Spring Cleaning: 6 Contract law tips for limiting risk on construction projects
It’s springtime! That means spring cleaning. Out with the old and in with the new. This is also a good time to think about cleaning up your systems for limiting your risk on construction projects. Here are a few short things to consider as you attempt to improve your construction contracts:
- Do you have a standard written contract or proposal for every project, no matter how small or how long the client has been doing business with your company? This should be your number one priority. If it is a standard form, it shouldn’t be a big deal to use even on short projects. And if you think your longtime customers will be offended, blame it on the attorneys! That’s what construction attorneys are here for– we’re tough and can take being the bad guys.
- Has your contract or proposal been reviewed by your insurance carrier? This is an important step you can take to limit any risk issues in your contract. Many insurance carriers will review your contracts at no cost to you– they view it as a good loss prevention measure. Check with your insurance agent or broker to see if your carrier offers this service. This is also a good time to see if your insurance coverage is sufficient for the amount of work you are currently performing.
- Has your contract been reviewed by your attorney? If your insurance carrier has an attorney licensed in your jurisdiction review your contract, you can skip this step. Otherwise, strongly consider having the contract reviewed by a professional, preferably an insurance defense attorney. Measure twice and cut once applies to the legal world, too.
- Does everyone on your staff know to use the contract or form proposal and where on your system to find it? It does you no good to have a great contract template that some of your employees don’t use. Educate them on the importance of all contracts and proposals being produced in a uniform, systematic way.
- Is there a follow up procedure in place, in case a construction contract or proposal is not returned executed by the client? Someone should be tasked with making sure a completely executed contract or signed proposal is obtained, and that it is filed in an easily accessible location for future reference. One idea: do not open a new client or matter number to bill against until the contract is in place.
- Consider whether it is worth getting current verbal agreements translated into written agreements. If you have an ongoing project that is only based on a verbal agreement, consider the potential for risk on that project. It might be worth it to ask the client to execute a new written agreement. Again, you can blame it on the lawyers. This *may* not be possible, or it may simply be too awkward to ask for this in the middle of a project that is going well. But at least consider all of your current projects to see if this is a possibility.
Happy Spring Cleaning!
Photo “Kane Cleaning Supplies” by Collin Anderson via Flickr via Creative Commons License
Welcome! This is the work-in-progress of Melissa Dewey Brumback, a Raleigh, North Carolina construction and business dispute attorney. I’m a partner in the litigation department at Ragsdale Liggett, PLLC. I will be posting articles of relevance to those in the construction industry (especially design professionals) as well as those involved in (or hoping to avoid) business disputes.
While I’m getting my feet wet here, feel free to write me a comment or visit my law firm profile.
As sure as Santa’s arrival each year, the setting of the sun each night, and the arrival of the bowl games each December, there will be changes to a construction project. How you manage those changes is important. If you can properly document delays, changes in scope, or other issues, you can recoup your time and expenses. If you fail to manage changes well, you are literally throwing money away. And– if you are a design professional and do not have a good system in place for handling change order requests, you are almost guaranteeing a lawsuit at the end of the project. Read more on Managing Changes on the construction Project at this link.
Excuse the little self-promotion here, but if you want a quick way to learn more about construction issues in North Carolina, I’m speaking at a seminar on May 7, 2010 in Greensboro, NC.
The seminar topics include:
* Understanding Liens, Bonds, and Payment Issues
* Risk Transfer (including insurance and indemnity issues)
* Making Changes & Resolving Disputes during the Construction Process
* Contracts and Subcontracts on Public Projects
* Recent Bankruptcy Cases Impacting Contractors’ Lien Rights
The seminar qualifies for 6.0 PDHs for NC Engineers, 0.6 CSI CEUs, and NC Attorney CLE credit is pending.
Joining me in speaking are Eric Biesecker, Jennifer Maldonado, and Brian Edlin. For more details or to register, go to Half Moon Seminars.