Monthly Archives: January 2022

Is the Supply Chain Problem Putting Your Contracting Business At Risk?

You’ve probably heard plenty about the supply chain, especially the ways that it affects the construction industry. It can put your contracting business in difficult positions, so you should know what the risks are. Here are a few things you’ll need to know, and some ideas to help you solve them.

Increased Costs
The most obvious example of the supply chain problems in action are the increased costs for supplies. You’ve probably noticed that common construction materials like lumber or steel have been quite volatile over the last couple of years. It makes sense if you think about it. When supply is down, but demand remains the same, people who are in great need of the supplies may be willing to pay more to get them. Until the supply side regulates or increases to meet the demand, access and pricing are at a premium. That’s why lumber skyrocketed in the middle of 2020 and gradually dropped as supply improved.

Project Delays
For many years, experts in construction have said that project delays are the norm, not the exception. But the supply chain problems make it worse. If it takes you much longer to source the materials that you need, you’ll need longer to complete the project. Once you factor in the long-term labor shortage, you might fall significantly behind your original estimates. This can be a source of tension between contractors and clients, even those who understand the situation. It’s forcing a lot of contracting businesses to reevaluate the way that they budget their time, and requiring them to estimate a bigger cushion for unexpected delays.

Concerns With Material Substitutions
With the supply chain issues, there have been delays and there have been shortages. For some materials, you can wait a little longer, but you’ll still be able to get access to them. For others, you might not be able to get them for a specific project at all. Of course, whenever you have to deviate from the original plan, you put yourself at risk for claims that you failed to meet specifications. In addition, even clients who are understanding of the need for substitutions may be more likely to raise a dispute, especially if those substitutions don’t turn out to work as well or last as long as the original.

Breach of Contract Claims
Of course, all of these problems can lead to clients or other construction firms claiming that contractors are in breach of contract for their failure to deliver according to the specifications. Dealing with these claims can be a complicated and expensive process, particularly as it takes time away from other paid projects you could be working on. As such, contractors are better off if they do what they can to be realistic about what they can deliver and clear about their needs and expectations in contract language.

How to Minimize Problems
Ultimately, contractors should make sure that they are accommodating issues like the labor shortage and the supply chain into their contract language. When clients claim that a contractor has breached contract, they may cite a lack of clarity that shows that the contractor could delay project completion due to unforeseen circumstances. Being clear about this language, and the exceptions that may come up can help contractors and clients better understand what is expected for the duration of the project.

The supply chain is likely to be a problem for some time, so contracting businesses need to prepare. For more information about what you’ll need to succeed as a contractor, visit CSLS today!

How Your Contracting Business Can Avoid Disputes

Construction disputes can be a nightmare. No one enjoys getting stuck in the middle of one, especially if you don’t think you did anything wrong. The best path is to avoid it in the first place With these tips, you can minimize your risk.

Review Your Contracts
Many people start out by building contracts using boilerplates that they can find online. But in a lot of cases, those boilerplates don’t provide the clarity that you need for the type of projects you do. They may also be outdated, failing to address current issues in the construction industry, like the labor shortage or supply chain issues. Take the time to review all of your contract language. Break it up into pieces so that you don’t start to skim. Underline passages that don’t make sense or seem too vague. That will give you a jumping-off point to improve them.

Hire a Professional to Clarify Language
If you ever end up in a dispute, you’re probably going to need a lawyer to help you negotiate it. You may be able to save yourself a lot of time and hassle by hiring a lawyer to review your contract language, as well. Lawyers with experience in contract disputes in construction may be able to tell you which terms are more likely to become an issue in a dispute, as well as better alternatives. It can be a significant investment of funds. But the comfort and assurance of knowing that your contracts are legal and specific could go a long way toward helping you negotiate with new clients with confidence.

Update Your Business Practices
Although contract disputes often involve some issue with the contract language, there are plenty of other problems that can trigger a dispute. If your business practices are inconsistent with your contract language, you could easily end up with a dispute. Despite the fact that many construction firms consider overspending and delivering late to be the standard, you don’t have to assume that for your own business. Take the time to examine your business practices and see which areas could be improved. Getting better at estimating costs or delivery time might be the difference between a satisfied client and an angry one.

Resolve Issues Early
As with most aspects of construction, the sooner you find a problem, the better off you are. It’s easy to assume that early issues will resolve themselves in time, but it doesn’t always work out that way. If you seem to have problems communicating with the client or reaching consensus from the outset, you should pause on progress to negotiate them. After all, someone who is unhappy with the approach you are taking during design or planning is more likely to raise issues with the results of those stages. Investing the time to make sure everyone is on the same page gives you a better assurance of a satisfactory end result.

Be Transparent About Expectations
Transparency is the best path to ensuring that your client understands your obligations and confirming that you can meet their expectations. A lack of communication or delays in the delivery of things like project plans can put people in the position of rushing through important review and negotiation stages. It can be annoying to deal with a client who constantly wants to change the scope, but the solution is not to keep everything under wraps until you’re ready to start construction. Work on hammering out the issues as they come up, and you’ll be more likely to solve them before it’s too late.

Avoiding disputes isn’t always possible, but you can reduce the likelihood. To learn more about starting your career in construction, contact CSLS today!