Problems on projects can be more prevalent in the tough economic times. Let’s ignore the low bidder being the one with the biggest mistake for now. The contractors, subcontractors and vendors are facing tight financial times. This also applies to architects and engineers. The owners are facing these same or very similar conditions as the rest of the participants. This makes it even more important to make sure all parties involved in the project know their responsibilities and obligations.
The architects and engineers are under financial pressures. They have been for years on their fees. This leads directly and indirectly to bid documents that are poorer quality each year. A good example of this is all of the questions that are asked during the bidding period by the contractors and subcontractors. Each question is a problem with the bid documents.
Contractors and subcontractors on the projects are facing hard financial times. There are far fewer projects and competition is intense. Backlogs of profitable work have been reduced. They are looking to get and keep every contract dollar they can obtain. In the “good times” many firms walked away from projects that could have had claims for extras because there was more work and profits coming on the next project. This is no longer true. Contractors are becoming more intense in recouping costs.
Owners and developers in the prior years could start projects without tenants lined up. They could obtain loans for marginally viable projects. Times have changed. Loans are looked at with more scrutiny than they have in the past 10 years. Owners and developers are looking to keep the project costs as low as possible.
All of these factors are coming together in one giant wave that can sweep away many firms in the overall construction industry. The contractors must make sure the funds are in place so they can be paid. The architects must do the same, not only for the design but construction period. The owners and developers must make sure their architects and engineers are turning out quality documents. Owners must make sure the contractors have the resources to complete the job, not just a bond.
Contracting is complex enough in good times. Tough times can make it worse if the parties do not make themselves aware of the conditions of the others. Ignorance is no excuse for putting your company out of business.
Oh By the Way… A payment and performance bond is supposed to get your project completed but it may not get it completed on time. When was the last time the condition of a bonding company was verified?