An increasing number of general contractors are taking the pre-qualification route as a means to secure the best interest of a current project as well as the company as a whole. A successful project often begins with prequalifying subcontractors, but it must not stop there. In this article, we’ll discuss what happens after the pre-qualification process—managing your subcontractors.
How Do You Manage?
Do you have the right tools to manage the risk that comes with partnering with subcontractors? Poor risk management leads to trouble. First, identify your risks, then look for the red flags. Does a subcontractor lack of experience or have signs of financial weakness? Review records to see if they’ve had any safety violations. As Tampa construction lawyers, we’ve handled many disputes between general contractors and subcontractors. This is why we recommend putting efficient and effective management tools into practice.
What Tools Should You Use?
Implementing the right tools means being two steps ahead of potential risks. Failing to pay suppliers timely or missing work deadlines, are just a couple of examples you want to prepare for. A subcontractor’s financial strength is also crucial for the stability of a project. If a subcontractor is a potential liability, it would behoove you to place a limit on the subcontract with them. You could also lessen the chance of risks by requiring subcontractors to provide a disclosure of the vendors they are working with. Providing joint checks may lessen the likelihood of vendor payment issues.
After putting some of the above tools into practice, you can also have a plan for ongoing risk management. This can include prequalifying subcontractors yearly to reassess their financial stability as well as regularly monitoring all subcontractors on a project.
Even after implementing the above tools, a contractor may still default. One solution would be to incorporate default termination language into the contract in advance. Doing so will address the possibilities of a default. The language in the contract should identify behaviors that would warrant termination and ways the subcontractor can correct the default. An experienced Tampa construction lawyer can assist you with drafting a default termination into your subcontract so you’ll have all your bases covered.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.