoring of the
contract status report are extremely
important in operating a successful,
profitable company. As profits are
realized, reinvesting back into the
company consistently over a period
of time through the retention of
earnings will grow a company’s capital
base. The combination of capital and
a conservative amount of debt with
well-identified repayment sources
are vital resources for a thriving
construction company.
General contractors don’t build projects on their own. It takes a team of companies to get a job done, and many of
the players on that team are not contractors. Financial, legal, surety and insurance advisors and other providers work
behind the scenes, partnering with contractors and adding value to projects by offering essential advice and services.
Their support is a critical factor in the success of every project. Our
Point of View
feature asks these essential team
players to share their expertise and suggestions. For this inaugural article, we posed this question:
Use contracts to
limit your risk. Use
your own contract
forms when you
can, and when
you must use your
customer’s form,
study it and request
revisions in order to avoid language that
expands your risk unreasonably.
• Your scope of work should be just as fixed
and definite as your price. Do not accept
language that allows the plans and
specs to be completed and corrected
during the construction phase without
compensation for the costs of changes.
• Delete or modify conditions
precedent to your right to payment.
• Do not agree to allow your schedule to
be modified by your customer without
compensation for extra costs that result.
• Do not sign indemnification agreements
that make you liable for damages that
you did not cause. Try to limit your
liability to your insurance coverage.
• Do not waive your lien rights.
• When applying for progress
payments, do not sign waivers and
releases that are broader than the
payments that you have received.
Construction
executives have
traditionally ignored
technology or let
their IT people worry
about it, but they
should be thinking
about it in a more
strategic way. CEOs need to view technology
as a business portfolio and ask how it can
help drive strategic company goals. How
can IT improve a company’s ability to meet
customer needs and differentiate itself
competitively? Focusing on key business
metrics can help CEOs understand whether
technology is underperforming in terms
of meeting strategic goals. In an era of
shrinkingmargins, greater competition and
higher customer expectations, construction
executives need to reduce risk, increase
efficiency and improve customer satisfaction.
A company’s single greatest exposure is labor
risk—cost overruns, crew inefficiencies, keying
errors, inconsistencies and theft. Properly
executed technology can address these
exposures. Mobile technology, for example,
can virtually put the owners and construction
company executives at the job site withmore
real-time information, feedback and looks into
project status. This on-site view helps speed
the approval and payment processes and
positively impacts overall job performance.
What one piece of advice would you give to construction executives
who want to ensure that their own businesses will thrive?
JORGE V. ESPINOSA
SENIOR COMMERCIAL LENDER
TD BANK
CHRIS GRANT
CHRISTOPHER L. GRANT,
ATTORNEY AT LAW
DAVE HARTMAN
PRESIDENT
HARTMAN EXECUTIVE ADVISORS
Point of View
Building Washington 15
