I’ve been all over the country seeing members this summer and have enjoyed the company but not the conversations. No matter what topic we are on, the conversation seems to turn to some crazy story of a project gone completely wrong. Don’t get me wrong; jobs have been going bad for years, but not like this. Our jobs used to go bad because we missed a labor bid by a few dozen hours, or we forgot a crucial piece of equipment – that type of mistake.
But now, these jobs are falling apart because of things often beyond the limits of our technical and estimating skills. Risk management in systems integration and contracting has become a “business” issue and one we need to respond to quickly. Good jobs are going bad because of performance disputes, scope of work disputes, improper project management, restrictive use of subs and unplanned delays due to other contractors failing to hold up their end of the job. I spoke with one member who is still awaiting his retainage from a project from 18 months ago. Projects are costing our members real money simply because of unrealistic scheduling or because we signed a contract waiving any rights or any means to remedy.
Please do yourself a favor and carefully review what you are about to commit your company to in a contract. For example, never ever sign a document that includes an indemnification for the negligence of any other contractors or trades. Things like that seem harmless, yet I was with a member last week who faced a $500,000 worker’s comp lawsuit because of that one sentence. At least think about all of the potential risk-based costs for the project beyond just the necessary margins and labor-related items such as project meeting time, legal fees, safety plan filing, numerous indirect costs and contingencies. I have seen jobs go at expected cost (actually below the real cost) with expectations of landing major change orders. That truly scares me.
I know it’s easier said than done in this tight bid market. I am very sympathetic to the commissioned sale person who is struggling to land that big job they have worked for years on and are ready to sign anything to get started. I get that; but, sometimes, winning the project just can’t come at the risk of losing the company. CW