Tag: Payment Risk
-
Why It’s a Bad Idea to Send Preliminary Notices on “Problem Jobs” Only
Whenever a construction company tells us that they only send notices ‘on problem jobs,’ we’re immediately prompted to follow up with: “if you only send notices on ‘problem jobs,’ how do you know which ones are problem jobs, and which are not?” Not surprisingly, what we’ve found in our experience is that everyone defines ‘problem…
-
How to Decrease Payment Risk for Construction Projects
Every year, $1 trillion of construction industry payments makes its way through the convoluted mess (see graphic). We call it the “payment chain,” and it’s the way projects have been run, and project participants have been paid, for a long, long time. But as complicated as this example looks, it represents a very “clean” project…
-
Retainage can be a Huge Burden for Subcontractors
Even as retainage continues to be widely accepted and commonly practiced in the construction industry, the majority of subcontractors interviewed for a 2004 report published by the American Subcontractors Association hold the view that “[prime] contractor abuse of their retainage” is a widespread problem. Some of the data uncovered by the report are troubling: -…
-
Construction Payment and Financial Risk: A Primer
This article was originally published on November 25, 2014. It was updated on December 16, 2016. [hr] The way that payment works in the world of construction projects is unique. The credit heavy nature, the high number of businesses involved, and the lack of visibility into who is doing what work, make payment issues all-the-more…